OnDeck vs. Credibly: Which small business lender is right for you?

OnDeck and Credibly are online lenders focused on short-term business loans, both offering repayment terms of up to 24 months. OnDeck loan requirements are more lenient because OnDeck accepts less revenue of $100,000 per year.

Yet Credibly’s business loan options are wider than OnDeck’s limited two business loans. Credibly also offers loans directly or through a partner network. So, even if Credibly doesn’t fund your loan, the lender may still be able to help you secure financing. Let’s look at each lender’s business loan choices and who will best qualify for them.

OnDeck vs. Credibly at a glance

OnDeck and Credibly both provide fast online business financing, making loan decisions within hours to help you know whether or not you’re approved. But the major differences are that Credibly offers significantly more funding options with wider borrowing ranges than OnDeck. OnDeck focuses on short-term loans and business lines of credit, offering greater accessibility for low-revenue businesses.

*Credibly lists a $180,000 minimum annual revenue on its website, but a spokesperson stated the minimum as $300,000.

OnDeck business loans

OnDeck loans include a term loan and business line of credit, both offering payment terms of up to 24 months. The lender is accepting of fair credit borrowers with at least a 625 personal credit score. It keeps its loan sizes low, which is helpful for small businesses covering small expenses as low as $5,000. Not all traditional banks will approve loans that low.

If you need financing immediately, OnDeck offers same-day funding if you’re requesting a business loan of $100,000 or less. If you apply on a weekday morning, you should see funds in your account the same day as long as you get approved for the loan. Same-day funding isn’t offered in every state. Outside of this offering, you can expect to get a loan decision and receive funds within two to three business days.

Pros

• Relaxed eligibility requirements
• Same-day funding available
• Accessible term loan sizes

Cons

• High interest rates
• Limited loan options
• Charges origination fees up to 4%

Credibly business loans

Credibly business loans are offered either directly from the fintech itself or through its lender network, giving it the ability to offer multiple loans. Business owners can choose term loans, business lines of credit, merchant cash advances, equipment financing or SBA loans.

Both its working capital loan and merchant cash advance accept bad credit borrowers with a 550 minimum personal credit score, six months in business and $180,000 in annual revenue, according to its website. Despite these seemingly relaxed requirements, Credibly prefers small businesses with at least three years of experience, $540,000 in annual revenue and personal credit scores of 675.

You’re also more likely to be approved if you work in the restaurant, contract work, electrical, repair shop or healthcare office industries.

Pros

• Variety of business loans
• May accept bad credit
• Funds within 24 hours

Cons

• High revenue required
• Potentially high factor rates
• Inconsistent loan details

How to choose between OnDeck and Credibly

Both OnDeck and Credibly offer online business loans with short repayment terms and may accept subprime borrowers. Despite low minimum requirements to apply for some loans, Credibly prefers a strong business experience and credit history.

OnDeck is more welcoming to businesses with fair credit and low revenue. But overall, you’ll get more options if you go with Credibly business loans versus OnDeck’s loans.

Choose OnDeck for flexible loan options

Both of OnDeck’s business loans offer repayment terms of up to 24 months, more flexible than many of Credibly’s loans. With an OnDeck line of credit, you can choose terms from 12, 18 and 24 months. Or choose terms between 18 to 24 months for its short-term loan.

OnDeck is also more flexible in terms of loan requirements. OnDeck accepts business owners with personal credit scores of 625, one year in business and $100,000 in annual revenue.

By contrast, Credibly’s ideal business requirements are $540,000 in annual revenue, three years in business and a 675 personal credit score or higher. If you’re getting a loan directly through Credibly, you can choose a term loan with payments from six to 15 months. It also offers a merchant cash advance with three- to 15-month payment terms.

Choose Credibly for variety of small business loans

As a direct lender and loan marketplace, Credibly offers seven different business loan options. Its lineup rivals what you can find at a traditional bank, which is known for its variety of business loan options.

You can get both its short-term loan and merchant cash advance directly through Credibly. These offer loan amounts up to $400,000 and repayment terms up to 15 months. Both loans also charge factor rates instead of interest rates, though you get a 20 percent discount if you pay off the loan early. That’s a significant benefit since factor rates get applied to the entire loan upfront and typically require you to pay back the entire fee regardless of your payment schedule.

Alternatives

OnDeck and Credibly business loans won’t cover every funding need since they both serve specific small business sectors. If you need fast financing and like the accessibility of online business loans, you could choose Funding Circle. It provides term loans with payment terms of up to seven years. It has relaxed revenue standards of at least $50,000 yearly, but you’ll need fair credit and at least two years in business to qualify.

For a more traditional banking option, you could try Bank of America, which provides a variety of business loans, from term loans to multiple lines of credit to equipment financing. Most of its low-interest business loans need strong credit — usually a score of 670 or higher — and at least two years in business. But startups can get their credit-building business line of credit even with revenue of just $50,000.

Another alternative to these business loans is a business credit card with rewards designed for the spending categories you use the most. Many offer rewards for your business purchases, hotel or flight bookings or as a flat rate across all your purchases. The best business credit card can act as a short-term loan that won’t charge interest as long as you take advantage of the card’s grace period of 21 days or longer and pay the balance in full each month.

SBA loans

SBA loans offer the perfect blend of low interest rates, high possible funding amounts and long payment schedules. These loans are partially guaranteed by the Small Business Administration, making them less risky for the SBA-approved lender.

The most popular SBA program is the 7(a) loan, which small businesses can use for nearly any purpose like expanding the business, buying equipment or paying operational expenses. Small businesses with specific work contracts or seasonal dips can tap the SBA’s CAPLines, which are its business lines of credit. Both SBA 7(a) loans and CAPLines can finance up to $5 million.

Unfortunately, SBA lenders often keep lending criteria strict. If you don’t have strong credit or you own a startup business, you could go for an SBA microloan or Community Advantage loans. Both serve disadvantaged businesses through nonprofit or community-based lenders. The difference is that SBA microloans offer loans up to $50,000 to borrowers, while Community Advantage loans offer funds up to $350,000 through a variety of community-based lenders like Community Development Financial Institutions (CDFIs).

Bottom line

As online lenders, you can expect to get funding quickly whether you apply through OnDeck or Credibly. If you’re in the market for a short-term business loan or business line of credit, you might want to get prequalified with both to see which gives you the best loan offer.

Both lenders charge potentially high fees or interest rates — OnDeck starting interest rates are 29.90 percent, while Credibly charges factor rates, which are known for keeping borrowing costs high. To differentiate between the two lenders, OnDeck provides more accessible business loan requirements. Credibly is the better choice if you’re not sure which business loan is right for you and need options.

You can also compare with other small business loans to make sure you’re getting a competitive loan offer.

Frequently asked questions

• What credit score do you need for an OnDeck loan?

  OnDeck requires a minimum personal credit score of 625, which is common for an online lender but lower than traditional lenders require. Some online lenders accept bad credit scores as low as 500 if you’re looking for a bad credit business loan.

• Does Credibly do a hard credit pull?

  Credibly’s online prequalification uses a soft credit pull for loans offered through the fintech lender. But Credibly or partner lenders may switch to a hard credit check when finalizing your loan offer.

• Are there short-term loans for startup businesses?

  You can find many business loans for startups with short terms, particularly through online lenders. Online lenders tend to keep more relaxed requirements, such as requiring just six months in business. Some SBA lenders may also offer startup SBA loans, which are partly guaranteed by the Small Business Administration.