Compare Kabbage vs. OnDeck business financing

Maybe this situation sounds familiar: Your business is doing well, but you can’t seem to push it into the next level. Taking out a business loan could give you the boost you need to increase your inventory, pay for advertising or set up a website that kicks things up a notch.

The good news: The Internet’s changed the game when it comes to business financing. Which means you’re not stuck with the rigid, slow process you’ll get with your local bank.

Instead, you’ll find a range of online providers working hard to earn your business with fast decisions that look beyond your credit score when deciding how much they can provide. We take a look at how the non-bank business lenders, Kabbage and OnDeck, compare.

Winner snapshot

Funding speed	Tie	Tie
Reputation		Winner
Lending limits		Winner
Costs		Winner
	Read Review	Go to site Read Review

Overview of Kabbage and OnDeck

When it comes to the basics, Kabbage and OnDeck offer similar products: financing with low rates and online applications for fast funding to qualified businesses. Both consider your business’s cash flow and performance — not just your credit score — when coming to a decision on your loan amounts and terms.

Founded in 2008, Kabbage can approve you for a business line of credit for ongoing funding without tapping into your cash flow. You can often get a decision on your application in minutes, with loans available in all 50 states.

OnDeck was founded a year earlier, and it too works to help small businesses. But rather than limiting your options to a line of credit, OnDeck also offers business term loans of up to $250,000. Like Kabbage, OnDeck’s services are available nationwide and offer quick decisions with funding typically available in one business day.

Loan requirements

Both online lenders have some overlap when it comes to eligibility: Your business must have been up and running for at least a year, for example. But OnDeck requires a higher minimum annual business revenue for approval, which could shut out smaller businesses.

Which lender can get me money faster?

Kabbage and OnDeck offer similar online applications that are easy to complete for nearly instantaneous decisions. Their differences come down to funding turnaround — or when you can actually start accessing your approved funds after approval.

• Winner: Tie

  You’ll find easy-to-complete applications, quick decisions and fast funding with both online lenders.

Which has a better reputation?

• Winner: OnDeck

  OnDeck wins this category by a hair: Its average score is marginally better than that of Kabbage.

How much can I borrow with each lender?

Applying with either lender will not affect your credit, which means that you’re free to see what you qualify for, adding your potential rates and terms to your list of factors to weigh when comparing your options.

• Winner: OnDeck

  While OnDeck’s lines of credit top out at $100,000 — $50,000 less than what you can get with Kabbage — you might want to see whether a business term loan of up to $250,000 might work better for your business needs.

Which lender offers more affordable financing?

For this category, it all comes down to breaking down heavy marketing. Technically, Kabbage doesn’t charge “interest” on its lines of credits. Instead, your loan is subject to a complicated fee structure that’s broken down by months and loan amount percentages. OnDeck’s a bit more transparent about what you’ll pay, expressing its fees more traditionally as APRs.

• Winner: OnDeck

  OnDeck offers business lines of credit and term business loans. Not to mention a more transparent way for you to fully understand what you’re looking at as far as interest and fees when repaying the loan.

Case study: Food truckin’: Chris takes out a $10,000 line of credit

Chris has run his food truck for just over 14 months when he notices that his sales take a major dip over winter since fewer people want to eat outside when it’s cold. He wants a 12-month $10,000 line of credit to make sure he can pay for supplies over the slow season.

Bypassing the hassle of his bank, he compares lines of credit offered by nontraditional online lenders Kabbage and OnDeck, looking at their fees and ease of use.

	Kabbage	OnDeck
Fees	1.5% to 10% fee of the principal for first 6 months and 1% of remaining principal for last 6 months.	$20 monthly maintenance fee.
Ease of application	Easy online application. Doesn’t require a credit check until after contract acceptance.	Easy online application. Considers your cash flow in making its lending decision.

Chris finds that both lenders offer easy applications with fast turnaround, so he instead focuses on what he could face in interest and fees. With Kabbage, Chris first needs to break down his $10,000 into 12 monthly payments — about $835 a month. He’s finally able to figure out that he could pay from $150 to a whopping $1,000 a month in fees on top of his already high monthly payment for at least the first six months of his loan, which could drop to $50 or less for the remaining six months.

With OnDeck, Chris could pay $240 in fees over the life of the loan, along with up to $1,400 to $4,000 in interest, depending on how much he withdraws from his line of credit.

Chris ultimately makes his decision based on transparency, choosing OnDeck for its easy-to-understand rates and fees that make it easy to predict what he could end up paying over the life of his loan.

Compare other business loan lenders

Bottom line

Kabbage and OnDeck are neck and neck when it comes to small business funding. Both are easy to use and can get you money quickly.

It can be easier for you to get short-term working capital with Kabbage, which doesn’t require as much business revenue to qualify. But given a complicated fee structure, it can also be difficult to know exactly how much you could pay over the life of your line of credit.

If you’re looking to borrow more than $250,000 for your business, OnDeck could be a better choice, but you’ll need stronger personal credit and higher business revenue for approval.

Ultimately, when looking for small business financing, it could help to compare your full range of options with other providers before making a decision.

See how other top business financing providers compare

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Frequently asked questions

• Is it safe for me borrow through Kabbage or OnDeck?

  For safety, you’ll want to look at both user ratings and any technological safeguards a lender puts in place to protect your personal and financial information.

  Kabbage is a safe, trustworthy direct business lender accredited by the Better Business Bureau since 2008. Its site is SSL encrypted and your funds are FDIC insured.

  Like Kabbage, OnDeck is a direct lender with high user approval and accredited by the BBB since 2014. OnDeck uses Transport Layer Security encryption to protect your personal and financial information on its site.

• What if my business is newer — in business for under a year?

  With research, you can find lenders willing to provide loans to businesses in operation for as little as six months, but these loans can come with high interest rates or require collateral. Another option is a personal loan, provided you meet the lender’s eligibility.

• What's the difference between a line of credit and a loan?

  Term loans and lines of credit differ in a few key ways.

  With a term loan, you’ll start paying interest toward the entire amount you borrow from the get-go. With a line of credit, you’ll have access to funds up to a specified limit, and you pay interest only on the money you withdraw from this line of credit.