OnDeck, an online lender for small businesses, has nailed down a partnership with HomeAdvisor that delivers access to the platform’s more than 200,000 home improvement, maintenance and repair professionals.
Through the partnership, home service professionals and small businesses on the HomeAdvisor platform can apply for either an OnDeck loan, with amounts ranging from $5,000 to $250,000, or an OnDeck line of credit, from $6,000 to $100,000. APRs are as low as 11.89% for a loan and 10.99% for a line of credit.
Once OnDeck approves an application, money can be deposited into a borrower’s account as soon as the same business day. For a business to qualify, it must have been around for at least a year, and the borrower must have a personal FICO credit score of at least 600. OnDeck’s typical customer has been in business for at least three years, has annual revenue of $300,000 or more and has a personal FICO credit score of 650 or more.
“Across the U.S., home service activity is booming, which creates an opportunity for home pros and their businesses to grow and thrive,” Bryan Ellis, executive vice president of operations at Denver-based HomeAdvisor, said in a Feb. 22 news release. “For pro businesses to continue to grow, access to capital is essential.”
Borrowers use money from OnDeck for business expansion, equipment purchases, payroll, marketing and advertising, and other needs.
“Demand for contracting and building services has been less impacted than other industries during the pandemic, and we are happy to offer these professionals a solution to manage their operations and invest in their continued growth,” Kelly Jordan, head of marketing at OnDeck, said in an interview.
New York City-based OnDeck has provided more than $13 billion in financing for small businesses in the U.S., Canada and Australia since it was founded in 2006. OnDeck is part of Chicago-based fintech company Enova International. In December, OnDeck’s and Enova’s small business products originated over $120 million in loans, up 26% from the previous month.
Last year, publicly traded Enova purchased publicly traded OnDeck in a cash-and-stock deal valued at $160 million. Before the acquisition, OnDeck had projected gross revenue of $465 million to $485 million for the 2020 budget year.
With OnDeck now under its umbrella, Enova is further capitalizing on increasing demand for online lending in the small business sector.
According to Fundera, a small business lending comparison site owned by NerdWallet, reported that 43% percent of small businesses applied for a loan in 2019. Fundera data shows OnDeck’s maximum borrowing amounts are lower than the average small business loan from a bank ($633,000) and the average loan backed by the U.S. Small Business Administration ($107,000).
In 2019, nearly one-third of small businesses that applied for a loan did so through online lenders like OnDeck, according to Fundera.
“This small business lending statistic has grown substantially — up from just 19% — over the past three years,” Fundera noted in 2020.
An article posted on Business.com predicts the online lending trend for small business loans will keep growing.
“There’s a good chance that the small business lending space won’t ever go back to its pre-pandemic configuration. That’s because each day, a bumper crop of new … fintech innovators are bringing new approaches to lending to [the] market, and the incumbent businesses look like they see the writing on the wall,” the article states.
From obtaining loans to engaging with customers online, fintechs report a surge in their client base as small to midsize businesses that relied on more traditional lending methods had to switch gears when the pandemic forced more digital transactions and fewer in-person transactions. LendingFront, a New York-based fintech operating system, reported 100% growth in clients from 2019 along with 40% growth in loan applications processed.