PMorgan Chase & Co., the biggest U.S. bank, is collaborating with OnDeck Capital Inc. to dramatically speed up the process of providing loans to small businesses.
“We’re working with OnDeck to build a new Chase lending product that will be launching in 2016 for small-dollar loans to our small-business clients,” Jennifer Piepszak, JPMorgan’s head of business banking, said Tuesday in a phone interview. “By combining Chase’s relationships and lending experience with OnDeck’s technology platform, we’ll be able to offer almost real- time approvals and same- or next-day funding.”
JPMorgan has about 4 million small-business customers.
Big financial firms are working with online lending startups that less than a decade ago set out to bypass banks by offering so-called peer-to-peer loans, matching borrowers with individuals who wanted to fund them. While some banks use the platforms to make loans cheaper and faster, others just make the ventures’ products available to their customers.
OnDeck, which offers high-cost loans to small businesses over the Internet, went public in December at an initial price of $20 a share. It has since slid to $9.01 as more startups crowd into online lending. The firm says it uses a proprietary assessment of creditworthiness that pulls in more and better data than banks do.
Small business loans that currently take days or weeks to be funded could be made within minutes or days, Piepszak said. The product will carry Chase’s brand and is expected to be rolled out in a pilot program next year, she said. Small-dollar credit typically refers to loans of less than $250,000.
JPMorgan Chief Executive Officer Jamie Dimon signaled that a partnership is in the works earlier Tuesday during a panel discussion in Washington. The new ventures offer “the kind of stuff we don’t want to do or can’t do, but there’s somebody else who can do it and do it probably well,” he said. Online lenders use a broad amount of non traditional data to “determine whether someone is a good credit or not,” he added.
OnDeck Capital was No. 24 on Crain’s 2015 Fast 50 list of the fastest-growing companies in New York
OnDeck (NYSE: ONDK), the leader in online lending for small business, is committed to powering Main Street’s growth through lending and technology innovation. Using advanced technology, analytics and the OnDeck Score® – the company’s proprietary small business credit scoring system – OnDeck makes real-time lending decisions based on thousands of data points and a business’ individual needs. By combining its proven credit platform with outstanding customer service, OnDeck offers small businesses a complete financing solution, including a range of term loans and lines of credit as well as a streamlined process that respects a small business owner’s time.
OnDeck also partners with small business service providers, enabling them to seamlessly connect their customers to OnDeck financing. OnDeck’s diversified loan funding strategy enables the company to fund small business loans from various credit facilities, securitization and the OnDeck Marketplace®, a platform that enables institutional investors to purchase small business loans originated by OnDeck.
Since 2007, OnDeck has deployed more than $3 billion to more than 700 different industries in all 50 U.S. states and Canada. The company has an A+ rating with the Better Business Bureau and operates the website BusinessLoans.com which provides credit education and information about small business financing. OnDeck is a publicly traded company on the New York Stock Exchange.