Online Small-Business Loan Alternatives to OnDeck and Lending Club

Teddy Nykiel

When you hear the phrase “online lender,” a few brand names probably come to mind. You’ve likely heard of OnDeck Capital or Lending Club — the only two publicly traded companies that originate small-business loans online. Together, those companies spent $102.9 million on sales and marketing in the first half of 2015, according to the companies’ quarterly statements.

But there are dozens of other online lenders that have emerged in the past 10 years, offering small-business loans that are easier and faster to get than a bank loan — but also more expensive. If you’re looking for quick cash for your business or don’t qualify for a bank loan, an online small-business loan could be a smart alternative. Not all online lenders are the same, however. You should compare all your options based on factors including annual percentage rate and term length.
“I always advise clients to read the fine print,” says Joshua Daly, director of the Providence region of the Rhode Island Small Business Development Center. “If it seems like it’s too good to be true, you might want to take a second look.”

Below are some small-business lenders that are lesser known than OnDeck and Lending Club but may be right for your business. To compare all your options, check out our list of best small-business loans, based on factors including lender trustworthiness and user experience.

For businesses that want versatility: Dealstruck

Founded in 2012, Dealstruck is an online direct lender offering three different types of small-business loans to fit companies’ various needs. Its term loan is good for businesses that need to finance one-time purchases, such as equipment or renovations. Its asset-based line of credit is best for businesses that have outstanding invoices and need cash fast to make payroll or pay rent. Dealstruck’s inventory line of credit is designed for businesses that have recurring inventory purchases but won’t actually sell that inventory for several weeks.

When you apply for a Dealstruck loan, you’ll be asked to select the purpose of your loan, such as “manage finances and payroll better” or “hire staff.” Dealstruck will match you with a product — either a term loan or line of credit — based on your answer. To learn more about the pros and cons of Dealstruck, check out our Dealstruck review.

For businesses looking to expand: Fundation

Founded in 2011, Fundation is an online direct lender offering term loans for established businesses that want to expand, refinance debt or boost their working capital. To qualify, you need to have been in business for at least two years and have at least three employees, including yourself.

Fundation offers different term lengths depending on how you plan to use the loan funds. If you’re using the money to expand your business by opening a new location, add a new product or service or buy large equipment, your term will be two to four years. If you’re financing shorter-term costs such as payroll or small amounts of inventory, your term will be one or two years. To learn more about the pros and cons of the lender, check out our Fundation review.

For technology companies: Lighter Capital

Founded in 2010, Lighter Capital focuses on lending to technology businesses including software services, mobile application makers and digital media companies. Lighter Capital offers revenue loans, which are variable-rate loans up to $1 million based on a fixed percentage of your monthly revenue. For high-growth technology companies, revenue loans can be an attractive alternative to venture capital if you don’t want to give up equity. To learn more about the pros and cons of Lighter Capital, check out our Lighter Capital review.

For franchises: ApplePie Capital

Founded in 2014, ApplePie Capital is an online marketplace lender offering term loans for new or expanding franchise businesses. You can use an ApplePie Capital loan to start a new franchise, finance renovations or refinance an old loan. ApplePie Capital connects franchise entrepreneurs with individual and institutional investors. The online application is quick and easy; you can get preapproved in two days, approved in five and funded in 30 days or less. Franchises that have gotten financing through ApplePie Capital include Einstein Bros. Bagels, Wetzel’s Pretzels and Nothing Bundt Cakes.

The bottom line

Although OnDeck and Lending Club are two of the biggest online lenders for small-business loans, more small-business loan options are emerging as online lending grows in popularity. If you qualify, it’s a good strategy to apply for multiple small-business loans and choose the lender that offers you the lowest APR.

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About Fundation

Fundation combines the benefits of a bank loan with the ease and efficiency of an online lender. We offer conventional loans with competitive rates to businesses with varying credit profiles. Our technology allows us to deliver capital in as few as 3 business days through streamlining the collection and evaluation of customer information and conducting the majority of the lending process electronically. As a direct lender, we use our own capital to originate and hold the loans we make, so that we can focus on building relationships with our customers. Our dedicated customer relationship model enables us to understand each unique borrower’s business. This level of service, coupled with our best-in-class products, is why many of our customers come back to us repeatedly for more capital.

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