The company is increasingly looking to partner with financial institutions to open the market for small-business loans. On Deck says it's in discussions with many of the top U.S. 25 banks to use the technology platform. "The banks are recognizing now that we have a proven model
to work with a segment they are missing," Breslow says. "We have a credit model that is very squarely focused on the health of these micro businesses and not on the personal credit of the business owner. We're able to open up credit access to a whole new spectrum of businesses that have been screened on personal credit." (The company wouldn't release the specific names of banks with which it is in discussions.) "Lending to a business with 300 employees is very different than an upstart with 25 employees and $25 million in revenue or even a home-based self-employed individual that brings in $30,000 in annual revenue," he adds. When the company originally launched, it expected certain industries to be more prevalent than others at receiving funding through the platform, like restaurants, auto body shops, retail stores and others that commercial bankers typically stay away from due to high failure rates, Breslow says. Instead, what they're seeing is "bankable" self-employed people like doctors and dentists finding relief through On Deck's system. "Time is valuable. They can't step away from their businesses and then wait a month to get approved," he says. "What we've learned is that convenience and speed and this idea of business owners being in control of the process" is appealing to applicants. The other trend the company is seeing involves the types of projects for which business owners are using the funds, indicative of the economy. "Business owners are taking on new projects and making investments, but they're smaller and shorter term than these long five-to-seven year investments," Breslow says. "Instead of someone saying 'I want to open a new location,' they might be using the money to hire workers at current locations."