When it comes to securing financing for your business, choosing the right lender can make all the difference.
Funding Circle and OnDeck are 2 popular options.
While both offer various loan products to meet the needs of small businesses, their requirements and processes differ.
We've compared Funding Circle vs. OnDeck to help you determine which lender best suits your business goals and financial situation.
Let’s dive in!
Funding Circle vs. Ondeck: A Quick Comparison
Before we dig deeper, here are highlights for both financial platforms.
Funding Circle: Overview
Funding Circle is a UK-based digital lending platform that provides loans to small and medium-sized enterprises.
It initially operated as a peer-to-peer lending marketplace, connecting businesses directly with investors looking to lend money.
Over the years, it has evolved into a commercial lender, facilitating over £14 billion in loans.
Funding Circle: Key Features
Funding Circle’s core products fall into 4 main categories:
- Various Types of Business Loans
- Credit Cards
- Flexible Line of Credit, and
- Asset Finance, including Vehicle, Agriculture, and Equipment finance.
1. Loan Types
With Funding Circle, you can apply for small business loans, government-backed loans, and flexible lines of credit.
1.1. Small Business Loans
To apply for a small business loan, your business must be UK-based and have been operating for at least one year.
You can apply for a small business loan of £10,000 to £750,000 over 6 months to 6 years, with interest rates starting from 6.9% per year.
Your monthly repayments come at a fixed rate, and there are no fees for early repayment.
However, Funding Circle charges a one-off completion fee between 4.49% and 10.49% when you take out your loan.
The cost of your loan will depend on:
- The amount you want to borrow,
- Your interest rate, and
- Your loan term.
In addition, your interest rate depends on several factors, including your credit score and finances.
If you’re a limited company or LLP, you can get a loan decision without affecting your credit score.
Regardless of the loan type, you need to provide a personal guarantee.
1.2. Government-backed Loans
Funding Circle offers loans under the Government-backed Growth Guarantee Scheme (GGS).
It provides lenders with a 70% government-backed guarantee against the outstanding balance of the debt.
In other words, if a business can’t repay the debt, the lender can recover some of the funds from the government.
In order to be eligible for the loan, you must:
- Have a turnover of less than £45 million.
- Be trading in the UK for a minimum of 2 years.
- Be a limited company.
- Use the loan for a business purpose such as working capital or investment.
- Have any ongoing collective insolvency proceedings.
The loan terms are from 6 months to 6 years, and the loan amount ranges between £25,001 and £250,000.
Interest rates start from 13.7% per year.
1.3. Flexi Line of Credit
Funding Circle’s Flexi line of credit is a short-term loan that allows you to repay over 1, 3, 6, 9, or 12 months. The credit limit is up to £250,000.
It is free to set up and comes with no interest or annual fees, but you are charged a flat fee each time you use it.
However, there is no fee when you pay off your card balance in 1 installment.
The fee is set when you apply, starting from 1.5%, depending on the number of installments.
2. Business Loan Calculator
The loan calculator allows you to estimate the fee and interest rate you’ll pay based on the borrowed amount and repayment period.
Funding Circle: Pros & Cons
🟢 No prepayment penalties.
🟢 High maximum loan amounts.
🟢 Rates start from 6.9%.
🔴 Requires a personal guarantee.
🔴 Charges a loan completion fee.
OnDeck: Overview
OnDeck is an American online lender that provides small business loans and lines of credit. Since it is American-based, it follows the FICO scoring system — You must have a personal FICO score of at least 625 to apply for a loan.
OnDeck: Key Features
An interesting thing about OnDeck’s funding is that you complete one application, and OnDeck will evaluate which product best fits your business.
1. Loan Types
OnDeck offers 2 loan types: Term loans and Lines of credit.
1.1. Term Loans
This type of loan is secured, but OnDeck doesn’t require a specific amount, type, or collateral value. In addition, there isn’t appraisal or specific asset requirement.
Instead, a general lien is placed on the business's assets, and a personal guarantee backs them.
OnDeck doesn’t take the guarantors' personal assets as collateral.
Term loans range from $5,000 to $250,000, with term lengths ranging from 18 to 24 months.
Depending on the loan type, OnDeck will deduct payments from your business bank account daily, weekly, or monthly.
- For term loans, your rate depends on your business's health and cash flow. Your loan will have an origination fee of 0% to 4%.
- Payments for term loans are fixed, so you’ll pay the same amount from the beginning to the end of your repayment term.
- You’ll get a discount on the remaining unpaid interest when you prepay your term loan in full.
- The average rate for term loans is 56.1% APR.
Regardless of the loan type, in order to qualify for funding, you must:
- Be in business for a minimum of 1 year.
- Have a minimum of $100,000 in annual revenue.
- Have a minimum of 625 personal FICO score of the business owner.
- Have a business checking account.
Regarding application documents, you’ll need to provide:
- Business Tax ID.
- The last 3 months of business bank statements and
- Social Security number of business owner(s).
OnDeck allows additional funding if you’ve reached 6 months of repayment or paid down 40% of your term loan.
1.2. Lines of Credit
OnDeck also offers more flexible, revolving funding via a line of credit option.
Like all lines of credit, you’ll only be charged interest on the funds you draw.
The eligibility criteria are the same as for the term loan.
- The loan ranges from $6,000 to $100,000 and has flexible repayment terms of 12, 18 or 24 months.
- The total cost of your line of credit will vary based on several factors, including your personal and business credit scores, time in business, annual revenue, and cash flow. The average rate for lines of credit is 55.9% APR.
According to OnDeck, eligibility for the lowest rates is very limited.
It is only available to businesses with the strongest creditworthiness and cash flows and businesses that have already used OnDeck’s loan products and shown an excellent payment history.
As with the term loan, you may be eligible for additional funding based on your cash flow, net income, and payback history.
It is worth noting that although OnDeck runs soft credit checks that don’t affect your credit score, it does report your payments to business credit bureaus.
1.3. Instant Funding
Instant funding is a variant of OnDeck’s line of credit loan thatuses a debit card network to process transactions and allows you to access funds usually within 30 minutes.
It is limited to draws between $1,000 and $10,000, and you can only make one draw request per day.
Moreover, there are other limitations:
- Registration is required and is subject to the Instant Funding Terms & Conditions.
- You must register a business debit card matching the information associated with your OnDeck account.
2. Loan Comparison Tool
It’s a tool that shows you key terms you need to evaluate potential short-term loan offers to have a comprehensive breakdown of your capital cost.
The breakdown will show the following cost calculations:
- Annual percentage rate.
- Cost of financing.
- Cents on the dollar.
- The monthly payment amount.
In addition, it will also showcase whether there are any early repayment fees or reductions in total interest charges.
OnDeck: Pros & Cons
🟢 Fast funding
🟢 Loan renewal available.
🟢 Lower fees for repeat customers.
🔴 Possible prepayment penalty.
🔴 Can have high interest rates.
🔴 May charges a loan origination fee.
Funding Circle vs. Ondeck: Final Verdict
The choice between OnDeck and Funding Circle largely depends on your business's financial situation and urgency for funding.
OnDeck can make a good choice for urgent funding, while Funding Circle has lower entry barriers and more diverse loan types.
However, there is an alternative to both Funding Circle and OnDeck that provides flexible loaning options with minimal requirements and no credit checks.
In addition, it equips you with liquidity planning tools to nurture a healthy cash flow — a core element when applying for loans.
Puls Project — A Robust Alternative to Funding Circle and OnDeck
Puls Project is a comprehensive cash flow management tool that assists SMEs with financial planning and quick access to funding.
It is an effective financial management system that addresses common cash management challenges, such as liquidity problems and poor cash flow management.
Thus, with Puls Project, you can:
💎 Get Quick Access to Funding
We offer fast financing options, allowing you to secure loans up to €100,000 within approximately 48 hours for 12 months.
💰 Our requirements are minimal.
You only need to:
- Be in business for 6 months,
- Provide a loan agreement and
- Provide the personal identification of beneficial owners and directors as per GwG.
💰 In addition, we don’t require collateral or personal guarantees, and we don’t run credit checks.
We can offer such flexible and favorable terms mainly because our fund, Montold SME Lending Fund GmbH & Co. KG, registered with BaFin, enables us to issue loans quickly and easily. No time-consuming policies and complex criteria.
💰 You can also request additional funding provided your payments are in order and you maintain proper flow management.
💰 Our Loan Calculator enables you to get an estimate by setting the amount and the repayment period.
This way, you can see the total cost, interest rate, and monthly interest.
💎 Connect Multiple Bank Accounts
Our solution enables you to manage your finances efficiently by safely connecting various bank accounts from over 4,000 banks within a single platform.
As a result, you’ll get a centralized view of your financial status across all accounts and companies.
💰 The multi-banking functionality allows you to categorize all inflows and outflows and consequently
- Improve organization and expense tracking,
- Identify spending trends and
- Optimize financial strategies.
💎 Automate Cash Flow Planning
Our cash flow management tool simplifies the creation of cash flow plans by allowing you to input regular monthly expenses just once and see them automatically displayed for future months.
💰 Another perk of our tool is that you have a centralized view of all your bank accounts and companies, enabling unified account management.
💰 Furthermore, we sync all your transactions multiple times a day, providing you with accurate, real-time data for better forecasting and decision-making.
💰 We’ll also inform you when we spot a potential cash gap so that you can be proactive and take necessary actions.
Ready to see Puls Project in action?
Sign up for Puls Project today and get immediate funding while enhancing cash flow management practices.
Keep Learning:
5 Best Business Loans for Small Businesses With No Credit Check
