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OnDeck Turns 10: Snapshot of its Journey Into an SME Lending Giant

OnDeck Loan Originations

OnDeck, with its vision to provide lending solutions to Small and Medium Enterprises (SME), has gone from strength to strength since its 2007 inception to emerge as the largest online lender to small businesses. It has been able to win in an increasingly competitive environment, is now a listed corporation, and has successfully completed a decade whereas its peers have faced many strong headwinds. Let´s put light on the journey of OnDeck into an SME lending giant.

OnDeck, an alternative lending platform, entered the P2P lending space in August 2007 with the intention to gain a foothold in SME lending. With its “customer first” philosophy, it has focused on providing speedy, efficient, and top quality lending solutions to SMEs. The company was founded by Mitch Jacob (founder), a serial fintech entrepreneur. So far, OnDeck has provided $7 billion in loans to over 70,000 customers in almost 700 different industries. The company has over 400 employees on its payroll and more than $150 million in annual revenue.

Key Milestones


After originating its first loan in 2007, the SME lending powerhouse leveraged its proprietary technology and data driven OnDeck Score to achieve company revenue of an estimated $15 million in 2010 as compared to $5 million in 2009. The financial crisis of 2008 came as a blessing in disguise for the online lending platform as banks simply vacated the small business lending vertical. This helped the young company to quickly reach the $50 million mark in loans disbursed to over 2,000 small businesses.


2011-2014 was considered as a golden era in the history of the company, as the company grew by 127% (CAGR) during that time. In 2013, it originated $458.9 million of loans in the top five states alone: California, Florida, New York, Texas, and New Jersey; this represented a year-on-year growth of 165% and was ranked 11th in the Forbes’100 Most Promising Companies in America. It was awarded an A+ rating from Better Business Bureau for providing remarkable product and service to its clients.

In May 2014, OnDeck entered into a partnership with BBVA Compass, a customer-centric global financial institution, ranked among the top 25 banks in the US. With the help of OnDeck’s innovative technology and business scoring system, the bank was able to offer customized loans to its small business clientele. In this alliance, BBVA referred their clients to OnDeck for loans, and OnDeck used the BBVA data to underwrite the loans. The partnership was a game changer as banks and fintech lenders had been seen as competitors till then. This model showcased a way where they could work on their individual strengths and be allies. OnDeck flourished in 2014 and originated loans worth $788.3 million during the year and witnessing a year-over-year growth of 171%. By the end of 2014, it crossed the coveted $1 billion mark in originations during the year.



In December 2014, the online lending platform started trading on New York Stock Exchange under the ticker “ONDK.” It managed to raise $200 million from its IPO, and the firm was valued at $1.32 billion after the end of first day of trading. It was a huge milestone for OnDeck as well as the entire alternate lending industry as OnDeck was only the second P2P company to be listed at that time. With a valuation over $1 billion, the company was catapulted into an elite list of “unicorns.”


Since 2007, OnDeck has facilitated over $1.5 billion in loans across 700 industries in almost all 50 US states.

OnDeck $1.5 billion

Another feather in its cap was the partnership with JP Morgan Chase, the country’s largest bank with $2.5 trillion in assets and over $100 billion in revenue. Through this partnership, JP Morgan has been offering small business loans to its 4 million small business accounts. The bank leverages OnDeck’s underwriting technology for quick approvals and funding of their loans. While it is a Chase branded loan and it appears on the bank`s balance sheet, OnDeck provides loan servicing and in return has been receiving originations as well as servicing fee per loan. OnDeck is providing a tailor-made platform keeping in mind JP Morgan’s needs and leveraging the bank’s own client base for customer acquisition.

An In Depth Look at the OnDeck/JPMorgan Chase Deal

Economic Impact

OnDeck commissioned an analysis report to show the positive economic impact its lending had on the economy and society. The report stated the company’s first $3 billion lent to the small businesses powered $11 billion in business activity and created 74,000 jobs nationwide.

Key Highlights

  • In order to remain ahead of its competitors, the online platform is continuing to grow its strategic partner channel. In April 2015, OnDeck collaborated with Angie´s list to give small businesses access to loans up to $250,000. Another strategic alliance was announced in the same month between Prosper Marketplace and OnDeck. The focus is to collectively address the financial needs of customers by offering better, innovative, and customised solutions.
  • OnDeck launched its offices in Australia and Canada. They represent unchartered territories, but the company has the capital and the experience to take advantage of new markets sharing a lot of similar characteristics as its home market.


To maintain its strong value proposition and promote transparency, OnDeck created a group named “Innovative Lending Platform Association” (ILPA) with two other major online lending companies, Kabbage and CAN Capital. ILPA is a trade organization that was formed to ensure transparency and standards around pricing and fees. The association was formed with the motive to create the industry´s first model for pricing disclosure by empowering small businesses to better assess and compare finance options. The initiative resulted in the origination of SMART BoxTM which means ¨Straightford Metrics around Rate and Total Cost .¨

OnDeck also joined hands with Intuit Inc. (NASDAQ: INTU), a financial software company, in June 2016. The alliance launched a new “QuickBooks Financing Line of Credit” that provides small businesses easy access to loans at a low rate of interest. Intuit and OnDeck alliance also launched a $100 million small business lending fund to back the new product.


OnDeck is extending its partnership with JP Morgan Chase by signing a new 4-year contract. The project named Chase Business Quick Capital® will allow OnDeck to increase digital functionality on the platform and target the megabank’s millions of small business clientele.

Measures to turn it into a profitable company

The company has endured a rough time as a listed company in the last few months and this has shown in its annual results. In Q4, 2016 its year-on-year (YOY) growth in loan origination fell to 13% as compared to 27% in Q3. To stop this downward slide, it introduced a “cost rationalization” plan which was focused on tightening credit management and job cuts. Along with this, the following lines of actions were also adopted by the company to reach profitability:

  • As per Q4, 2016 results, staff reduction was expected to be around 11%. But the management revised the staff reduction target to 27% to further continue the cost reduction.
  • The company is moving to a balance sheet lending model to reduce dependence on external lenders.

OnDeck Loan Originations

And not surprisingly, its recovery plan and cost optimization measures started paying off in Q1 2017. The net losses dropped substantially by 68% from $36.5million in Q4, 2016 to $11.6 million in Q1, 2017. And above that, provision for losses also reduced by nearly 17% from $55.7 million to $46.2 million in Q1, 2017.

Stock Price responding to the measures
OnDeck stock price

The price chart clearly shows that the last year was not a good period for the company stock. The stock kept plummeting all through the year. But the measures initiated by the management in the last quarter of 2016 have somewhat stalled the downward spiral and the stock price has finally started to show some resistance.


OnDeck announced Q2, 2017 financial results in August. The lender has managed to narrow down the quarterly losses significantly along with kickstarting a $45 million cost rationalization program. More importantly, the company expects to finally hit GAAP-profitability by the year-end. The company has a strong fundamental base, and its ability to pivot for survival and growth will ensure that the company is here for the long run.


Written by Heena Dhir.


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