Kabbage vs. OnDeck: What’s the Difference?
While both Kabbage Funding and OnDeck offer small business lines of credit, Kabbage Funding offers larger lines of credit and longer terms. Kabbage Funding also offers fixed monthly payments and no origination fee. OnDeck does not charge an origination fee on its line of credit but it requires daily or weekly repayments. However, OnDeck also offers a short-term loan product, which features higher loan amounts and longer repayment terms.
If you’re deciding between a small business loan from Kabbage vs. OnDeck, the good news is that they’re both solid line of credit lenders. When it comes to Kabbage vs. OnDeck, how do they differ, and what are the pros and cons of each?
To accurately compare these two funding solutions, we’ll assess them on six key criteria: loan terms, qualification requirements, application process, underwriting process, post-funding experience, and customer reviews.
Kabbage Funding vs. OnDeck Overview
Line of credit
Line of credit, short-term loan
$2,000 – $250,000
$5,000 – $500,000
6 – 18 months
3 – 36 months
19.56% – 213.84% APR
9.99% – 99% interest rate (short-term loan) 13.99% – 63% APR (line of credit)
Annual revenue requirements
Time in business
Time to fund
As little as 24 hours
As little as 24 hours
Payment due date
Daily or weekly
Origination fee (short-term loan), maintenance fee
Kabbage vs. OnDeck Loan Terms
Probably the most important aspect when choosing between Kabbage Funding 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 Funding 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 Funding 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 Funding 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: 1.5% – 10% interest rate per month (converted to 19.56% – 213.84% APR)
This isn’t an apples-to-apples comparison, but generally speaking you get a lower cost of capital with an OnDeck line of credit than with a Kabbage line of credit. Having said that, interest rates on an OnDeck short-term loan can be quite high. Overall, OnDeck offers higher loan amounts as well as 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 Funding. 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
- Adult entertainment or material
- Vehicle dealers and used goods dealers
- Fortune telling
- 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 Funding Qualification Requirements
To qualify for a line of credit, Kabbage Funding will want to see the following business credentials:
- Annual revenue: $50,000 (or $4,200 per month for the last three months)
- Credit score: No minimum
- Time in business: 1 year
Kabbage Funding does not work with the following types of businesses:
- 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:
- Financial institutions
You also need to know that Kabbage Funding 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 Funding line of credit.
Kabbage Funding has less stringent requirements when it comes to qualifying for financing. There is no minimum credit score required, and your annual revenues don’t have to be particularly high. OnDeck requires a 600 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 Funding vs. OnDeck is how difficult the application process is. This section focuses on how easy each lender makes it to apply for financing, and how fast qualified candidates can be approved.
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 Funding Application Process
Like OnDeck, Kabbage Funding 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. Similar to OnDeck, qualified candidates can secure financing from Kabbage Funding in as little as 24 hours.
You’ll want to keep in mind that the application process can take longer for credit lines above $200,000 and in cases where Kabbage Funding has trouble verifying your business information.
Kabbage Funding 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 Funding 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 Funding 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 Funding Underwriting Process
Kabbage Funding’s online algorithm underwrites your loan application, making it possible to get approved within minutes. If you’re approved, you’ll instantly 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 Funding 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.
Kabbage’s underwriting process is less rigorous than OnDeck’s, making it more business owner-friendly. Keep in mind that with both Kabbage and OnDeck you’ll need 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 Funding 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 Funding revolving 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 1.5% to 10% of the total amount borrowed, or between 19.56% – 213.84% when converted to APR. Kabbage Funding will charge a fee every month you have a balance for a six or 12-month line of credit. For their 18-month line of credit, your monthly charge is accrued in full at the time of funding and an equal portion of this fee is paid each month for 18 months, regardless of your balance over those months.
Kabbage Funding does not charge a prepayment penalty or monthly maintenance fees. However, Kabbage Funding 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.
Kabbage Funding 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, Kabbage’s APRs can be much higher than OnDeck’s APRs when it comes to their line of credit product. With Kabbage, you can be looking at an APR as high as 213%, whereas OnDeck’s maximum is 63% 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 Funding 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 Funding 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. Applications can be funded pretty much instantly, and your cash flow won’t be hamstrung by daily or weekly repayments. Plus, 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. Lastly, customers love Kabbage’s online platform, which makes it very easy to apply for funding.
Common complaints of Kabbage center around their high interest rates. Now, many alternative lenders charge high interest rates, but Kabbage’s are very high, especially when compared to OnDeck. Keep in mind that these fees are the price you pay for lax qualification requirements. But if you have stronger business credentials, OnDeck can probably offer you a lower cost of capital.
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:
- 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)
- 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 Funding is easy 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 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.