OnDeck expands into equipment financing
- Equipment financing is heating up.
- Small business lender OnDeck wants a piece of the action.
In the wake of record originations in the third quarter of the year, the online small business lender OnDeck is expanding its services to financing equipment purchases. The company had already been referring customers seeking equipment financing to third-parties, and instead, will now originate and service such loans themselves.
What’s happening: In a press release, the company gave some details about the proposed expansion: 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.
Why get into equipment financing: OnDeck is working its way into an already competitive industry. According to a report from the Equipment Leasing & Finance Foundation, there is increasing competition from lenders in the equipment leasing space across the board.
Tearsheet Take: With an already solid base of small business customers, OnDeck should be able to make this transition rather seamlessly. Additionally, 67percent of the $1 trillion equipment leasing industry finances their purchases via loans or leases, so it’s a huge market for disruption.
Some small business lenders, like Kabbage, offer equipment financing, and peer to peer lenders like Funding Circle offer alternative lending methods in the space. However, for the most part, traditional business lenders such as CIT and lending arms of commercial banks like Bank of America and Wells Fargo already control the vast majority of this market. This may be why OnDeck will originate loans less than $100,000 each, focusing more on smaller equipment purchases than their larger competitors.