By Adam Hoeksema
Financing a small business is still a huge challenge, but I love to highlight innovative companies that are helping to change the game. The last 5 years have seen some major innovations including peer-to-peer lending and crowdfunding take root as a major player in how small businesses are financed now and in the future.
On Deck Capital is an emerging innovator in the space of small business finance, and I believe they have the potential to further disrupt the traditional bank.
Who is Eligible?
So far On Deck has provided 5,000 businesses with financing, totaling over $200,000,000.
It looks like you need to have at least $200,000 in sales in order to be considered, but the good news is that On Deck does not turn you down based solely on your credit score. Straight from the On Deck website:
“On Deck May be Right for You if: You’re a small, healthy business with a lot of transactions from a broad customer base
You have steady cash flow
You are conscientious about paying your bills (you may miss occasionally but you always catch up)
You need a loan quickly”
It seems that On Deck is filling a major gap that most banks try to avoid by looking at the health and stability of your business rather than merely looking at your credit score.
Additionally, if you have a low credit score an On Deck loan is a great way to build your score back up because they report your payments to the credit agencies.
What Makes On Deck Special?
On Deck is special in a number of ways, but there are 2 things that really stand out as innovative.
First, they pull a small loan payment from your account every day instead of once a month. This is incredibly important because a monthly loan payment can really hurt a business when it is coming out in $5,000 payments, but a $150 payment each day is much easier for a small business to manage.
I imagine that the smaller daily payments along with the shorter loan terms (12 to 18 months), drastically reduces the number of loan defaults for On Deck.
A second thing that makes On Deck unique is the fact that they truly look at the health of your business. They are looking for businesses with a large number of small transactions from a diverse customer base. Some examples would include:
- Retail stores
- Restaurants and Cafes
- Doctor Office
- Small Grocery Store
On Deck is bringing some interesting new financing options to businesses who are just out of reach of traditional bank loans, and I think they are going to truly change the world through this new unique, common-sense lending model.
About the Author: Adam Hoeksema is the Co-Founder of ProjectionHub which helps entrepreneurs create financial projections without the need for a PhD in spreadsheet modeling.
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