Kabbage vs OnDeck Capital

If you’ve been searching for lending opportunities to build and grow your business online, the odds are pretty good you’ve come across both the Kabbage and OnDeck lending organizations.

Non-traditional lenders that move a lot faster than local banks and credit unions, both Kabbage and OnDeck give you an opportunity to get your hands on cash and capital when you need it most – all without requiring you to have picture-perfect credit or a mountain of collateral, either.

Both of these platforms have a simple and straightforward application process that minimizes paperwork. They also have skyhigh approval rates compared to traditional lenders, the ability to fund their loans within 24 hours in most situations, and also are a lot more lenient towards new businesses and startups.

Of course, there are a bit of trade-offs when you’re looking to take advantage of Kabbage and OnDeck. Most of these have to do with the higher borrowing costs you’ll find associated with these organizations, but we’ll dive a little bit deeper into that in just a moment.

In this quick guide, we’ll touch on all of the advantages (and some of the drawbacks) for moving forward with Kabbage or OnDeck. At the end of the day, you will be able to use all of this inside information to better inform your decision, ending up with the right nontraditional lender for your business needs.

 

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Let’s get to it!

 

A QUICK BREAKDOWN OF KABBAGE

Right out of the gate, Kabbage is going to be the better option for entrepreneurs that need a lot of quick cash for working capital in their business. It’s also going to be the better service for those that already have reasonable credit scores, especially anything above 600 or so.

Multiple lines of credit can be taken advantage of through the Kabbage service, though each individual draw will require that you repay that singular loan over either a six-month block of time or a 12 month block of time. Individual lines of credit can range from anywhere between $2000 and $250,000, and as we mentioned above you can usually get access to the entirety of your line of credit within 24 hours or so.

The minimum qualifications for being accepted with Kabbage are pretty lenient, particularly when you stack them up against traditional lenders.

There aren’t a lot of banks or credit unions that will offer loans between $2000 and $250,000 to individuals and businesses with credit scores around 500. Kabbage does this every day. Your credit score can be a whole lot lower than 500, however, or you’ll have a much more challenging time gaining access to this funding – though it won’t be impossible.

Secondly, you need to have already been in business for at least 12 months and have annual revenues of at least $50,000. These are the only real nonnegotiable qualifications for approval here at Kabbage, and should be relatively simple and straightforward to meet.

Kabbage also likes to see that you have a legitimate business checking account established, though using online payment processors like PayPal and the QuickBooks Business account will be accepted as well.

 

Application process

 

As far as the actual application process goes, you’re looking at a start to finish timeline of about 10 minutes.

You don’t have to furnish a whole bunch of documents, you don’t have to “prove” your status as an entrepreneur outside of the details we mentioned above, and for the most part you’ll be able to breeze right through the application.

Another big bonus of moving forward with Kabbage is that you’ll be able to get an instant approval or denial through this service.

It’s only going to take 10 minutes from front to back, and even if you are denied your initial loan application from Kabbage you can reach out to them directly or more insight. Plenty of entrepreneurs have reported being able to gain a loan just by contacting Kabbage directly, even after being declined.

 

Access to funds

The funds that you are approved for (again anywhere between $2000 and $250,000) will become available almost instantly or will become available within the next two or three days – depending upon the method of transfer you have selected.

Choose a direct transfer to your bank, either through your account and routing number or through your business debit card, and you’ll see those funds almost instantly after your approval. You can also speed things up significantly by choosing an instant transfer to your PayPal or QuickBooks Business account, too.

The option to choose a paper check is another way to go for entrepreneurs that are more comfortable with this approach. Obviously, you’ll have to wait a couple of business days for the mail to move your check to you – but those funds will be available instantly upon your deposit.

 

Cost

As we highlighted above, the total cost of nontraditional lending with a service like Kabbage is always going to be a bit more expensive then with your nontraditional lenders.

Lines of credit from this organization are going to set you back anywhere between 24% APR and 99% APR, depending upon your specific situation, credit score, credit history, and the amount of funding you are looking for.

Repayment timelines are anywhere between six months or 12 months. Each month you are going to have to pay a percentage of the amount you have borrowed as well as a fee of between 1% and 10% of the total still outstanding.

Six month plans have a higher fee for the first 60 days (upwards of 10%) before it drops down to a 1% fee for the remaining four months of that term. Twelve-month plans have higher fees for the first 180 days (upwards of 10%) before dropping back down to one person for the remainder of the year.

It is nice to know that you don’t have to worry about any early repayment fees, however. In fact, repaying your loan early can help you save quite a bit of money with Kabbage. You’ll see the biggest savings if you are able to pay off your loan within the first two months or the first six months, depending upon your plan.

At the end of the day, OnDeck is best for getting your hands on “working capital”, covering your cash flow needs, and making sure that your payroll and inventory funding has been secured for six months or a year.

 

A QUICK BREAKDOWN OF ONDECK

OnDeck is very similar to Kabbage in a lot of ways, but more than anything else it’s going to be the most advantageous plan for entrepreneurs and business owners looking for more than $250,000 in cash and capital.

OnDeck is definitely a platform that has been designed to help entrepreneurs with the expansion and growth of their business.

We live in the middle of the most exciting and competitive business environment human history has ever seen.

Getting access to capital in a hurry gives you the ability to shoot past your competitors that are hamstrung with traditional lenders that are inevitably slow moving, gun shy, and more than a bit reticent about handing over large sums of cash to less than picture-perfect track record entrepreneurs.

OnDeck puts you back in control of your business. Their loans range from anywhere between $5000 and $500,000, putting a large lump sum amount into your account at closing while giving you the ability to repay back your loan each day or weekly for a block of time that ranges between three months and 36 months.

Any of the credit lines available from OnDeck that hit $100,000 or above can be repaid weekly over a six-month block of time as well. This is perfect for entrepreneurs that want to gain access to some quick capital for rapid expansion, knowing that they are going to be able to repay these loans through the growth of the business that they make possible.

 

Qualifications are pretty simple and straightforward at OnDeck.

For term loans will need to have been in business for at least 12 months and have annual revenues of at least $100,000. This makes OnDeck loans a bit more challenging to get access to then Kabbage loans, but when you’re talking about doubling the amount of money they make available it’s easy to see why.

Personal credit scores of 500 or better are required as well, though entrepreneurs that have had personal bankruptcies within the last two years are going to be immediately disqualified.

Entrepreneurs looking for a line of credit will have to be the majority owner of the business, possess a personal credit score of at least 600, and have the same $100,000 minimum of annual revenue and 12 months in business requirements as well.

On average, OnDeck clients have a credit score of about 660 or higher, revenues that go beyond $450,000, and usually have at least seven years of continuous business operation. You’ll also have to sign a personal guarantee, though lines of credit from OnDeck will not require a lean to be put on your business assets, either.

 

Application process

You’re looking at another speedy application process here at OnDeck.

The entire process will take the same 10 minutes at OnDeck that it does at Kabbage, giving you the ability to move through the application process 100% online at any point in time, day or night.

You’ll receive an answer about your application approval or denial just as soon as you finish things up. You won’t need a lot of paperwork, you won’t need a mountain of data, and you won’t have to wait very long to find out whether or not you get the green light for the funds you are after.

If you’d like to call in at any point in time during your application, or handle the entire application over the phone, you have the opportunity to do that as well through OnDeck.

 

Access to funds

Any loan under $100,000 will almost always be funded directly to your bank account of choice inside of 24 hours. You can give your bank account and routing number to speed things up, though you’ll also be able to fund your business checking account directly through your business debit card as well.

Loans over $100,000 usually take a little bit longer than that to hit your bank account, though you’ll almost always see your money inside of 72 hours. This is true even if you are going for the maximum of $500,000 on a line of credit.

Funding will have to be deposited into a bank account at OnDeck. You can’t use PayPal or QuickBooks Business the way you can with Kabbage.

 

Cost

The APR term loans through OnDeck will range from anywhere between 9% and 99%, which is pretty close to the kind of APR you’re likely to see from Kabbage as well.

The difference between these two services, however, is that OnDeck charges in origination fee of 2.5%. 2.5% of your total loan figure will be added immediately to your first charge from OnDeck, which is a bit of a barrier of entry to getting your hands on the cash and capital you need right away.

On all secondary loans through OnDeck you will see the originator fee dropping from 2.5% to 1.25%, with all subsequent loans after that second loan carrying zero originator fee whatsoever. If you continue to take advantage of the nontraditional lending services from OnDeck they get cheaper and cheaper, which is nice to see.

You’ll never have to worry about early prepayment penalties when you move forward with OnDeck, either. In fact, OnDeck makes a number of prepayment choices available that allow you to dramatically reduce your interest rates. OnDeck does require that you set up an auto payment program through your business checking account for approval, so scheduling larger payments will speed up your repayment process while getting you a big break in the long haul, too.

The lines of credit OnDeck makes available have annual APR’s of between 14% and 40%. You’ll have to repay each individual line of credit weekly over a six-month block of time, and there are no prepayment penalties here, either.

All things considered, the loans that you can take advantage of from OnDeck are probably best for entrepreneurs that need a large injection of capital right out of the gate. These kinds of loans are best for growing and building a business rather than being used as a cash flow protection service, which is something you’ll want to consider before you choose to move forward with either OnDeck or Kabbage in the future.