Not too long ago you had to go to the bank to get a business loan. Today, you can often search, apply and receive your funding online. With faster turnover and competitive rates, online lenders are becoming increasingly popular among small businesses.
We compare two options — OnDeck and Prosper — to help you decide which could be a better choice for your business’s needs.
OnDeck is an online business lender offering term loans and revolving lines of credit to small businesses. It’s main selling point is speed. And for good reason: It can get you funding in as little as 24 hours.
On the other hand, Prosper is an online peer-to-peer lender that provides access to personal financing. You can get personal loan through Prosper to cover small business costs. You’ll need a fairly high credit score to qualify, but you won’t find any business requirements to satisfy, making it ideal for startups or entrepreneurs having trouble qualifying for online business loans.
Prosper has higher credit requirements than OnDeck, but that’s it. Your business won’t need to make specific revenue or be around for many years, because you’re technically getting a personal loan.
However, borrowers living in one of Prosper’s restricted states or with a credit score that’s lower than 640 might want to consider an OnDeck business loan instead.
To qualify for a loan with OnDeck:
Your personal credit score must be at least 500.
Your business must be at least a year old.
Your business must make $100,000 or more each year.
You must be willing to provide a lien on your business assets.
To qualify for a loan through Prosper:
Your personal credit score must be at least 640.
You must be a US citizen or permanent US resident.
You must be at least 18 years old.
You must not live in Iowa, North Dakota, Maine or West Virginia.
Which lender can get me money faster?
OnDeck claims it can get you funding in as little as 24 hours after approval — which itself takes takes only a few hours.
Loans through Prosper can be funded 1 to 5 business days after approval. However, underwriting can sometimes take a week or more.
Both Prosper and OnDeck can get funds to you within a business day. But OnDeck wins with a faster process overall — from approval to funding.
Which has a better reputation?
Accredited by the Better Business Bureau (BBB) since 2008, OnDeck gets an A+ rating. It does just as well with customer reviews, scoring an average 9.4 out of 10 from Trustpilot users, 92% of whom rate it “Excellent.”
Prosper is also BBB-accredited, and it too gets an A+. It’s rated an average 7.3 out of 10 from a small pool of Trustpilot reviewers, of whom only 65% rate it “Excellent.”
Not only does OnDeck garner higher customer ratings, but there’s also more positive conversation about it online than Prosper.
How much can I borrow with each lender?
You can take out loans of $5,000 to $250,000 with OnDeck.
Smaller loans are offered through Prosper than OnDeck, ranging from $2,000 to $40,000.
You’re more likely to find the loan amount you need with OnDeck — unless you want to borrow between $2,000 and $5,000. In that case, Prosper is your better bet.
OnDeck business term loans come with APRs starting at 35% and terms of 3 to 18 months. Its revolving credit lines have slightly higher APRs that start at 13.99%. But repayments are weekly, rather than monthly, which could get you in trouble if your business has a bad week.
Prosper’s APRs are typically lower than OnDeck’s, starting at . You can also pay off your loan over a longer period of time — from 3 years or 5 years. Longer-term loans might have lower monthly payments, but they’re more costly in the long run due to higher interest rates.
Loans through Prosper boast significantly lower APRs meaning it could potentially lead to a lower overall loan cost than OnDeck’s business loan.
Case study: Andrew hires on help
Andrew started a graphic design company a year ago that’s growing faster than expected. To keep up with demand, however, he needs to hire more staff. His business is making enough money to cover three new salaries monthly, but not enough to cover the new computers and software he’ll need to support them.
He looks into taking out a loan of $8,000 to cover immediate expenses. Without enough of a business track record to qualify for a bank loan, he restricts his search to online lenders and applies for preapproval with OnDeck and Prosper.
Here’s how the rates and terms he’s ultimately extended compare:
Going with Prosper is a no-brainer for Andrew. Not only will he save more on monthly payments and his total loan cost, but he also isn’t required to submit as much paperwork and documentation to qualify.
Another concern: OnDeck’s weekly micropayment system. He plans to make some big purchases in the near future, and expects his business bank account to be short for a week or two.
Whether OnDeck or Prosper is better for your needs depends on your business priorities. Business owners concerned with speed and credit requirements might do better with OnDeck. Those worried about costs above all else might want to go a loan through Prosper.
See how other top business financing providers compare
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Frequently asked questions
Yes — as much as it can be within reason. OnDeck uses Transport Layer Security that encrypts your personal information when it’s transferred from your computer to OnDeck’s network. Prosper uses the more traditional SSL encryption on its website.
OnDeck loans are secured by a general lien on your business assets as collateral. Loans through Prosper are unsecured, which means they don’t require collateral.
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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