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ProfileCompany or group

OnDeck

Lender or loan platform

PPP
Type
Company or group
Role
Lender or loan platform
Programs
PPP
Updated
  • Type: Online small-business lender; formerly independent public company, now a brand of Enova International.
  • Legal entities: On Deck Capital, Inc. (NYSE: ONDK until October 2020); since October 13, 2020 a subsidiary/brand of Enova International, Inc. (NYSE: ENVA).
  • Founded: 2006, New York City.
  • HQ: New York City (pre-acquisition); Enova is headquartered in Chicago.
  • CEO: Noah Breslow through the Enova acquisition; the OnDeck brand now sits under Enova, where Jim Granat has led the small-business unit.
  • Role in PPP: Publisher of the March 24, 2020 fintech coalition letter; PPP agent/processor for Celtic Bank; announced SBA approval as a direct lender on April 14, 2020, but as of its August 2020 10-Q had not used it to originate a loan, and it stopped processing new PPP applications on June 4, 2020. No OnDeck-specific PPP volume or fee total is broken out in the public data; its August 2020 10-Q said its PPP fees had "not been significant."1

Pandemic-role map

  • Reader shorthand: organizer of the March 24, 2020 fintech letter; acquired by Enova in October 2020.
  • What OnDeck did for borrowers: processed and serviced PPP applications on behalf of Celtic Bank and appeared in fintech-PPP access lists (including the U.S. Chamber's June 2021 guide); for its own borrowers it offered flexible repayment and, later, work-out programs.21
  • Where responsibility sat: loans in the OnDeck channel were booked on partner-bank rails; no clean OnDeck originating-lender row appears in the lender-fee data, unlike ReadyCap, Itria, or Fundbox.

Before the pandemic (2006–early 2020)

OnDeck was an online small-business lender in the United States: founded 2006, NYSE-listed from December 2014 (we do not have copies of the SEC filings). Its IPO valuation, cumulative lending and JPMorgan Chase white-label history previously stated here are not in any source we have.

During the pandemic (March 2020 – October 2020)

On March 23, 2020, On Deck Capital told the SEC that the financial guidance it had issued earlier that year "no longer applies" and that it had drawn the rest of its corporate credit line, $35 million.23 It had spent $33 million buying back its own stock in January and February, then suspended repurchases in late February.4

The March 24, 2020 letter to congressional leaders that OnDeck published on its press page came from "OnDeck, and 21 fintech companies"; its signature block lists 30 executives from 25 companies, including OnDeck's CEO, Noah Breslow. It asked for legislation giving Treasury the flexibility to "inject upwards of $500 billion in discretionary funding into small businesses," through "financial institutions, credit unions, online lenders, payroll processors" and others. "We seek no gain from this crisis."5

PPP: the agent's fee

In the Paycheck Protection Program, OnDeck processed and serviced loans on behalf of Celtic Bank.6 Its August 2020 10-Q said the loans were funded by "chartered financial institutions we partner with" and that its fees were "limited by law and our contractual arrangements." It added: "To date such amounts have not been significant, and we do not expect them to be."1 OnDeck applied on April 9 to lend under PPP directly and announced on April 14 that the SBA had approved it.67 By the August 10-Q it had not used that approval to originate a loan, and it had stopped processing new PPP applications on June 4.1

Its PPP page told applicants that "applications from OnDeck customers may be prioritized over non-customers for submission to the SBA."8 In a May 28 filing, OnDeck said a survey of its customers at the end of April drew about 1,700 responses: 15% said they had received a first-round PPP loan, and 72% planned to apply in the second round.9 Management's forecasts were updated as of June 23, 2020 and discussed by the board on June 30, the day it received revised buyout proposals. They had been refined to reflect "the adverse impact of government loan assistance programs on the demand for OnDeck's loan products."3 The SBA's public PPP loan data (September 2024 release) list no loan to On Deck Capital or Enova International.10 OnDeck is not named in the House Select Subcommittee on the Coronavirus Crisis's December 2022 staff report on fintechs in PPP.11

Borrowers: workouts and a 39.5% delinquency rate

For its own borrowers OnDeck offered "flexible repayment options to current customers, when appropriate," and later "work out programs."21 Neither filing gives an enrollment count or a cost. Under a May 2020 amendment to one of its loan-funding facilities, receivables "granted temporary relief in response to the COVID-19 pandemic" would generally not count as delinquent from March 11 to August 31, 2020, while they paid on their modified terms.12 The share of OnDeck's loan balances 15 or more days past due rose from 8.5% a year earlier to 39.5% at June 30, 2020.1

Staff: furloughs, pay cuts, then a layoff

On April 6, 2020, OnDeck imposed a temporary hiring freeze and moved about 30% of its employees to part-time or furlough status. Staff who stayed full-time took a 15% pay cut, the CEO 30% and the board 30%, for an initial 90 days.313 OnDeck had 746 employees at June 30. In July it conducted a workforce reduction expected to be about 20% of its U.S. headcount, with a $2.8 million restructuring charge.1

Going concern, then a sale

The first-quarter 10-Q, dated May 11, disclosed "substantial doubt" about OnDeck's ability to continue as a going concern.13 In late April OnDeck had suspended nearly all new term loans and lines of credit; it reported second-quarter originations of $66 million, down 89%.1314 On June 3 the NYSE notified OnDeck that its average closing price over the prior 30 trading days was below $1.00.15 A June 17 trigger in its corporate credit line set up principal repayments of $21 million a month; OnDeck paid $5 million to delay them to July 14.163

Beginning in April, OnDeck's banker, Evercore, contacted 84 parties. One, called Party C in the proxy, proposed buying about $1.3 billion of OnDeck's loan portfolio for $40 million.3 On July 28 Enova agreed to pay $0.12 in cash plus 0.092 of an Enova share for each OnDeck share. The companies valued the deal at about $90 million, or $1.38 a share, 90.4% above OnDeck's $0.73 close the day before.173 At the October 13 closing Enova put the price at $1.89 a share, about $122 million.18

Enova's 2020 10-K put total purchase consideration at $115.7 million and booked a $164.0 million "bargain purchase" gain, because it valued the net assets it acquired above the consideration. It said uncertainty about the pandemic's effect on OnDeck, about its debt facilities and about its liquidity "are what likely led to a bargain purchase scenario."19 The gain was larger than the price.

The merger proxy estimated CEO Noah Breslow's golden-parachute compensation at $2,768,120 and disclosed his offer from Enova: vice chairman, a $580,000 salary and a proposed equity award with a grant-date value of $1,160,000. Accepting the Enova job at the closing counted as a termination for "Good Reason" under his change-in-control agreement.3

Notes

  1. On Deck Capital, Inc. Form 10-Q, quarter ended June 30, 2020, filed August 7, 2020: risk factors, Notes 12 and 13, MD&A. ↩
  2. On Deck Capital, Inc. Form 8-K, March 23, 2020, Item 8.01. ↩
  3. On Deck Capital, Inc. definitive merger proxy statement (Schedule 14A), September 8, 2020: "Background of the Merger," "New Compensation Arrangements with Enova" and "Golden Parachute Compensation Table." ↩
  4. OnDeck Reports First Quarter 2020 Financial Results, Form 8-K Exhibit 99.1, April 30, 2020. ↩
  5. OnDeck and fintech coalition letter to congressional leaders, March 24, 2020. ↩
  6. OnDeck Begins Processing Applications for SBA Paycheck Protection Program, April 13, 2020. ↩
  7. OnDeck Approved as SBA Paycheck Protection Program Lender, April 14, 2020. ↩
  8. Paycheck Protection Program - OnDeck (ondeck.com, May 13, 2020). ↩
  9. On Deck Capital, Inc. Form 8-K, May 28, 2020 (mid-quarter update), Item 7.01. ↩
  10. SBA PPP FOIA loan-level data, September 30, 2024 release. ↩
  11. We Are Not the Fraud Police: How Fintechs Facilitated Fraud in the Paycheck Protection Program, House Select Subcommittee on the Coronavirus Crisis staff report, December 1, 2022. ↩
  12. On Deck Capital, Inc. Form 8-K filed May 15, 2020 (debt facility amendments), Item 1.01. ↩
  13. On Deck Capital, Inc. Form 10-Q, quarter ended March 31, 2020: Note 13 (going concern), Note 14 and MD&A. ↩
  14. OnDeck Reports Second Quarter 2020 Financial Results, Form 8-K Exhibit 99.1, July 28, 2020. ↩
  15. On Deck Capital, Inc. Form 8-K filed June 5, 2020 (NYSE notice), Item 3.01. ↩
  16. On Deck Capital, Inc. Form 8-K filed June 23, 2020 (corporate facility consent), Item 1.01. ↩
  17. Enova to Acquire OnDeck to Create a Leading FinTech Company Serving Consumers and Small Businesses, joint press release, On Deck Capital Form 8-K Exhibit 99.1, July 28, 2020. ↩
  18. Enova Completes Acquisition of OnDeck, Enova Form 8-K Exhibit 99.1, October 13, 2020. ↩
  19. Enova International, Inc. Form 10-K for 2020, filed February 26, 2021: note on the OnDeck acquisition. ↩

After the pandemic (late 2020 – present)

OnDeck survives as Enova's small-business brand. Enova's FY2024 results (we do not have a copy of the release) reported revenue of $2.7 billion and net income of $209 million; those are Enova numbers, not standalone OnDeck numbers. Noah Breslow left after the integration (see his profile); Jim Granat, who signed the coalition letter for Enova (signatories register), continued to run Enova's small-business business (see his profile).

Sources

In this archive

  • Letter archived locally: LETTER OnDeck Fintech Coalition Request-500B to Congress 2020-03-24
  • Enova earnings-call transcript, Q1 2020 (Apr. 28, 2020): Enova International (ENVA) — Q1 2020 Earnings Call Transcript
  • Enova EDGAR PPP extraction (no quantified PPP origination disclosure): PPP EXTRACTION

External references

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