[Chambo]

All jokes aside, On Deck is probably in the best position of any lender right now. Think about it... If you take renewals out of the equation, they are originating the most deals in the market right now. It doesn't matter if they are doing it at 0% APR, as long as they have sufficient backing. If this continues, their portfolio will overtake CAN Capital's within the next 2 years (as far as gross funded volume).

If they do any of these four things, they will be set:

1. Sell their platform to a large bank for a several billion
2. Raise their rates (or at least have high-risk categories that have substantially higher rates)
3. Lower defaults
4. Lower overhead

I would personally go for #1.

you are really daydreaming, aren't you? Commercial banks cannot legally get involved directly in cash advance.

God, you sound like Sharif three years ago...."Bank of America is going to buy us for a BILLION DOLLARS!"

[Zach]

you are really daydreaming, aren't you? Commercial banks cannot legally get involved directly in cash advance.

God, you sound like Sharif three years ago...."Bank of America is going to buy us for a BILLION DOLLARS!"

Chambo, couple of things:

1. On Deck does not do cash advances. They do business loans.

2. If On Deck sold their platform to a bank, they could limit the APR to a specified percentage that would be legal (although many states do not have usury laws for business loans), or they could even just utilize the technology and data to automate their underwriting.

3. Why wouldn't a bank purchase On Deck? It would automate the processes of a huge, untapped market for bank space. The reason they don't do small business loans anymore is because the cost of underwriting does not make sense for the minimal profits. An automated system using the On Deck scoring mechanism would alleviate their manpower costs, and the higher rates would increase yield.

No reason for a personal attack here buddy, just expressing what I think their strategy is. Do you think they are doing poorly? If so, why?

[CreditGuy]

Commercial banks cannot legally get involved directly in cash advance.

OnDeck isn't selling a cash advance. Its a loan. That's a distinction they have always made in the market.

Also, what legal mechanism is preventing banks from entering? Banks factor receivables all the time. Using the definition bandied about here that it is "a sale of future receivables", that is in essence a factoring relationship. The difference is that the bank underwrites existing A/R for quality and aging, sometimes employing a lockbox to ensure collection, but sometimes not; whereas an MCA is more about assessing the borrowers to consistently generate receivables and lending into that risk.