Hoping to transform the traditionally slow-moving, opaque, and complicated process of the equipment financing market, online small business lender OnDeck has announced it will enter the market for small ticket ($250,000 and under) loans in this category. OnDeck will offer loans online of up to $100,000 to U.S. small businesses beginning in 2019.
Here is what CEO and Chairman, Noah Breslow said in the press release:
With more than a decade of success and over $10 billion funded to small businesses online, we believe OnDeck’s technology is primed to revolutionize how small businesses finance their equipment needs. We expect OnDeck equipment finance loans to quickly become a vital source of online financing for small business owners seeking simple, transparent equipment financing they can understand and utilize.
OnDeck’s decision to add only the third lending product in its history is based on a successful pilot program begun last summer and resulting data indicating that the equipment financing market is vulnerable to disruption. According to the Equipment Leasing and Finance Association, 68% of all capital purchases in the United States are financed, with small-ticket (under $250,000) equipment finance loans and leases representing $35 billion in originations in 2017. Applying for and receiving the majority of those small ticket loans remains a cumbersome, time consuming and paper-based process. That is a similar scenario to the market for small business loans that OnDeck first began disrupting in 2008.
In 2019, OnDeck will begin making its own equipment finance loans, ranging from $5,000 up to $100,000, with terms ranging from 24 to 60 months, secured by new and used equipment. OnDeck plans to offer only equipment finance loans, rather than leases.
OnDeck also announced the appointment of Mark Erickson as Vice President of Equipment Finance. Erickson is a veteran of the equipment finance market, previously serving in executive roles in sales, operations, syndications, and risk at Key Equipment Finance, Inc., a unit of Key Corp. He was also the managing director of the firm’s Australia and New Zealand subsidiary from 2000 to 2004. He had this to say about his new position:
I look forward to working with the team to leverage OnDeck’s online originations and underwriting technology to deliver speed and convenience for small business owners seeking equipment finance loans. With speed, service and transparency, we are poised to transform this market to the benefit of small businesses.