Kabbage vs. OnDeck: Which Is Best for Your Small Business?

Updated on May 12, 2022
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Kabbage vs. OnDeck: What’s the Difference?

Kabbage vs. OnDeck Overview

Kabbage OnDeck
Loan type
Line of credit
Line of credit, short-term loan
Loan amount
$2,000 – $250,000
$5,000 – $500,000
Repayment term
6, 12, or 18 months
3 – 36 months
Interest rate
9.00% – 36.00% Estimated APR
9.99% – 99% interest rate (short-term loan) 13.99% – 63% APR (line of credit)
Revenue requirements
$3,000/month minimum
$100,000/year minimum
Time in business
1 year
1 year
Credit score
640 minimum
600 minimum
Time to fund
3 business days upon approval
As little as 24 hours
Payment due date
Monthly
Daily or weekly
Additional fees
None
Origination fee (short-term loan), maintenance fee

Kabbage vs. OnDeck Loan Terms

Probably the most important aspect when choosing between Kabbage vs. OnDeck is the loan terms you’re offered. This includes the types of loan you can secure, the maximum loan amount you can qualify for, your repayment term, and the interest rate. Here’s how Kabbage and OnDeck compare in this regard.

OnDeck Loan Terms

Founded in 2007, OnDeck Capital is a pioneer in the alternative lending industry. The company prides itself on providing large amounts of capital, fast approval, and rapid funding. Since launching, OnDeck has provided over $2 billion in financing to companies in more than 700 industries.

OnDeck provides two types of financing: lines of credit and short-term loans. The terms on the OnDeck line of credit product are as follows:

  • Loan amounts: $6,000 – $100,000
  • Repayment term: 12 months
  • Interest rate: 13.99% – 63% APR

Here are OnDeck’s short-term loan terms:

  • Loan amounts: $5,000 – $500,000
  • Repayment term: 3 – 36 months
  • Interest rate: 9.99% – 99% interest rate

Kabbage Loan Terms

Since it launched in 2009, Kabbage has financed over $1 billion in small business loans to more than 100,000 small businesses. Unlike OnDeck, Kabbage offers just one form of financing—business lines of credit. Here’s the breakdown on their terms:

  • Loan amounts: $2,000 – $250,000
  • Repayment term: 6 – 18 months
  • Interest rate: Six-month term: 0.25% to 3.50%, 12-month term: 0.25% to 2.75%, and 18-month term: 0.25% to 2.50% (converted to an estimated APR of 9.00% – 36.00%).
  • Takeaway

    This isn’t an apples-to-apples comparison, but generally speaking you get a lower cost of capital with a Kabbage line of credit than with a OnDeck line of credit. Overall, OnDeck offers two different types of financing solutions. That’s not to say that OnDeck is simply a better lender. Kabbage has some unique benefits that we’ll touch on in the next section.

Qualification Requirements With Kabbage vs. OnDeck

Qualification requirements are the credentials your business has to meet in order to be eligible for financing from OnDeck or Kabbage. This includes your business’s average annual revenue, time in business, and credit score. Here’s how the comparison breaks down:

OnDeck Qualification Requirements

To qualify for a line of credit or a short-term loan from OnDeck, you’ll need to meet the following requirements:

  • Annual revenue: $100,000
  • Credit score: 600
  • Time in business: 1 year

On top of these requirements, there are certain business types and business situations that OnDeck does not offer financing for. This includes the following:

  • Government, nonprofit, or public administration industries
  • Entrepreneurs that need a loan to purchase a business
  • Entrepreneurs that operate out of a home address
  • Businesses that are in the following restricted industries:
    • Drug dispensaries
    • Brokerage
    • Adult entertainment or material
    • Firearms
    • Gambling
    • Vehicle dealers and used goods dealers
    • Fortune telling
    • Horoscopes
    • Auction houses
    • Rooming and boarding houses
    • Religious organizations
    • Financial services

On top of this, OnDeck requires you to have a business bank account that you make at least five deposits into each month. They will also not work with businesses that have total liens and judgments against their business amounting to more than $20,000 or more than 5.5% of their annual revenue.

Lastly, OnDeck requires two years to have passed since discharge if you’ve ever filed for bankruptcy.

Kabbage Qualification Requirements

To qualify for a line of credit, Kabbage will want to see the following business credentials:

  • Monthly revenue: $3,000
  • Credit score: 640
  • Time in business: 1 year

Kabbage does not work with the following types of businesses:

  • Nonprofits
  • Businesses that have large outstanding balances with other lenders
  • Businesses that are located outside the 50 U.S. states and territories
  • Businesses that are in the following industries:
    • Marijuana/CBD
    • Firearms
    • Gambling
    • Financial institutions
    • Lending

You also need to know that Kabbage will only fund businesses with a minimum average bank balance of $2,500. You can have a bankruptcy on record, but at least one year must have passed since discharge to qualify for a Kabbage line of credit.

  • Takeaway

    Kabbage has more stringent requirements when it comes to qualifying for financing. Kabbage requires a 640 minimum credit score, which can be restrictive for some businesses.

Application Process With Kabbage vs. OnDeck 

The next factor you need to consider when comparing Kabbage vs. OnDeck is how difficult the application process is.

OnDeck Application Process

You can apply for a loan from OnDeck in as little as 10 minutes through OnDeck’s one-page online application. The documents you will be required to provide are as follows:

  • Three months of business bank statements
  • Voided business check
  • Copy of your driver’s license
  • Business tax ID number
  • Business owner’s social security number
  • Estimated annual gross revenue (with a minimum gross annual revenue of $100,000)
  • Average bank account balance

If qualified, your application can be approved within 24 hours.

Kabbage Application Process

Like OnDeck, Kabbage also has an online application. To get started, you’ll create a Kabbage account. They’ll then ask for information about you and your business to see if you qualify. This includes the following:

  • Business name, type, and industry
  • Business tax ID
  • Social security number
  • A business checking account
  • If you use accounting software, at least three months of records

Note that you can link your business financial platforms to your Kabbage account to make the importing of business data seamless—including your point of sale and accounting software.

Kabbage must verify your information before you receive a decision. If the application needs further review, it may take four to seven business days for you to get a decision.

  • Takeaway

    Kabbage allows you to link all your financial platforms to your Kabbage account, making the application process seamless. OnDeck’s online platform is also intuitive, and applying for a loan with either OnDeck or Kabbage is easier than going through a bank.

Underwriting Process With Kabbage vs. OnDeck

So you’ve submitted your application—now what? Here’s how both OnDeck and Kabbage will review your business’s credentials to determine if you qualify.

OnDeck Underwriting Process

After you submit your application and provide the required documents, OnDeck will perform a soft credit pull. OnDeck will also review your bank statements, cash flow, and annual revenue. They will approve borrowers for loan amounts of roughly 10% of annual revenues. As we said, this entire process can be done within 24 hours.

If they have an offer for you, OnDeck will send you a SMART Box disclosure form, which shows the cost of your loan, repayment term, and other conditions. If you take their offer, the funds will be deposited into your business bank account within one business day.

Note that OnDeck requires a personal guarantee from the owner who has signed the application. You’ll also be charged an origination fee for their short-term loan between 0% and 4%, depending on whether you’ve funded with OnDeck before. After you’ve been funded, OnDeck will file a  UCC-1 blanket lien on your business.

Kabbage Underwriting Process

Kabbage’s online algorithm underwrites your loan application, making it possible to get approved quickly. If you’re approved, you’ll see the size of your credit line, the repayment terms offered, and the interest rate in your account. Once you sign your loan agreement, your funds will be sent to either your business bank account or your PayPal account (whichever you prefer). It can take up to three days to receive your funds.

Note that after you accept your loan offer, Kabbage will perform a hard credit pull from Experian, which will negatively impact your credit score. You will also be required to sign a personal guarantee.

Once you’ve received your funds, you can immediately start drawing money from your credit line and you’ll only pay for funds that you use.

  • Takeaway

    Both Kabbage and OnDeck require you to sign a personal guarantee. OnDeck also charges an origination fee for its short-term loan product.

Post-Funding Experience With Kabbage vs. OnDeck

Working with Kabbage or OnDeck extends far beyond the funding process. After you get a short-term loan or line of credit, you’ll have to work with them to pay it back. Here’s how that process looks.

OnDeck Post-Funding Experience

You can keep track of the status of your OnDeck loan repayment via your OnDeck online account. This account will automatically update after each payment to indicate the status of your loan repayment. For an OnDeck line of credit, your first payment will be due the day after you draw from the line of credit. After that, you’ll either have daily or weekly payments that OnDeck will automatically deduct from your business bank account, depending on the terms of your loan.

If you pay off your OnDeck short-term loan early, you’ll be forgiven for 25% of the outstanding interest owed. You should also be aware that OnDeck charges a $20 monthly maintenance fee for their line of credit (but no origination fee). However, this fee will be waived for six months if you draw $5,000 or more within five days of opening the credit line.

Once you’ve paid down 50% of your outstanding balance, you’re eligible for a renewal. If you renew your short-term loan, OnDeck will offer discounted origination fees.

Kabbage Post-Funding Experience

Once funded, you can pull from your Kabbage line of credit as often as once per day directly from your online dashboard or mobile app. As is the case with most lines of credit, you’ll only pay interest on what you use. Your repayment schedule will be determined during the underwriting process. They’ll automatically collect the minimum repayment each month from your business bank account. However, borrowers can also make manual payments at any time.

The minimum payment you’ll pay each month is an equal portion of the loan principal plus a fee. As previously mentioned, monthly fees range from 0.25% to 3.50%, depending on your loan term.

Kabbage does not charge a prepayment penalty or monthly maintenance fees. However, Kabbage will enforce a late payment fee that will vary based on your balance amount. There is a four-day grace period before this fee is applied.

  • Takeaway

    Kabbage has a simple monthly repayment format and lack of maintenance fees. OnDeck, on the other hand, charges a $20 monthly maintenance fee and requires daily or weekly repayments. That being said, OnDeck’s APRs can be much higher than Kabbage’s estimated APRs when it comes to their line of credit product. With OnDeck, you can be looking at an APR as high as 63%, whereas Kabbage’s estimated maximum is 36% for their line of credit.

Kabbage vs. OnDeck Customer Reviews

Lastly, let’s look at what small business owners who have used OnDeck or Kabbage as their lender, think of the service.

OnDeck Customer Reviews

If we look at customer sentiment across a variety of popular review platforms, we find that customers praise OnDeck for the simplicity of its loan application process, the professionalism of the OnDeck team, and the speed with which their loans or lines of credit were funded. Although some customers said the costs of the loans were high, overall borrowers felt that the ease of obtaining financing made up for the costs. And while some did not like making daily payments, customers agreed that the repayment process was simple and seamless.

The biggest recurring complaint about OnDeck is that they utilize aggressive sales and marketing tactics. Some OnDeck reviews complain about receiving endless amounts of mailers encouraging them to apply.

Kabbage Customer Reviews

In reviews on popular platforms, customers say Kabbage is their best option when looking for quick business loans to finance small projects or manage cash flow. Kabbage does not charge extraneous fees, like application fees and underwriting fees. Instead, they roll all of your costs into one monthly fee, making it easier to plan and understand your payments.

Common complaints of Kabbage center around their high interest rates.

  • Takeaway

    While customer sentiment is difficult to judge, you can tell when reading customer reviews that borrowers seem to enjoy working with Kabbage more so than OnDeck. This can be attributed to their lack of fees and monthly repayment structure.

    That’s not to say the customers dislike OnDeck—a majority of their reviews are positive as well. And as we said, OnDeck offers cheaper capital—if you can qualify for it. The takeaway should be that both lenders are highly reputable, and it’s worth exploring your financing options with both.

Key Differences Between Kabbage vs. OnDeck

Now that we’ve laid out everything we need to know about Kabbage vs. OnDeck, let’s end with a quick comparison of the details. Here’s a quick breakdown of the key differences between OnDeck and Kabbage:

  • OnDeck

    • Offers lines of credit and short-term loans
    • Lender can place a lien on your business assets
    • Payments made daily or weekly
    • If you decide to pay the loan off early, they’ll give you a 25% discount on remaining interest, but forgive it all entirely
    • Charges an origination fee on all first-time short-term loans (no origination fee for their line of credit)
    • Option to get more money than from Kabbage (up to $500,000)
  • Kabbage

    • Only offers lines of credit
    • Fixed monthly payment
    • You can save some money by repaying loan early
    • No origination fee

The Bottom Line

Overall, if you’re a new business or your business credentials aren’t particularly strong, Kabbage is probably the best option for you. A line of credit from Kabbage can be easier to obtain and may very well be exactly what you need to drum up some business.

Conversely, OnDeck can offer you more financing overall with their short-term loan product, as well as longer loan terms. But to qualify your business will need to be a bit more established. You also have to be prepared to pay an origination fee on their short-term loans and make weekly payments.

Your job is to take all of these factors into account when searching for financing and make a decision that is in the best interest of your business. Be sure to consider how much funding you need, how often you need to draw funds, and the minimum requirements you’ll be able to meet when choosing between Kabbage and OnDeck.

Rieva Lesonsky
Contributing Writer at Fundera

Rieva Lesonsky

Rieva Lesonsky is a contributing writer for Fundera. 

Rieva has over 30 years of experience covering, consulting and speaking to small businesses owners and entrepreneurs. She covers small business trends, employment, and leadership advice for the Fundera Ledger. She’s the CEO of GrowBiz Media, a media company specializing in small business and entrepreneurship. Before GrowBiz Media, Rieva was the editorial director at Entrepreneur Magazine. 

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