OnDeck and Funding Circle offer short-term working capital loans up to $500,000, but each is best for different businesses. OnDeck is best for businesses that need quick funding because they can fund in as little as one day. Funding Circle has the more affordable solution for prime borrowers, offering interest rates as low as 4.99%.
When to Use OnDeck
OnDeck is the better option if you need short-term borrowing with fast funding. Their loans are easier to qualify for and you’ll receive the funds faster than you would through Funding Circle, often getting funded in as quickly as one day. Further, though OnDeck’s APR is higher than Funding Circle’s, you’ll likely repay their loan much faster, which makes your total cost of capital potentially lower.
When to Use Funding Circle
Funding Circle is the right choice if you’re only looking for the lowest possible APR. However, due to their longer repayment terms, it’s possible that OnDeck could be more affordable. You’ll need to be a prime borrower with strong business financials to take advantage of the lowest interest rates offered by Funding Circle, but you can potentially get your interest lowered every six months.
When to Use an Alternative Option
When you need financing to solve a recurring cash flow problem or to prepare for unexpected expenses, then a business line of credit is your best option. Our recommended business line of credit provider, BlueVine, offers financing up to $200,000 with interest rates as low as 4.8%. You can apply by filling out an online application that only takes a few minutes.
OnDeck vs. Funding Circle at a Glance
How We Determined When to Use OnDeck & Funding Circle
Business loans are typically compared on rates, qualification requirements, and repayment terms. We took all of these things into consideration when deciding when to use either OnDeck or Funding Circle.
The specific criteria that helped us make our decision also included:
- Loan Amounts
- Time to Funding
- Repayment Terms
- Lowest Possible Starting Rate
- Time in Business Requirement
- Minimum Credit Score Required
- Minimum Annual Business Revenue Required
After taking those things into consideration, we believe that both OnDeck and Funding Circle are good, short-term loan options. Each is best used when paid back within one year of funding; Funding Circle is more expensive the longer you’re in repayment, and your fee for OnDeck is larger with a longer repayment term. We recommend using OnDeck for quick funding needs and Funding Circle for a more affordable option if you’re a prime borrower.
OnDeck vs Funding Circle: Terms
The terms of a loan include how much you can borrow, how long you’ll have to repay the loan, and how quickly the lender is able to fund an approved loan. OnDeck and Funding Circle offer similar loan amounts, but each of their other terms varies. OnDeck can fund your loan the fastest, offering funding in as quickly as one day, while Funding Circle offers the longest potential repayment term of five years.
OnDeck Loan Terms
The terms you’re likely to get with a loan from OnDeck fall into these ranges:
- Loan Amount: $5,000 – $500,000
- Repayment Term: 3 – 36 months
- Repayment Schedule: Weekly
- Funding Time: One to three days
Funding Circle Loan Terms
The terms for a Funding Circle loan fall into these ranges:
- Loan Amount: $25,000 – $500,000
- Repayment Term: Six months – Five years
- Repayment Schedule: Monthly
- Funding Time: Six to ten days (typically about one week from when you apply)
OnDeck vs Funding Circle: Rates & Costs
In this comparison, Funding Circle charges more fees but has a lower total APR than OnDeck. This makes Funding Circle the more affordable solution if you plan to have the same repayment terms for either loan. However, if you repay the loan over the full five years that Funding Circle offers, then your total cost of capital could be larger than an OnDeck loan.
OnDeck charges a factor rate of 1.3 to 1.5 in most cases. There are no hidden fees and no annual interest because you’re agreeing to pay off the same total amount regardless of when you pay off the loan.
With OnDeck, you’ll have a total APR that falls into this range:
- APR: 30% – 50%
Funding Circle Costs
Funding Circle differs from OnDeck in calculating costs because the longer you’re in repayment, the more you’ll end up paying for the loan. There are no prepayment penalties and you’ll want to pay off the loan as fast as possible to make it the most affordable option.
The costs for a Funding Circle Loan fall into these ranges:
- APR: 12% – 30%
- Origination Fee: 0.99% – 5%
- Interest Rates: 4.99%+
For an example of how these costs work, with an OnDeck loan, you may be approved for a 1.3 factor rate, which means you’ll repay 1.3 times the original loan amount. If you borrow $100,000, you’ll pay back $130,000, which is a 30% APR. With an OnDeck loan, you’re agreeing to pay that set amount regardless of when you pay it off. While there are no prepayment penalties, there’s also no benefit to paying early.
If you borrow $100,000 from Funding Circle, you’ll pay an interest rate every year you’re in repayment plus an origination fee. If your origination fee is 3%, then you’ll have $3,000 added to your total loan amount for a total of $103,000 that you’re borrowing and paying interest on. Let’s say your approved interest is 15%, so your total cost will be $147,000+ over five years, which means that Funding Circle would have a larger total cost of capital.
OnDeck vs. Funding Circle: Qualification Requirements
OnDeck and Funding Circle are both online lenders with fewer qualification requirements than traditional lenders like banks. The most important qualifications for short-term loans are your personal credit score, the length of time you’ve been in business, and the amount of annual business revenue you have.
OnDeck Qualification Requirements
An OnDeck loan has less stringent qualification requirements than Funding Circle does. You’ll typically qualify if you meet these minimum standards:
- Minimum Credit Score: 500+ (check your credit score for free)
- Time in Business: One+ year
- Minimum Annual Business Revenue: $100,000+
Funding Circle Qualification Requirements
A loan from Funding Circle is more difficult to qualify for, but as a small-term loan, it’s still not difficult for most businesses to meet the minimum qualifications. You’ll typically qualify if you meet these minimum standards:
- Minimum Credit Score: 600+ (check your credit score for free)
- Time in Business: Two+ years
- Minimum Annual Business Revenue: $120,000+
OnDeck vs Funding Circle: How to Apply
Online lenders all have similar loan application processes that are much easier to navigate than traditional lenders like banks. Instead of working through a pile of paperwork and applying inside a physical location, you’ll typically be able to apply online by providing basic personal and business information.
OnDeck Application Process
The first step in applying for a loan through OnDeck is to fill out their online application, which takes about 10 minutes. You’ll be asked for information that includes:
- Name and address (personal and business)
- Social Security number (to check your credit)
- Amount you want to borrow
- How you’ll use the funds
- Recent bank statements
If you can’t provide recent bank statements, then you’ll need to connect OnDeck online to your business bank account, where they can analyze your recent business history. Once you’ve filled out all of the information, you could be pre-approved instantly and funded in as quickly as one day.
Funding Circle Application Process
Funding Circle requires a similar loan application process to OnDeck in terms of the amount of information you’ll provide. However, it’s a different process that takes longer than OnDeck because Funding Circle is a peer-to-peer loan. This means that you’ll be funded by a variety of investors in a single loan provided by Funding Circle. This takes longer to get approved and to receive the funds than through other online business loans.
With Funding Circle, you’ll follow these five steps to get funded:
- Apply online (takes 5 – 10 minutes)
- Get a conditional offer
- Submit required documentation and go through underwriting (two to three days)
- Receive a funding decision and final offer
- You get funded (in as quickly as 48 hours after you accept the final offer)
Since you’re borrowing from a peer-to-peer lender, the documentation you could be asked for will vary during the funding stage. However, it won’t be much more intrusive than an OnDeck loan and will still be much easier of a process to navigate than a traditional loan from a bank.
Funding Circle will typically ask for the following documentation:
- Complete application with basic personal and business information
- Business tax returns (last two years)
- Personal tax returns (last one year for every individual with 20%+ in ownership)
- YTD profit & loss statement
- YTD balance sheet
- Business bank statements (last six months)
The entire process generally takes about one week to complete, but you could be funded in as quickly as six days from the time you submit your application. This process is generally much slower than OnDeck’s application process.
OnDeck vs Funding Circle: Customer Service
It’s important to make sure the lender you choose not only has a good reputation but also offers plenty of easy ways to connect with their customer service teams after you get funded. If there is ever a problem during the application process, or if you’re in danger of missing a payment after you’re funded, then you’ll want to know you have experts who you can reach.
OnDeck Customer Service
OnDeck offers a very active customer service team that is considered to be one of the best in short-term lending. You can reach them via phone, email, or live chat online via your computer, tablet, or smartphone. OnDeck also offers a mobile app that makes it easy to reach out to any department in the company.
OnDeck has been given an A+ rating by the Better Business Bureau, where they have 65% positive customer reviews and a total composite score of 4.54 out of 5. On TrustPilot, OnDeck has been given 5 out of 5 stars with 93% of customer reviews out of 1,079 being “excellent.” Both of these are positive signs that OnDeck customers are generally pleased with the overall experience. Read our OnDeck reviews article to learn more.
Funding Circle Customer Service
Funding Circle believes in a fluid customer service experience that allows you to speak directly with a member of their team at any step of the loan process. They offer the opportunity to contact them via phone or email, and they offer a mobile app for iPhone users to manage their loan or to contact them directly.
Funding Circle Reviews
Funding Circle also has been given an A+ rating with the Better Business Bureau, where they have received a total of eight reviews, all negative. As a result, the BBB has given them a composite score of 3.68 out of 5 stars, due mainly to their A+ rating.
This doesn’t appear to be an indicator of their total performance, however, because they currently have a 5-star rating at TrustPilot based on more than 3,700 reviews, with 87% giving them the rating of “excellent.” Read our article on Funding Circle reviews to learn more.
Alternative Loan Options to OnDeck and Funding Circle
While OnDeck and Funding Circle both offer good short-term fast business loans, they may not be the best option for your business. You may prefer to get a business line of credit, a small business credit card, or a long-term loan that can provide more affordable rates. The table below is a collection of many of the common competitors that OnDeck and Funding Circle share.
Common OnDeck & Funding Circle Alternative Options
|BlueVine||Business line of credit up to $200k for recurring business expenses.|
|Kabbage||Business line of credit up to $250k with a monthly repayment schedule.|
|Fundbox||No credit check invoice financing up to $100k that works similar to a business line of credit.|
|Square Capital||POS financing that funds customers up to $100k who process a lot of credit or debit cards through its POS system.|
|PayPal Working Capital||POS financing that funds customers up to $100k who process a lot of credit or debit cards through its POS system.|
|StreetShares||Flexible line of credit or business loan for up to $100k with 3- to 36-month terms that only requires $25k in revenue to qualify.|
|SmartBiz||Long-term SBA 7a loans that can fund in as little as 30 days.|
|Small Business Credit Cards||Revolving credit line that most businesses with a 640+ credit score can qualify for regardless of time in business.|
Both OnDeck and Funding Circle can help businesses with their short-term financing needs. Each has their own strengths, and the right one for you depends on the situation of your business. If you need to be funded quickly or can pay back the loan within one year, then OnDeck is the better option, but if you’re looking for the most affordable potential rates, then you should try Funding Circle.
Overall, we recommend OnDeck for the majority of businesses looking for short-term financing. Their qualification requirements will fit the mold of more businesses and they can fund quicker than Funding Circle. You can apply by filling out a simple online application that takes about 10 minutes, and you could be funded in as quickly as one day.