ondeck capital
ondk stock price & news - on deck capital inc. - wall street journal
goldman has the lending capital part of the equation in hand, and has recognised that the online “platform” represents the most efficient method of distributing that capital to borrowers .
keep your business running smoothly. manage your working capital needs, both planned and unplanned .
on deck capital, inc. (ondk) dividend date & amp; history - urltoken
loans subject to lender approval. on deck capital australia pty ltd abn 28 603753215. ondeck® is a registered trademark. all rights reserved. please read our: privacy policy, privacy statement and website terms of use. ondeck group refers to on deck capital, inc. and its subsidiaries .
for the second time in two weeks, an alternative lending company has gone public. new york city - based ondeck capital rose in its debut earlier wednesday on the the new york stock exchange. ondeck capital' s shares opened at $ 26. 50, and touched a high of around $ 28 .
as of december 2017, ondeck capital is valued at $ 411 million, which is an increase since may of 2017 when we noted it was $ 324 million .
other startups in the space include capital access network and kabbage, and even amazon is getting into the game .
if you currently process a large number of your customer payments through square then you could qualify for up to $ 100k in financing through square capital. this is a niche based financing option but could be a good capital source for square users looking for a ondeck and kabbage competitor .
small business credit cards aren’t typically considered a kabbage or ondeck competitor, but they can be a good alternative solution if you need a small amount of capital. in fact, small business credit cards are great to have in any business’s financial toolkit regardless of what other capital you have .
ondeck capital caters specifically to small businesses, and does not allow peer - to - peer investments. instead it partners with distributors, from financial institutions to independent sales groups, to connect businesses to capital. since its launch in 2007, ondeck has deployed more than $ 1. 7 billion in small business loans to 25, 000 businesses in more than 700 industries .
the forecasted range of $ 16 to $ 18. based on late tuesday' s pricing, ondeck capital raised about $ 200 million from its ipo, valuing the firm at about $ 1. 32 billion .
ondeck capital reported a quarterly loss of $ 12. 6 million as revenues fell short of expectations. at the same time, the new york firm sharply reduced its earnings projection for the rest of the year .
like square, paypal also has a capital wing of their business that focuses on lending money to merchants who process payments through paypal. they also offer their merchants up to $ 100k in financing. if you already use paypal on a consistent basis then paypal capital could be a fast financing solution .
the nonbank financial system is estimated at $ 3. 2 trillion in the u. s. and $ 15 trillion globally, according to the bank for international settlements. foundation capital, a venture capital firm, estimates the global peer - to - peer lending industry alone will reach $ 1 trillion by 2025 .
the wall street journal, in an article entitled inside jp morgan’s deal with ondeck capital, stated that the partnership would “help the bank process applications more inexpensively and quickly, in hours instead of weeks”. there you have the delivery element .
“i looked into ondeck online and found the whole process very easy and the know your score tool was very straightforward. i’d definitely recommend ondeck to another business. ”
there are a number of online lenders out there other than traditional banks, but ondeck capital inc (nyse: ondk), lendingclub corp (nyse: lc) and credibly all offer unique products and services that specifically cater to small businesses .
the smart box tool will help give you a better picture of your total cost of capital when you are analyzing a potential loan. this will allow you to :
new york startup on deck capital hopes to appeal to these millions of businesses with a loan application process that takes minutes to complete and can be approved within a day .
small business owners are lucky to have so many options today to get short term working capital, with ondeck and kabbage leading the way. we recommend ondeck overall for small businesses because they loan larger amounts of money with longer terms. a kabbage loan is a good option for small businesses that generate lower revenues of $ 50k – $ 250k, or who need monthly payment terms .
both lending club and ondeck illustrate the growth of the alternative lending market, despite low interest rates .
ondeck and kabbage are both great at offering short term working capital. however, this doesn’t mean there aren’t viable alternatives. for example, you may qualify for a more affordable loan if you have outstanding customer invoices or if you process your customer payments with a specific service like square or paypal. further, if you need a longer term loan, then an ondeck or kabbage competitor may be best .
we recommend an ondeck business loan over a kabbage loan because they offer lower rates for prime borrowers and can originate much larger loans. ondeck can get you a term loan much quicker than traditional financing lenders, like banks. plus, on average, ondeck is half as expensive as a merchant cash advance .
these companies are building defensible moats against bank competitors for a variety of fundamental reasons. the one area where the funding cost advantage that banks have doesn’t work for them is in areas where new credit models are required. regulators insist that banks keep disproportionate amounts of equity capital in reserve when they try new things, and while their debt capital (ie, deposits) is cheap, bank equity capital is quite dear. in addition, these segments generally start out with high apr models. they can support high interest rates, as by definition these customers don’t have good alternatives, and as discussed, they require high interest rates to compensate for the risk and elevated cost of capital. over time, aprs can come down dramatically, but these segments are generally dismissed in the early days as predatory or niche .
your advisor is prepared to work with over 700 different industries. no company is too niche for ondeck .
while kabbage customers don’t provide as glowing reviews as ondeck’s, kabbage also gets good reviews. one of their best features is that they require monthly payments, where ondeck requires payments every week. kabbage is also quick to fund and like ondeck they can get you the money you need in as quick as 1 day .
the company which makes mainly short - term loans to entrepreneurs who need a quick hit of capital to buy inventory or expand rapidly, plans to use the cash infusion to expand by growing its team and launching new products. ondeck uses algorithms to assess applicants based on cash flow, online sentiment and credit history .
our simple, secure web platform and mobile app make it easy to access your ondeck account anywhere, anytime .
“ondeck is a business solution for the future and it’s available now. myob loans powered by ondeck assists businesses by creating cash flow and easing time restraints, two pain points smes have repeatedly told us place pressure on their businesses”
existing investors institutional venture partners, rre ventures, sap ventures, google ventures, first round capital and peter thiel also participated. ondeck has now raised a total of $ 180 million in equity and over $ 300 million in debt financing. james robinson iii, the former ceo of american express, is an investor and director .
created to support and empower small businesses, ondeck is 100% committed to serving our customers with the smartest financing solutions and world - class service. ondeck is the secure financing service that business owners everywhere can truly rely on .
smartbiz offers fast sba loans of up to $ 350k for working capital in as quick as 30 days. if you’re a prime borrower and can wait a month or more for financing, then this is a great solution .
ondeck and kabbage offer very quick business loans. despite the fact that they have a pretty high cost of capital, most customers seem to be willing to go back for a second or third loan from these alternative lenders. the speed of funding is very helpful and convenient, even for prime borrowers who have the capacity to repay the funds quickly .
while some loans are funded by individuals or institutions like banks, ondeck last year began shifting toward funding more loans itself .
on deck capital, inc. is an on - line platform that uses a big data, analytic model to source, underwrite, and fund loans to small businesses. the company offers online tools and resources including data aggregation and electronic payment technology, and to evaluate the health of small businesses. it' s small business loans include dental loans, restaurant loans, medical financing, restaurant financing, fast small business loans, fast small business financing, online small business loans, online applications for small business loans, small business loans online, retail capital, fast small business financing, short - term business loans, business equipment financing, small business equipment financing and merchant cash advance. on deck capital inc. is based in united states .
as a result, ondeck’s provision for loan losses more than doubled during the fourth quarter, to $ 55. 7 million .
getting a business loan from a bank can be a nightmare even if you’re well qualified, because they’re slow and require tons of paperwork. short term loan providers have stepped in to make getting a business loan easier for small businesses. in this article, we review the rates, terms, and qualifications of the two best short term business lenders: kabbage vs ondeck capital .
current and historical pe ratio for on deck capital (ondk) from 2013 to 2018. the price to earnings or pe ratio is calculated by taking the latest closing price and dividing it by the most recent earnings per share (eps) number. the pe ratio is a simple way to assess whether a stock is over or under valued and is the most widely used valuation measure. the current pe ratio for on deck capital (ondk) as of march 31, 2018 is 238. 33 .
the average apr for ondeck business loans was 40. 6% in the first quarter of 2016. kabbage, which is not a publicly traded company like ondeck, told us that risk analysts in two separate offices confirmed an average apr of ~ 40% .
“ondeck’s process was very streamlined. i called them up, told them what i wanted to do, filled out some paper work, and within a couple days i had the money deposited in my bank account. i highly recommend ondeck to any small business looking to grow. it has been very good for us — my business has grown 59% since i started working with ondeck. ”
very small businesses will have trouble meeting ondeck’s minimum annual revenue requirement of $ 100k per year, but kabbage only requires $ 50k .
ondeck also offers a business line of credit in addition to a short term loan. once you are approved for the ondeck line of credit, you can use their mobile app to withdraw funds from that line quickly and easily (shown in the middle picture above) .
ondeck is the big winner if you need financing north of $ 150k because that is the maximum you can get with kabbage. while both companies can get you funded for small amounts, ondeck will loan up to $ 500k for businesses with better revenues and longer operating histories .
we will see greater financial benefits from our decision beginning in 2017 ,
ondeck chief executive noah breslow said in a press release .
a kabbage business loan can be a better fit than ondeck if you can’t meet ondeck’s revenue requirements or if you require monthly repayment terms. kabbage business loans are much quicker and easier to get approved for than a traditional bank. they’re also more affordable than a merchant cash advance .
know someone who’d be a great fit for ondeck in north america or australia? you could receive a referral bonus of $ 2, 000 .
one of the largest companies originally known as peer - to - peer lenders, ondeck runs a website where small businesses can apply for loans .
on deck capital, inc. , incorporated on may 4, 2006, offers an online platform for small business lending. the company' s platform aggregates and analyzes data points from disparate data sources to assess the creditworthiness of small businesses. small businesses apply for a term loan or line of credit on the company' s website, and using its ondeck score, the company makes a funding decision and transfers the funds .
it’s important that the repayment schedule of a working capital loan fits within a small business’s normal cash flow. some small businesses will have no problem adhering to a daily or weekly repayment schedule. for other businesses, monthly payments may seem like the only repayment schedule that will work .
ondeck loans and kabbage loans have similar costs, with both companies reporting average aprs of ~ 40% . however, at 9. 99% , ondeck’s lowest possible rate for prime borrowers is lower than kabbage’s. the average apr’s include ondeck’s origination fee of 2. 5% on every loan, which is taken out upfront from your total loan amount. kabbage charges a single interest fee on their loans per month with no additional fees .
we are seeking to transform small business lending by making it efficient and convenient for small businesses to access capital. enabled by our proprietary technology and analytics, we aggregate and analyze thousands of data points from dynamic, disparate data sources to assess the creditworthiness of small businesses rapidly and accurately .
ondeck shares were down 15. 5 percent at $ 4. 75 in late - morning trading after falling as low as $ 4. 26 .
in the fourth quarter, ondeck’s net loss attributable to shareholders widened to $ 35. 9 million from $ 4. 6 million a year earlier .
when applying for a short term business loan, the three main qualification requirements that the lender will consider are credit score, revenues, and time in business. kabbage is easier to qualify for than ondeck in terms of business revenues, with $ 50k + annual revenues requirement while ondeck requires $ 100k +. however, in terms of credit score, ondeck is easier to qualify for, with a 500 + requirement compared to 550 + for kabbage .
“companies like ondeck are so important – they help you build your business credit while removing stressful ups and downs in cash flow, which is really helpful for businesses like mine. last year we made about 300 watches, and this year we’ll make over 1, 000 thanks to funding from ondeck. ”
another reason we like ondeck capital loans is that compared to other financing options, they’re very fast to approve and fund your loan. the application is online and there’s very little paperwork that you have to submit. you can get approved the same day that you apply and funded in as little as 1 business day. usually, there is no hard credit check, so applying for a loan will generally not have any impact on your credit score .
ondeck, a company that makes online loans to small businesses today announced it raised $ 77 million in a late stage round led by tiger global management .
like its digital lending peers, ondeck has been struggling with investor’ concerns over the quality of its underwriting and ability to maintain a rapid pace of growth .
just when it looked like the small business lending environment couldn' t get any darker, the dawn of the fintech revolution has made access to business capital easier than ever. on deck, lending club and credibly are only three of the countless fintech funding options out there for today’s small business owner .
ondeck launched in 2007 to solve a major issue facing small businesses: efficient access to capital. our passion for main street and the cutting - edge technology we use to evaluate businesses based on their actual performance, not solely business owners’ personal credit scores, make it possible for us to responsibly expand access to credit. this allows businesses to spend their time where it provides the most benefit—on their customers and on growing, not looking for a small business loan .
the recent tie - up between jp morgan chase and ondeck is perhaps the best example of the value that an online lending platform has to offer to the traditional underwriting process. chase began offering loans to its roughly 4 million small business customers in partnership with ondeck in january of this year. the money comes from chase’s balance sheet, and the loans carry chase branding, with the ondeck platform taking on a kind of white - label, behind - the - scenes role .
ondeck gets an average 9. 4 out of 10 point rating on trustpilot and 3. 5 out of 5 - star review on yelp. they have an a + rating with the better business bureau. business owners were happy with the speed of getting an ondeck loan and the fact that they could get a loan at all after being rejected by numerous banks. there have been some complaints from people who found ondeck’s interest rates confusing and who got the impression that they could save on interest if they pay the loan back early. you cannot save money by prepaying an ondeck loan, because you agree to pay back a set dollar amount. we recommend that small businesses take the time to understand the apr of any loan before committing to it. read our ondeck review to learn more .
ondeck is also very active in responding to customers on the better business bureau (bbb) website, where they currently have a 78% positive rating from customer reviews .
ondeck and kabbage both get pretty good customer reviews. both are able to retain customers for multiple loans despite their high apr costs. this speaks volumes to the customer service of each, which we have found to be very good with both businesses. however, past customers rank ondeck a bit higher on overall satisfaction than kabbage’s customers do .
ondeck reduced its gross revenue guidance for the full year to between $ 278 million and $ 288 million, down from $ 320 million to $ 328 million three months earlier .
ondeck has a very active customer service team. you can reach them by phone, email, or online live chat. you have a personal loan specialist you can reach out to at any time who will be familiar with your business’s loan. you can easily connect with your loan specialist or any of the other service options directly through ondeck’s mobile app .
ondeck was founded in 2006 and saw revenue of $ 65 million revenue last year, earning it the number 11 spot on forbes' 2014 america' s most promising companies list .
the interest rates charged by ondeck can be higher than traditional bank loans, but well qualified borrowers can actually see rates as low as 9. 99% . and even with average aprs of ~ 40% , ondeck gets great customer reviews. that might have something to do with the fact that returning customers can qualify for lower interest rates and lower origination fees .
ondeck capital is currently in its quiet period before going public and declined to be interviewed for this story. the company offers loans from $ 5, 000 to $ 250, 000 with terms of between three and 24 months. decisions can be made in
minutes
and payback rates vary. loan rate examples include $. 017 cents on the dollar for a $ 25, 000 loan over six months; and $ 0. 33 cents on the dollar for $ 57, 000 loan over 18 months, according to its website .
amid all the changes, ondeck’s originations of $ 2. 4 billion in 2016 were up 26 percent from the prior year, less than half the pace of growth it posted in 2015 .
¹eligibility for the lowest rates is very limited, available only to businesses with the strongest creditworthiness and cash flows, and typically businesses that have shown an excellent payment history on prior loan products with ondeck .
ondeck expects to generate net revenue of $ 377 million to $ 387 million this year. the analysts’ average forecast is within that range, according to thomson reuters i / b / e / s .
ondeck loans go up to $ 500k with terms of 3 - 36 months. if you have $ 100k + in annual business revenue, a credit score of at least 500, and have been in business for a minimum of 1 year, then you can pre - qualify online today within a few minutes. ondeck is easy to apply for and can fund your loan as quickly as 1 day .
the disappointing results led to a rapid sell - off of ondeck' s shares. the firm' s stock price fell by 29% to $ 5. 90 in after - hours trading monday .
the article goes on to explain that ondeck will earn a fee for originating and servicing loans of up to $ 250k in size on behalf of chase – loans that were “previously considered too small to move the needle at the big bank”. ondeck has made lending to businesses in this market segment economically viable through the use of cutting edge technology. jp morgan is attempting to capture a measure of that success for itself .
the third reason we chose ondeck is loan size and terms. they tend to approve much larger amounts than their competitors, including kabbage. ondeck provides loans up to $ 500k and may approve a loan for as much as 15% of a business’s annual revenues. you can choose repayment terms between 3 – 36 months based on what you plan to use the loan proceeds for and how much you can afford to repay monthly .
i’m quite familiar with them. they are the pioneer in an innovative new funding model for specialty finance companies, whereby they originate loans and then sell them off entirely, without keeping any of the risk or needing to tie up any equity capital in their assets. they receive a ~ 4% origination fee and an ongoing 1% annual servicing fee on the assets. they benefit from a number of unsustainable trends, including :
ondeck is the largest online small business lender in the u. s. since 2007, we’ve issued over $ 8 billion in loans for many business needs including inventory purchase, equipment acquisition, hiring, and general corporate purposes. serving more than 700 industries throughout the country, ondeck has been trusted by over 80, 000 small businesses by providing them with a term loan or line of credit to help them build a growing and thriving enterprise .
small businesses can apply for a term loan or line of credit on our website in minutes and, using our proprietary ondeck score, we can make a funding decision immediately and transfer funds as fast as the same day .
ondeck believes that each and every team member plays an important role in our company’s success. that’s why we strive to provide you and your family with a competitive and comprehensive benefit program with a variety of options and opportunities .
ondeck summary loan amount: $ 5k – $ 500k terms: 3 – 36 months starting rates: 9. 99% expected apr range: 30 - 50% funding time: 1 - 3 days credit score: 500 +
ondeck and kabbage both downplay apr when working with borrowers. instead, they like to focus on the dollar amount that the borrower will have to pay back over the life of the loan, which is called the factor rate .
like ondeck, kabbage offers a very responsive customer service program. both borrowers and applicants can reach out to their support team via phone, email, or online live chat. you can even reach out directly from their app .
so which is it? is lending a good business, where moats and profit pools are durable and one can build billions in equity value … or is it an inevitable cash bonfire when the cycle turns? is credit a critical lubricant for the economy, the more the better, or a creeping contagion to be limited, particularly in the “shadow” banking system? as someone who co - led the seed round in one of the first alternative lending companies (ondeck), and went on to serve as chairman, but who has not invested in a single lender since, i stand somewhat astraddle this issue. after watching closely for ten years, i remain convinced that the leaders of alt lending 1. 0 (specifically lending club, sofi and ondeck), if they can avoid getting acquired due to depressed stock prices, will build enduring platforms. i am most worried about the wave of “me, too” players that came next, alt lending 2. 0. most of them built their business plans on the now shifting sands of temporarily high valuations and cheap capital, and have insufficient differentiation to carve out a durable niche. i am most excited about the alt lending 3. 0 players, who have had the ability to learn the appropriate lessons of the past decade and can both pick their spots and choose a more capital efficient path .
ondeck said that it had $ 44. 6 million in operating expenses, up 33% from the same period in 2015. the firm attributed some of that increase to efforts to license its technology to banks such as jpmorgan chase .
rates are designed for short - term lending and therefore aren' t low - a typical rate for a six - month loan is 20 cents for every dollar borrowed. the average loan is around $ 35, 000, says ondeck .
minimum requirements to apply: many of our financing options require a minimum of 1 year in business and $ 100, 000 in gross annual revenue. ondeck serves over 700 industries, so it’s likely that we’re able to work with you .
“each time i took out a loan with ondeck, the interest rate went down, and i like that i can pay a little off my loan each day. the funding helped me boost my advertising and manage my cash flow. ”
ondeck is a publicly traded company on the new york stock exchange under the symbol ondk. being a publicly traded company gives you the borrower more insight into what the lender is doing because of the legal requirements public companies must abide by .
streetshares is an ondeck and kabbage competitor that offers longer term loans and line of credit products to borrowers with stronger credit profiles. if you want a more affordable loan with a longer term, this could be a good alternative option for you .
ondeck ’s unique business lending technology allows for borrowers to receive a loan decision in a matter of minutes and receive their funds in as little as one business day. instead of ruling out potential borrowers due to flawed personal credit histories, o deck focuses instead on the health of the borrower’s business. if you have less - than - perfect personal credit but are running a successful small business, you are much more likely to get approved for an ondeck loan than you would be at most banks .
however, ondeck places a ucc lien on your general business assets for all loans, and kabbage does so for loans above $ 20k. this means that the lender can seize any and all business assets if you’re unable to pay back the loan .
collateral is an asset or assets that you pledge as security for a loan. most traditional bank business loans require you to put up specific collateral, such as business equipment or machinery, as backing for the loan. neither ondeck or kabbage requires collateral .
at ondeck, we’re reinventing small business financing. we care intensely about each other, our company and the customers we serve, and are committed to making every day count. we are small enough to be nimble and strong enough to make a big impact .
from the very first call, your loan specialist is always there for you. ondeck loan specialists work with business owners like you every day, so they’ll be able to answer questions about business loans, industry challenges, and picking the best financing for your situation .
ondeck reported gross revenue of $ 62. 6 million during the first quarter. while gross revenue was up 11% from the same period a year earlier, it fell short of the $ 66 million to $ 69 million that the firm projected three months ago .
the graph below shows how much money each lender has loaned out from the inception of their business to 2017. both companies have initiated more than enough loans for you to be comfortable with them, but businesses have borrowed twice as much from ondeck as they have kabbage .
as a public company, ondeck is required to regularly report its earnings, and the total value of their business is their market capitalization, which is the value of their current outstanding shares. kabbage is a privately held company so valuations available to the public are rare .
it’s important to understand each aspect of ondeck and kabbage loans in more detail to fully understand how they compare to one another. below we’ll look at loan requirements, terms, and costs to give you a better idea of which lender is the best choice for your business .
ondeck’s mobile app also makes it easy for you to get the answers you need from their customer service team. they provide contact information for your individual loan specialist and information on contacting the general support department. you can email or call their support team directly from the app .
fundbox also offers a no credit check business line of credit with up to $ 100k in financing. if you only need up to $ 100k in financing and don’t want your personal credit to factor into your approval, then fundbox is a good kabbage and ondeck competitor to consider .
developing an advantage in customer acquisition is harder than it might appear. at first blush, it might seem that all it takes is to pick an unloved segment and get to know its idiosyncrasies and tendencies well enough to create a focused channel and tailored dialogue. in practice, progressive and thoughtful traditional lenders like capital one have mined most of the segments large enough to build a business around. the only way to build a durable competitive moat based on customer acquisition is to become integrated into a channel that is proprietary, contextual and data - rich .
we' ve learned a thing or two by working with more than 70, 000 business owners just like you. with ondeck, you don' t just get money in your pocket, you also get credit resources, renewal benefits and, best of all, peace of mind .
ondeck ’s mobile app is designed to help you manage your loan in a single place. the app gives an account overview of where you stand on each loan you currently have in repayment. you can also easily check the status of all account transactions including the loan payments you have made .
flexible terms and rates based on your business’ performance, and not solely personal credit history, may make an ondeck loan an attractive option when compared to a traditional bank loan. we offer a quick response to loan applications by qualifying and evaluating business performance based upon a variety of important performance metrics .
while each company advertises lower possible rates, we expect the typical kabbage and ondeck borrower to pay between 30% – 50% apr. this interest rate could be lower or higher depending on the creditworthiness of the borrower, the amount of the loan, and when the loan is paid back .
ondeck, a digital lender, attributed the worse - than - expected quarterly results to its decision to hold more of its small - business loans on its own balance sheet. that decision came at a time when online lenders are having a harder time selling their loans to investors at favorable prices .
ondeck and kabbage are part of a group of lenders who have come together through the innovative lending platform association (ilpa) to provide a disclosure tool that can help you better understand and compare the true costs of their loans. this disclosure is available after the application process, but before you commit to the loan .
minimum requirements to apply: many of our financing options require a minimum of 1 year in business and $ 100, 000 in gross annual revenue. ondeck serves over 700 industries, so it’s likely that we’re able to work with you. just in case, here is a list of the few industries we can' t serve
even though short - term business loans from ondeck and kabbage have high aprs, keep in mind that you end up paying them off much quicker than you would pay off a conventional bank loan. the total out of pocket cost of a short term loan is often less than the out of pocket cost of a bank loan .
small business owners are busy and not always behind a desk. this is why it’s essential in today’s business world for financing to be available on mobile devices. kabbage and ondeck do this by having their own mobile apps. each app is easy to use and will help you stay up to date with any outstanding loans you have .
overall the smart box tool is a great way to measure your loan costs more accurately and to compare those costs against other options. both ondeck and kabbage currently provide this disclosure after you finish the application process, but before you accept the loan. before you take out an online business loan, look for the smart box disclosures .
while i’ve come to be known as a skeptic on marketplace lending per se, i see a great deal of opportunity in alternative lending more broadly. that said, things are going to get harder before they get easier. valuations are down significantly, and the market volatility combined with a slowing economy will produce challenges with both default rates and access to liquidity. of the alternative lending 1. 0 players, lending club will be a survivor, and a long term leader. while it doesn’t have many of the distinctions i note above as important, it has scale, a brand in the capital markets for producing high quality assets, and an unbelievable management team. in fact, lending club may be the best example of managerial execution in a commodity market since amazon, and like amazon, if they continue on their current path they will figure out a way to create enormous value. ondeck, in a sense, has an easier road ahead. they are very far along an experience curve with regard to the new world of small business lending, and it’s hard to imagine someone catching them. i worry about the 2. 0 originators, which tend to be only slightly differentiated fast followers of either lending club or ondeck; it will be very hard to be anything other than the leader in this shaky market environment .
there are relatively few examples of companies that have gotten all of these elements right, but there are some. oportun provides credit to otherwise highly disadvantaged hispanic borrowers. what a bank sees as a 620 fico, oportun sees as an employed but challenged immigrant with a spotless record of sending remittances home. sub - prime and near - prime lenders like avant and lendup have proven out extremely advanced consumer credit models in unattractive segments, and are working quickly to leverage those models into more mainstream businesses. in small business, ondeck chose a large segment that had historically been attractive but hard to serve. where a bank sees a generic smb with a business owner fico score of 650, ondeck sees a plumber with far higher efficiency than comparable businesses in its zip code, and a glowing set of reviews on angie’s list. this hard work comes at a cost; ondeck’s r & d expenditures, noted above, are characteristic of the successful companies in this category. you have to have real ip to win here .
renaud laplanche out at lending club, share prices tanking at both lending club and ondeck, job cuts at prosper and avant – all prompted by a general slowing of institutional investor demand for marketplace loans. if you follow the industry with even a passing interest, you’d be hard pressed not to have heard it declared dead over the past fortnight .
we keep calling these' alternative lenders,' and we need to stop because demand is up for these loans and they' re becoming mainstream ,
stibel says .
with both lending club and ondeck, i see it as a sort of christmas miracle for small businesses. seeing these companies succeed means small businesses succeed as well .
bluevine offers two main products. one is invoice factoring based on the value of your invoices and the other is a business line of credit with a minimum credit score of 600 +. you’ll want to use bluevine over kabbage or ondeck if you have a low personal credit profile or if you have a lot of outstanding customer invoices (up to $ 5 million) .
kabbage gets good reviews, but not as good as ondeck. it has a 9. 3 out of 10 on trustpilot and an a + better business bureau rating. customers gave good reviews because of the speed of getting the loan. businesses liked the minimal paperwork–you can apply simply by linking your business bank account, amazon seller account, quickbooks account, or other business accounts .
we believe ondeck gives small businesses the best chance of getting approved for a short - term business loan. business owners only need a credit score of 500 +, $ 100k in annual revenue, and at least 1 year of operating history to be considered. many other providers of short - term loans require credit scores upwards of 600 + and up to two years of business history .
a personal guarantee means that you’re personally responsible for payment of a loan. if your business goes under and you can’t afford the loan payments, the lender can make you turn over your personal assets (e. g. your car or home) to pay off the loan. a personal guarantee is common with most small business borrowing and both ondeck and kabbage require a personal guarantee .
ondeck originated $ 569 million in loans during the first quarter, up 37% from a year earlier. the effective interest yield on the company' s loans fell to 34. 5% , down from 37. 6% in the same period of 2015. the percentage of loans that were at least 15 days delinquent fell from 8. 4% to 5. 7% .
most start - up originators focus on the opportunity to innovate in credit decisioning. the headline appeal of new data sources and new data science seem too good to be true as a way to compete with stodgy old banks. and, in fact, they are indeed too good to be true. building new credit models is hard, inherently time - consuming and expensive. fundamentally, you can’t figure out how to distinguish between the “goods” and the “bads” without sufficient “bads”, and “bads” cost you money. credit losses can also take some time to develop, depending on the category, and assets can behave quite differently in different economic cycles. until you have a model that is proven in a highly durable way, your cost of capital will be very high .
loans subject to lender approval. depending on the state where your business is located and other attributes of the loan, your business loan may be issued by celtic bank, a utah - chartered industrial bank, member fdic. your loan agreement will identify the loan issuer prior to your signing. ondeck® is a registered trademark. all rights reserved. 1400 broadway, new york, new york .
i’m quite excited about alt lending 3. 0, made up of earlier stage originators whose strategies line up with the precepts above, and who have gotten the memo about appropriate valuations and capital efficiency. for lending high flyers, as for the rest of the “unicorns”, the notion that high growth and “disruption” justify valuations detached from estimates of future cash production has gone away. companies seeking funding in the lending space today generally have less of the gold rush mentality of the alt lending 2. 0 players, who sought to take advantage of an enthusiastic investing community; instead, they are motivated by legitimately unmet needs and the prospect of meaningful moats. for the first time in a decade, i’m feeling like it’s a great time to be starting a lending company .
that said, i don’t think it matters whether marketplace lending ends up being a viable long - term funding strategy or not. what lending club, ondeck and others proved was that they could effectively compete with banks and build share in their respective categories. the unique way that lending club funded its assets was a feature, not the entire product. as an example, when i backed ondeck originally, it was before marketplace lending (or “peer to peer” lending, as it was originally called) was in vogue, and the assumption was that we would have to follow the traditional asset funding path. that path involves funding initial loans using 100% equity, until the assets are proven out, then layering in leverage over time. this generally starts with a 50% loan - to - value advance rate, eventually climbing to 80 - 90% over time as / if the assets perform. ultimately, you can build a highly redundant funding machine, as ondeck has done, with essentially equal parts balance sheet funding (using high advance rate leverage and an spv), rated securitizations and whole loan sales (the prosaic, old school term for what now goes by the dazzling nom de guerre marketplace lending) .
as an amusing aside, i’ve now been involved in two public panel discussions and multiple private conversations with lending club investors around funding models. it always goes the same way … they say that there is no more resilient model in capitalism than a marketplace model, hence the ineffable beauty of lending club. i then ask how a marketplace could be more resilient than a marketplace plus a securitization conduit plus committed multi - year balance sheet funding (the sofi, avant and ondeck model, among others). following that i am branded an apostate and asked to relinquish my fintech fan club ™ membership card. in point of fact, i consider no fewer than 6 current or past lending club board participants close personal friends, and the visionary investments they made in that company cemented their reputation as great investors. i just think the reason they chose well is the classic venture capital formulation of “great founder, big market”, rather than any notion that lending club discovered the credit equivalent of cold fusion. the fact that lending club was able to scale without using equity in its loans because of the marketplace model was a brilliant strategy, but far from the most important aspect of the success of the company .
the home run is when the credit offer is not only presented in context, but also can be structured with the benefit of relevant data. fundbox lends to small businesses by advancing them payment on receivables, in what is akin to a traditional factoring transaction (though without claim to the asset). they integrate with online accounting systems like quickbooks, which not only provide them access to customers, but do so in a way that allows them to learn a great deal about the creditworthiness and demand for capital of their prospective customers. bluestem brands has a business called paycheck direct, in which they integrate with payroll systems to provide access to an e - commerce catalog on credit to low fico employees; by having access to the payroll system for both underwriting and collections, they have a massive advantage over payday lenders .
instead of having to meet with a loan officer toting income tax records, personal finance records and other paperwork, applicants upload 90 days’ worth of cash flow data. from there, ondeck grabs personal and business credit history from bureaus like experian as well as scanning publicly available records for past lawsuits. it also considers the health of an applicant’s industry and region, and checks online reviews from sites like yelp and google places .
in addition, kabbage loans have added flexibility because they work like a line of credit. you get a maximum amount of money that you can draw from as needed, and you only pay interest on money that you use. as you pay off what you borrow, those funds become available to you again (like a credit card). ondeck also offers lines of credit, but the qualification requirements are stricter than kabbage .
“i remember the process being smooth and straightforward, it can be incredibly stressful; fortunately, ondeck had quick questions and quick responses. i could see how much financing i was approved for and what that meant [ regarding payback ]. i had the opportunity to review everything before i took the loan. the speed and efficiency of the process were incredible. i was able to introduce my recoverywear line and increase sales 4x over. ”
ondeck capital is a non-bank small business lender based in new york city , with locations in denver , colorado , and arlington , virginia . ondeck uses proprietary technology and credit models to evaluate the financial health of small businesses . as of april 2016 , ondeck has funded over $ 4 billion to more than 40,000 small business customers in the us , australia , and canada and is publicly traded on the new york stock exchange ticker symbol : nyse : ondk . ondeck capital seeks to extend loans and lines of credit to new small business customers by building strategic partnerships with larger established banks such as jp morgan chase and others . 
ondeck capital is a non-bank small business lender based in new york city, with locations in denver, colorado, and arlington, virginia. ondeck uses proprietary technology and credit models to evaluate the financial health of small businesses. as of april 2016, ondeck has funded over $ 4 billion to more than 40,000 small business customers in the us, australia, and canada and is publicly traded on the new york stock exchange ticker symbol: nyse: ondk. ondeck capital seeks to extend loans and lines of credit to new small business customers by building strategic partnerships with larger established banks such as jp morgan chase and others.
ondeck capital is a non-bank small business lender based in new york city, with locations in denver, colorado, and arlington, virginia. ondeck uses proprietary technology and credit models to evaluate the financial health of small businesses. as of april 2016, ondeck has funded over $ 4 billion to more than 40,000 small business customers in the us, australia, and canada and is publicly traded on the new york stock exchange ticker symbol: nyse: ondk. ondeck capital seeks to extend loans and lines of credit to new small business customers by building strategic partnerships with larger established banks such as jp morgan chase and others.