Kabbage vs OnDeck: Which is Best for Your Business?

Kabbage vs OnDeck

Kabbage and OnDeck are two good options for businesses looking for a lender that offers speed and convenience. However, often we are confused while choosing the right one when it comes to Kabbage vs OnDeck for small businesses.

Qualifying for a loan at a traditional bank takes time and requires excellent credit and, in some cases, collateral. These two online business lenders have a simplified application process with minimal paperwork, higher approval rates, and funding available as soon as the next day. In exchange, Kabbage and OnDeck charge higher interest rates than banks. Here in this article, we will look into the salient features of Kabbage vs OnDeck.

Salient features of Kabbage?

If you need cash for working capital, Kabbage is a good option.

  • Have fair personal credit.
  • Prefer to pay on a monthly basis.

Kabbage provides credit lines, with repayments spread out over six, twelve, or eighteen months. The credit lines range from $2,000 to $250,000. (Check out our Kabbage review.)

Kabbage requires the following minimum qualifications: Kabbage requires a minimum credit score of 640, at least one year in business, and at least $3,000 in monthly revenue.

You will also need a business checking account or an online payment platform like PayPal or QuickBooks.

Speed: The online application process can be completed in under 10 minutes. There are no documents required, and you will typically receive a loan decision the same day.

Depending on how you receive the cash and how quickly Kabbage can verify your business data and bank account, you may receive funds immediately or within a few days. A direct transfer to your bank allows you to receive funds using your debit card or an instant transfer to your PayPal account. You can also apply for a Visa credit card tied to your Kabbage credit line.

Costs: Kabbage lines of credit have estimated APRs ranging from 9% to 36%.

You pay a percentage of the borrowed amount — the principal — plus a fee each month.

Monthly fees start at:

  • For six-month loans, the interest rate ranges from 0.25 per cent to 3.50 per cent.
  • For 12-month loans, the interest rate ranges from 0.25 per cent to 2.75 per cent.
  • 0.25 per cent –2.50 per cent for 18-month loans

Best applications: Kabbage is an excellent choice for obtaining working capital and covering day-to-day expenses such as payroll and inventory.

Salient features of OnDeck?

If you need quick cash for a large expansion or working capital, OnDeck is a good option.

  • More than $150,000 must be borrowed.
  • Are willing to make weekly or daily payments.
  • The term loans offered by OnDeck range from $5,000 to $250,000 and provide a lump sum of cash at closing that you repay daily or weekly for up to 24 months.
  • Credit lines are available for up to $100,000 and are repaid weekly.

To qualify for a term loan, you must have been in business for at least one year, earn at least $100,000 in annual revenue, have a personal credit score of 600 or higher, and have had no personal bankruptcies in the previous two years.

You must be a majority owner of the business and have a personal credit score of at least 600 to qualify for the credit line. The annual revenue and time in business requirements are the same as for OnDeck’s term loans.

A personal guarantee will be required for both products. However, unlike term loans, OnDeck’s lines of credit do not require a lien on your company’s assets.

Speed: The application process is straightforward and takes approximately 10 minutes. You get a loan decision in minutes and funds as soon as the next day for loans and instantly for credit line withdrawals of $1,000 to $10,000. You can apply online or over the phone. In our OnDeck step-by-step guide, you can learn more about the application process.

Costs: OnDeck’s term loan APRs range from 11 per cent to 61.9 per cent, with an origination fee of 2.5 per cent to 4 per cent of the total loan amount. The fee is reduced to 1.25 per cent to 3 per cent for your second loan and 0 per cent to 3 per cent for all subsequent loans.

There are no prepayment penalties, and OnDeck provides prepayment options that may include interest rate reductions. Payments are automatically deducted from your business bank account.

The APRs on OnDeck’s credit lines range from 11% to 61.91%. Each individual draw on the credit line is repaid weekly.

OnDeck’s term loans are best suited for business owners who need a large sum of money to buy equipment, open a new location, hire employees, or make a large inventory purchase. Its lines of credit are an excellent choice for businesses in need of working capital or assistance with unexpected costs.

The Primary Distinctions Choosing between  Kabbage vs OnDeck.

Although both the lending companies perform nearly identical functionalities, they have different markets of targets and with loan products different services and legal terms. The most notable Kabbage is different because it is a completely automatized lender. On the other hand, for a slightly more manual application process, a phone call with a dedicated loan advisor is all that is required by OnDeck.

While it may appear to be a minor distinction, it can have a significant impact: OnDeck offers a personalized approach to its customers, whereas Kabbage is purely algorithmic. You connect the borrower’s account or software to Kabbage, and it is an automatized process based on additional criteria such as your credit score, annual revenue, cash flow, etc.). It is neither an advantage nor a disadvantage; it is simply a totally nuanced modus operandi

Both lenders’ markets of targets are also different. OnDeck primarily serves businesses with a strong track record and a high credit rating. Kabbage, on the other hand, has a broader range of applicants, whereas OnDeck provides larger loan amounts as compared to Kabbage, but the lending process and the eligibility criteria are more difficult to meet.

A significant distinction is that Kabbage charges the borrower on a monthly basis, whereas OnDeck charges are deducted per day or week. Depending upon the business, it can be either advantageous or a huge disadvantage. With such repayment schedules, the borrowers must ensure sufficient fund balances in their accounts to avoid any late payment penalties. The advantage is that in some cases, the repayment schedule on a daily basis is far superior for credit reporting than weekly or monthly.

In Conclusion:

In this article,  Kabbage vs OnDeck.we have discussed the advantages and disadvantages of both loan lenders in detail.

Kabbage has a business credit line with repayment terms of 6 months, a year, or 18 months, whereas OnDeck has a 12-month repayment term for a credit line and a 24-month repayment term for term loans. A credit line for the business can be used for whatever purpose you require. The main advantage is the credit line is always open in case anything should happen.

OnDeck offers both a credit line loan and a term loan, whereas Kabbage exclusively offers a business credit line. A credit line is not the same as a term loan. Term loans are those that have a set repayment time. You might want to borrow in order to pay for restaurant equipment, for example. You might be able to secure a $30,000 term loan with a set payback schedule upfront.

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