[bizloanbroker]

Sales rep A is commiserating with sales rep B over the decline of a large file due to the fact that the merchant was behind on the rent for 3 months. At the same time the Ondeck Capital local area rep is walking around my office and over hears this conversation going on. He walks over to sales rep A and says "send the file to Ondeck, we do not check landlords so the file will fly through underwriting. Sure enough sales rep A does that and 24 hours later the file funds for $90,000. No big surprise, 2 weeks later the merchant gets locked out of his store by the landlord and defaults on Ondeck.

Everyone out there is trying to figure out why Ondeck is suddenly cancelling iso agreements on some of their larger isos, cutting commissions etc.

The answer is real simple. Their portfolio is a giant train wreck with a 20% plus default rate and climbing

They don't check landlords, financials, pretty much anything. For them its all about funding more deals and grabbing market share.

Good luck with that IPO

[funding pro]

When you go from funding x in one month to 1.5x, 2x, 3x, 6x, etc. it will make the bad debt look manageable. The problem is once you hit the top of that bell curve and cannot push the multiple any higher, bad debt will start climbing rapidly.

[cashguy]

I'm opening a brokerage account as soon as they ipo and quit period ends. Shorting the **** out it.

[channin19]

Sales rep A is commiserating with sales rep B over the decline of a large file due to the fact that the merchant was behind on the rent for 3 months. At the same time the Ondeck Capital local area rep is walking around my office and over hears this conversation going on. He walks over to sales rep A and says "send the file to Ondeck, we do not check landlords so the file will fly through underwriting. Sure enough sales rep A does that and 24 hours later the file funds for $90,000. No big surprise, 2 weeks later the merchant gets locked out of his store by the landlord and defaults on Ondeck.

Everyone out there is trying to figure out why Ondeck is suddenly cancelling iso agreements on some of their larger isos, cutting commissions etc.

The answer is real simple. Their portfolio is a giant train wreck with a 20% plus default rate and climbing

They don't check landlords, financials, pretty much anything. For them its all about funding more deals and grabbing market share.

Good luck with that IPO

OnDeck does check financials on some deals.

Also realize that their investors do have different appetites for risk so are willing to fund riskier deals hence the difference between core and volume.

[MCNetwork]

The On Deck ODX program was laughable. Send in one bank statement and BANG! you're approved for 35K! Send in a DL and VC and you're FUNDED on the same day! Is your business seasonal? Who cares! Were the previous 3 months of bank statements horrible? No problemo! Can someone say...House of Cards?

[Scott Williams]

I think they phased out ODX because it was preforming so poorly. No surprise there.

[Fastpoint]

My favorite ODC story is the one where they cut off their biggest iso so they could steal all of the active files and not pay any commish...

Congrats to The Business Backer on all the new business.

[Chambo]

Sales rep A is commiserating with sales rep B over the decline of a large file due to the fact that the merchant was behind on the rent for 3 months. At the same time the Ondeck Capital local area rep is walking around my office and over hears this conversation going on. He walks over to sales rep A and says "send the file to Ondeck, we do not check landlords so the file will fly through underwriting. Sure enough sales rep A does that and 24 hours later the file funds for $90,000. No big surprise, 2 weeks later the merchant gets locked out of his store by the landlord and defaults on Ondeck.

Everyone out there is trying to figure out why Ondeck is suddenly cancelling iso agreements on some of their larger isos, cutting commissions etc.

The answer is real simple. Their portfolio is a giant train wreck with a 20% plus default rate and climbing

They don't check landlords, financials, pretty much anything. For them its all about funding more deals and grabbing market share.

Good luck with that IPO

over 80% of their deals funding never even speak to a human in the submission process. Fill out online, sign contracts, fund

[bizloanbroker]

So has anyone else done any real research on their recent securitization?

Well I did over this past weekend and I was blown away at what I found.

94-96% of the few hundred deals in the securitization were "seasoned" which in English means they are all renewals on round 2 or 3 of financing with Ondeck.

So the low single digit default rate they talk about in the prospectus is real for the deals in the securitization.

But my question is what is the overall default rate on all their deals, not just the seasoned renewals?

[funding pro]

So has anyone else done any real research on their recent securitization?

Well I did over this past weekend and I was blown away at what I found.

94-96% of the few hundred deals in the securitization were "seasoned" which in English means they are all renewals on round 2 or 3 of financing with Ondeck.

So the low single digit default rate they talk about in the prospectus is real for the deals in the securitization.

But my question is what is the overall default rate on all their deals, not just the seasoned renewals?

If their bad debt is running at 7.5% on their renewals, I would have to imagine the bad debt on their new deals is running at least 25%. That is just a guess though. You would need to dollar weight the whole portfolio to see what their true bad debt is based off of that.

[Jared_Weitz]

Objectively speaking I have never had a problem with them, they are actually one of my favorite funding partners. I've been funding their since ODC opened it's doors.

[skideeppow]

Me too ^^^^^