There comes a time when your business is doing all right, but it could be doing a bit better if you just had some extra capital. The good news is that thanks to online lending, you’ve got more options than ever.
We compare online lenders OnDeck and LendingClub to help you find the best choice for your business needs and budget.
OnDeck offers secured business term loans and lines of credit at breakneck speeds online. It has relatively lax eligibility requirements, calling itself an alternative to banks and other traditional lenders.
Its quick turnaround can make it a solid option for business owners facing emergency expenses they aren’t prepared to pay off. However, its overall cost might make you look elsewhere.
LendingClub
LendingClub is an online peer-to-peer lender that connects you with funding, rather than provide the cash itself. It takes a hair longer to get funding from LendingClub than OnDeck, typically a few business days. And its lower rates and fees make it a bit more affordable — without weekly repayments.
It’s a bit harder to qualify for a LendingClub loan, but it’s still easier than getting a loan from a bank. You also don’t have to provide collateral for loans of under $100,000.
First, am I eligible?
More businesses are likely to qualify with OnDeck than LendingClub. A potential drawback is that OnDeck’s loans are secured by a general lien on your business, whereas LendingClub loans of up to $100,000 require no collateral.
Putting down collateral may initially sound risky, but securing your loan can help you get lower rates — especially if you have bad credit.
OnDeck
To qualify for a business loan with OnDeck, you must meet the following minimum requirements:
Personal credit score of 500+
Business age of at least one year
Annual revenue of $100,000+
You’re willing to provide a general lien on business assets
LendingClub
To qualify a business loan with LendingClub, you must meet the following minimum requirements:
Fair or better personal credit
Business age of at least two years
Annual revenue of $75,000+
You own at least 20% of the business
No recent bankruptcies or tax liens
You’re willing to provide a lien on business assets for loans of $100,000 or more
OnDeck offers lightning-speed loans, sometimes resulting in funding within 24 hours of approval.
LendingClub
While still fast, LendingClub typically disburses funds within a few business days.
Winner: OnDeck
LendingClub’s turnaround is faster than most lenders, but it’s hard to beat OnDeck. You could prequalify with OnDeck in minutes and receive funding the next day.
Which has a better reputation?
OnDeck
OnDeck is accredited by the Better Business Bureau and gets an A+ rating. It also does well when it comes to customer reviews. Nearly 1,000 Trustpilot users give it an average 9.4 out of 10, with 92% of its users rating OnDeck as “Excellent.”
LendingClub
LendingClub is also BBB-accredited and gets an A+ based on BBB criteria. Only seven people have reviewed LendingClub on Trustpilot, which means its ratings don’t necessarily reflect the majority of its users’ experiences. These seven users give LendingClub an 8.1 out of 10, and 85% rate it as “Excellent.”
Winner: OnDeck
Not only does OnDeck have better customer reviews, but it also has a lot more online feedback. This doesn’t mean that OnDeck is more trustworthy, but a larger presence makes it a lot easier to understand what you’re getting into.
How much can I borrow with each lender?
OnDeck
You can take out a fixed-term loan between $5,000 and $250,000 from OnDeck. Lines of credit go up to $100,000.
LendingClub
Fixed-term loans and lines of credit are both available in amounts ranging from $5,000 to $500,000 with LendingClub.
Winner: OnDeck
Simple put, OnDeck meets a wider range of funding needs than LendingClub.
OnDeck business term loans come with APRs — meaning combined fees and interest — that start at 35%, with terms ranging from 3 to 18 months. Its APR includes an origination fee of 2.5% to 4%, taken from your funding before you even receive it.
Its revolving lines of credit are more expensive, with APRs starting at 13.99%. OnDeck also deducts automatic weekly payments from your business account, which can eat into your cash flow if you’re not careful.
LendingClub
LendingClub loans come with an origination fee of 0.99% to 6.99% and a total APR — meaning combined fees and interest — of at least 12.15%. Terms range from one to five years, meaning your payments might be lower but you could end up paying more overall interest than with OnDeck.
Its revolving lines of credit start at a competitive 7% APR and don’t require a monthly maintenance fee. You’ll pay a fee of 1% to 3% each time you take out money, however. And you have 25 months to pay back any amount you draw from your credit line.
Winner: LendingClub
Even though LendingClub charges more fees than OnDeck, its overall cost is lower. It also doesn’t require weekly repayments for its lines of credit, which can sometimes hurt businesses making large purchases that temporarily drain their bank account.
Case study: Casey buys a generator
Casey opened a food truck two years ago in LA, and things were going great. The only problem was her generator: an old thing she’d inherited from a retiring taco truck vendor.
After a year of generator problems, she resolved to take out a business term loan to cover the cost of a new one — about $5,000 for a high-quality generator that would last a while.
She breaks about $100,000 in annual sales but doesn’t have good enough credit to qualify for a bank loan. She does some research and narrows down her choices to online lenders OnDeck and LendingClub.
After prequalifying with each, this is what she’s offered:
OnDeck
LendingClub
Loan term
2 years
3 years
APR
24.6%
15%
Total cost
$6,380.50
$6,239.76
Paid each month
$256.86
$173.33
She decides to go with LendingClub. Even though OnDeck can get her money faster, LendingClub is cheaper for both her short- and long-term needs.
Bottom line
OnDeck wins on a lot of fronts, but its loans could cost you more in the long run. OnDeck might be a better choice for new small businesses that need to quickly cover an emergency expense.
LendingClub may be more limited in terms of loan amounts, but don’t ignore its lower costs. It could be better for established businesses that need longer-term funding.
See how other top business financing providers compare
LoanBuilder vs. OnDeck
BlueVine vs. Fundbox
Fundbox vs. Kabbage
Kabbage vs. OnDeck
OnDeck vs. Prosper
Frequently asked questions
It’s difficult to get a competitive interest rate from either OnDeck or LendingClub if you have bad credit. However, OnDeck tends to put more weight on your cash flow, your business’s overall performance and other factors than LendingClub.
You can with LendingClub — it doesn’t charge prepayment penalties. OnDeck sometimes offers a discount on interest if you pay off your loan early. But you could also end up having to pay the same amount of interest regardless of when you pay it off.
OnDeck is available nationwide, but you won’t be able to get a LendingClub loan if you live in Iowa or West Virginia.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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