OnDeck vs. Fundbox: Which small business lender is right for you?

OnDeck and Fundbox are two online lenders with specialized products. OnDeck offers a short-term loan and business lines of credit, while Fundbox specializes in business lines of credit.

You can qualify for a Fundbox loan with a slightly lower credit score compared to OnDeck. You’ll also spend less in interest if you go with Fundbox because OnDeck’s starting interest rates are high. However, Fundbox charges a weekly fee instead of the traditional annual percentage rate, which makes it difficult to compare interest rates.

OnDeck vs. Fundbox at a glance

OnDeck and Fundbox offer similar business loans and have comparative eligibility requirements. That said, Fundbox accepts less time in business than OnDeck, making it the more accessible option for startups.

Yet both lenders remain accessible to borrowers with fair credit and low business revenue. A downside is that both offer relatively low loan sizes, so you may need to look at other small business loans if the loan size you need isn’t available.

OnDeck business loans

OnDeck offers a short-term business loan and business line of credit, both with repayment terms up to 24 months. Its interest rates start at nearly 30 percent, with average annual percentage rates (APRs) hovering around 55 percent—much higher than what a traditional lender would offer.

That said, funding through OnDeck is significantly faster than a traditional lender. If you apply for a business loan of $100,000 or less on weekdays before 10:30 a.m. ET, you could qualify for same-day approval.

OnDeck also offers a prepayment discount for qualifying loans, which will vary depending on your loan agreement. If you don’t qualify for the prepayment benefit, you could be charged the remaining interest — which would be similar to a prepayment penalty.

Pros

• Accepts fair personal credit
• Low revenue requirement
• Same-day funding available

Cons

• High starting rates
• Few loan options
• Low loan sizes

Fundbox business loans

Fundbox is a fintech lender specializing in business lines of credit. Given its weekly fee, which is charged instead of interest, Fundbox may be best for small businesses that can’t qualify for a credit line with a traditional bank. Fundbox’s loan seems to cater to this group, accepting personal credit scores down to 600.

The weekly fee is charged to the leftover balance that you have, but it’s amortized, which means that it charges higher interest up front and then lower interest when you’re close to paying off the loan.

Fundbox’s app is unique in that it allows you to see your line of credit and any outstanding balances or available credit, making it easy to manage.

Pros

• Access via app
• Approves startups
• Approves fair personal credit

Cons

• Only offers a line of credit
• Low loan sizes
• Short terms

How to choose between OnDeck and Fundbox

Fair credit borrowers can qualify for business loans from either OnDeck or Fundbox. But OnDeck’s loans are the better option for length and number of payment options, and they offer higher loan amounts. Fundbox’s loan is better for lower credit scores and time in business requirements.

Choose OnDeck for flexible repayment terms

OnDeck is the better option of the two lenders in terms of the repayment options. With its short-term loans, OnDeck has a maximum repayment term of 24 months. For its business line of credit, you can choose a term of 12, 18 or 24 months.

Short-term repayment options are expected for that type of loan. But it offers more repayment options for a line of credit than you’ll find with most online lenders. With Fundbox, the terms available for its line of credit are short: 12 or 24 weeks (three or six months).

Choose Fundbox for flexible time-in-business requirement

Fundbox is the way to go if you’re a startup with just six successful months of generating revenue. It’s more common to see startups approved by fintech lenders, but not all online lenders lower requirements down to a few months. OnDeck requires at least one year in business, which is still lenient compared to traditional bank lenders.

By comparison, traditional banks and credit unions often require at least two years in business to qualify for conventional business loans. But traditional lenders are good for getting ideal interest rates and payment terms if your business qualifies.

Alternatives

OnDeck’s and Fundbox’s loans are limited in the types of business loans, loan sizes and overall length of terms. If these loans don’t work for you, you could go with Fundible, an online lender offering a range of business loans. Its choices include a business line of credit, term loan, equipment loan and more. Fundible is known for working with bad credit borrowers.

On the other end stands Bank of America, one of the most well-known traditional bank lenders. Bank of America offers a starter line of credit secured by a $1,000 cash deposit, which can help startups with less than two years’ experience qualify. Once you match those loans’ requirements, you may be able to qualify for an unsecured line of credit.

SBA loans

Other options if you can’t qualify for a traditional business loan are SBA microloans and 7(a) loans through Community Advantage Small Business Lending Companies (CA SBLC). Microloans allow you to get approved for a small SBA loan that maxes out at $50,000, usually through nonprofit lenders aiming to serve specific communities.

Community Advantage Small Business Lending Companies also aim to help underserved business owners and low-income communities. Lenders are mission-oriented and can offer loans up to $350,000 to small businesses in underserved communities.

Bottom line

OnDeck or Fundbox can provide for your business financing needs if you’re looking for a business line of credit, or you can get a short-term loan through OnDeck. You’re also still able to get approved with less-than-ideal credit. Yet OnDeck does require one year in business, while Fundbox accepts you even with just six months under your belt.

Be sure to compare multiple lenders offering the business loan you need. Then, you can view the loan offers side by side and choose the best offer with the lowest financing costs for your business.

Frequently asked questions

• What type of loans does OnDeck offer?

  OnDeck specializes in short-term business loans and business lines of credit. The fintech lender offers short payment terms ranging up to 24 months, granting more flexibility in the terms offered than other line of credit lenders available. You may also qualify for a prepayment discount for paying off the loan early.

• Are there short-term loans for startup businesses?

  Yes, many lenders offer short-term loans to startup businesses because the likelihood of the business defaulting is less over a shorter time period. Lenders will also look at business revenue and other factors, like personal credit scores, so if your startup has strong financials, you’re more likely to be approved.

• What credit score do you need for a business line of credit?

  Bank lenders often require a high personal credit score for any business loan, including a business line of credit. Banks often set the score standard at 670 or higher, while online lenders may accept credit scores as low as 580.