OnDeck Will Focus on Better Borrowers, Expanded Partnerships to Grow Originations

OnDeck is turning towards upgraded features, expanded partnerships, and higher-quality borrowers to jolt its originations back towards growth.

The online small business lender reported $464 million in originations for this year’s second quarter, said CEO Noah Breslow during OnDeck’s earnings call this morning. This is down 19% from the $590 million OnDeck reported for the previous quarter.

That number falls in line with estimates made last quarter, according to Breslow on the call, and represents more selectivity on OnDeck’s part, as opposed to any lapse in loan demand. Said Breslow:

For context, applications for credit were up year-over-year despite lower marketing spend, so loan demand remains high. As a result, we were very selective in approving and focusing on higher-quality borrowers.

In fact, Q2 yielded some of the highest-quality customers from both an OnDeck score and FICO perspective that we have ever originated.

The company is “pleased with this momentum in originations,” said Breslow, adding that the company is “also working on several discreet initiatives to reaccelerate growth in a responsible manner.”

The online lender will continue this focus on higher quality borrowers going into the remainder of 2017, and will also be expanding several of its loan features, including prepaid benefits for term loans and a “more tailored” underwriting experience for businesses, said Breslow.

The company will also be expanding its existing partnerships for small businesses, it announced during the call, including its expanded work with JPMorgan Chase on the bank’s own SMB lending product, Chase Business Quick Capital.

The lender will provide technology support to the product for up to four years, according to the company, as Chase continues to work on the offering’s digital features.

These initiatives will have a strong effect on OnDeck moving forward, per Breslow:

Accordingly, we are confident that originations will begin to grow sequentially again in a high-quality manner beginning in the third quarter.

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Grace Noto is Associate Editor of Bank Innovation. She has an MA from the University of Essex, as well as BA in English and a BA in Journalism from SUNY New Paltz. Prior to joining Bank Innovation in the summer of 2016, she worked on Electronic Products Magazine, an online publication surrounding technology and computer engineering, and has worked for other publications, including the Poughkeepsie Journal. She also writes in her spare time, and really needs more hobbies.

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