No business lender is perfect. A lot of them try (and get pretty close) but sometimes, the biggest advantages can lead to polarizing disadvantages. Take OnDeck Capital, for instance. This online business lender is widely-praised by all kinds of small business owners, and rightfully so. OnDeck’s application requires minimal paperwork, you can get funded in under 24 hours, and your personal credit score doesn’t need to be perfect. But despite their heightened accessibility, many OnDeck applicants find themselves unexpectedly declined. This is a huge blow, since online business lenders were initially created for business owners who were previously unable to obtain loans from traditional sources, like banks.
But being declined by OnDeck does not mean you won’t be able to meet the requirements of any other reputable business lender. Odds are, your rejection can be traced back to OnDeck’s only shortcoming: Having only 2 products.
Great Company, But Only 2 Products
OnDeck offers just two business funding programs: business term loans and business lines of credit. Borrowers must make minimum or fixed payments every month until the amount is paid off in full. The maximum credit amount for a term loan is $500,000 and $100,000 for the line of credit. They’re also beginning to roll out equipment financing programs as well, which is great news for partners like United Capital Source who love OnDeck’s current offerings. To determine whether an applicant can make the payments of his or her requested program, OnDeck assesses your monthly revenues & cash flow. You might think that if you meet the requirement for minimum annual revenue ($100,000), you should have no problem being approved.
This annual number, however, isn’t the real requirement. OnDeck borrowers must earn at least $8,500 per month, which comes out to approximately $100,000 per year. Plenty of small businesses earn $100,000 per year but not $8,500 for 12 months straight. They might be frequently prone to changes in demand, extreme seasonality, or delays in payments from business partners. There’s virtually nothing these businesses can do to avoid the natural circumstances of their industries. But if there’s any reason to believe your cash flow isn’t as smooth as possible, OnDeck may very well reject your application.
Examining Other Options
The solution to OnDeck’s lone flaw is to find another business lender that offers more than the two aforementioned programs. With the right small business loan for your cash flow situation, you could accomplish the exact same goals you would have with a term loan or business line of credit. And because the program’s terms are designed to accommodate fluctuations in revenue, you’d likely be able to make payments without having to dig into operational funding or experience any sort of difficulty meeting monthly business expenses.
At United Capital Source, we offer numerous business loan programs with very different repayment systems. Examples include merchant cash advances, revenue based business loans (a.k.a. business cash advance), accounts receivable factoring, SBA loans, and short-term working capital loans. Most of these programs are even available to applicants with poor or little credit history. Much like OnDeck, our application requires minimal paperwork and can be approved in 24-48 hours. But unlike OnDeck, the appearance of tumultuous revenue will not automatically render you ineligible for funding.
How We Work With Tumultuous Cash Flow
If your business suffers from one of the aforementioned cash flow dilemmas, we would likely recommend a business funding program that lacks fixed or minimum monthly payments. With a merchant cash advance or revenue based business loan, substantial payments are only deducted when sales volume is on the rise. Slow months deduct much smaller payments and do not increase your interest or the total amount owed. This makes both programs highly appropriate for seasonal businesses that struggle to cover regular expenses once demand comes to a dramatic halt for several months.
We also work with a great deal of service-based businesses that do not get paid in full until their projects are complete. The considerable expenses required for these projects leave them cash-strapped, despite having to cover payroll in the meantime. A similar predicament is common in medical practices, which tend to receive the majority of their revenue from insurance providers. Doctors and dentists must often wait weeks (if not months) for providers to file payments. Both scenarios can be alleviated with accounts receivable factoring. The borrower’s business cycle would be cut down to just two or three business days, and collecting payment from the client or insurance provider would become the responsibility of the business lender.
The Journey Is Not Over
So, if you’ve been rejected by OnDeck, there’s no reason to believe you’d have the same luck with a company like United Capital Source. As long as your business is alive and kicking, a few bouts of slower revenue will most likely not render you ineligible for funding altogether. Not sure which business funding program makes sense for you? No problem! We are more than happy to help you figure that out. You’ll be pleased to discover just how many routes today’s small businesses can take to growth or expansion.