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OnDeck Q3 2019 Earnings Results Recap

Today OnDeck reported positive metrics on net income, revenues and their stock repurchase program.

October 24, 2019 By Ryan Lichtenwald 1 Comment

OnDeck’s Q2 financial results included a handful of interesting updates from the company, but the news of losing JPMorgan Chase as a partner overshadowed any positive news coming out of last quarter. Today the company announced their Q3 2019 financial results which investors have responded positively to, sending the stock up 15% at the time of this writing.

The company continues their profitability streak, posting net income of $8.7 million (up from $4.3 million in Q2) in the third quarter. Gross revenues also grew 9% to $112.6 million. This is a result of higher interest and finance income as the portfolio has also grown.

Originations were $629 million, up 6% from the prior quarter and down 3% from the prior year period. This is a result of OnDeck’s tightening of underwriting criteria along with market dynamics. Interestingly, lines of credit account for 21% of OnDeck’s total loans and finance receivables, up from 15% last year. [Read more…]

OnDeck Pursuing Bank Charter, Loses Chase

OnDeck shared a flurry of updates on the business in their Q2 earnings results.

July 29, 2019 By Ryan Lichtenwald 1 Comment

OnDeck had some pretty interesting updates in their earnings release which took place earlier today. CEO Noah Breslow shared that the company has decided to pursue a bank charter which will enable the company to offer their small business customers a wider range of products. OnDeck has been studying their options for some time and felt that the timing was right. While OnDeck didn’t want to divulge their vision or timing for what the company may offer they did mention that the bank charter would be accomplished through a transaction or a de novo bank application.

To date, OnDeck has operated as a non-bank lending institutions, but they believe the opportunity is much bigger, even mentioning “digital banking for small businesses” as well as increasing product and services both in lending and non-lending on the call. There will also be benefits as it relates to funding. While this may be a costly endeavor they believe the benefits outweigh the costs. At this point this announcement leaves a lot to the imagination but it alludes to a number of interesting opportunities for OnDeck in how their business could transform.

OnDeck also shared plans for a $50 million stock repurchase program noting that even with the investment they will still have capital for further growth and a buffer against economic uncertainty.

Probably the biggest shock was that Chase is concluding their partnership with OnDeck. When this partnership was announced it created quite the buzz in the fintech community. To be working with Chase was a huge vote of confidence for OnDeck and I too thought it would radically change OnDeck’s business.

Chase will stop originating loans through OnDeck and OnDeck will continue to service the loans for two years. Breslow stated that the decision on Chase’s side was due to a change in strategic priorities and spanned more than just their small business lending plans. This decision makes one think about the long term plans of the bank as perhaps they look to build their own technology platform.

Despite the bad news with Chase, we learned that the pipeline has never been stronger with OnDeck’s ODX offering and that they are making progress in converting new customers. We should hear more announcements before year end.

In the quarter OnDeck also closed the transaction with Evolocity to combine their Canadian operations. Moving on to financials in Q2 2019, net income was $4.3 million compared to $5.6 million from the prior year period and $5.7 million in Q1 2019. Gross revenues were $110.2 million and originations were $592 million in what is typical for the second quarter.

You can view OnDeck’s Q2 earnings press release here.

Conclusion

It’s hard to sugarcoat losing the largest bank in the US as a client. Since the relationship was announced many have been looking to get a better understanding of the traction of the partnership. Now we have an understanding of perhaps why we never got the details. Since the Chase partnership was announced OnDeck created a new division called ODX to house this part of the business and signed up PNC on their ODX platform. There is clearly still opportunity in the ODX business but going forward OnDeck is going to have to work harder to prove the model out to their investors.

LendingClub, GreenSky and OnDeck Q1 2019 Earnings Results

We share the results of the public online lenders

May 7, 2019 By Ryan Lichtenwald 2 Comments

Every quarter we check in on the public online lenders. This includes LendingClub, OnDeck and GreenSky. LendingClub and Greensky reported today and we’ll review some general highlights from OnDeck who reported last week.

LendingClub rounded out 2018 originating the most loans in the company’s history at $10.9 billion. With their Q1 2019 results, the company is off to a great start in 2019. Originations were $2.7 billion, up 18% year over year. The company reported that application growth was 31% over the same period.

Net revenues came in above high end guidance of $172 million at $174.4 million for the quarter, up 15% year over year. GAAP Consolidated Net Loss was $(19.9) million, compared to $(31.2) million in Q1 2018. Finally, the company delivered adjusted EBITDA of $22.6, up 47% year over year and well above their projections of $13-$18 million. LendingClub is on track to become adjusted net income profitable over the second half of 2019.

As always, it’s always interesting to look at the investor mix over time.

There were a few interesting news items from the quarter as well as some comments from CEO Scott Sanborn on the earnings call. The most significant news was that the company announced a shift to the way they serve small businesses. LendingClub is no longer originating small business loans themselves and is instead opting for a partnership approach. The co-branded offering is made possible by Funding Circle and Opportunity Fund. In addition, small business loans will no longer be funded by LendingClub investors.

Beyond the small business operation, Sanborn discussed that the company is working towards their vision of not just being a “lending club” but a financial health club. To date we’ve seen little progress in realizing this vision, but clearly they want to do more. They envision moving from simply a product focus to a platform focus in areas where it makes sense. The decision to make the change in their small business operation is the first example of this.

In the personal loan space LendingClub is also looking to offer a unique opportunity for their investors. The reality today is that the company receives 40,000 applications a day but only a small fraction of these borrowers get approved and subsequently take a loan. LendingClub realizes that there is a lot of expertise in their broad investor base and they may give investors the opportunity to provide their custom models to underwrite a subset of these applicants. This would also result in higher satisfaction on the borrower side as more borrowers would be approved. In my opinion this gets back to LendingClub’s original promise of being a true marketplace, offering a wide range of loans to every type of borrower.

Interestingly, Sanborn commented on the opportunity of a bank charter, something that would be hugely beneficial for a company seeking to offer a wider range of products. Other potential benefits include margin improvement, more resilient funding and giving the company more regulatory clarity. While this would certainly change many dynamics in the business, Sanborn noted that this is a massive undertaking that will come with significant time and costs and they will update investors as their thinking evolves.

LendingClub is also very much focused on cutting costs as part of their simplification program. Last week Bloomberg published a piece on LendingClub’s plans to move employees to Utah from their expensive San Francisco office. The cost savings are significant as they decrease their footprint by around 41% in the city as leases expire and they sublease their open space. Below is LendingClub’s Q2 2019 and full year guidance.

GreenSky Q1 2019 Earnings

In Q1 2019 GreenSky increased transaction volume on the platform 20% to $1.2 billion. They also grew revenue 22% to $103.7 million form the prior year period. GAAP Net Income in Q1 2019 was $7.4 million. The company had aggregate commitments of $11.8 billion from nine bank partners of which $4.5 billion remain unused. The company ended the quarter with $268 million in cash.

Last year we reported on the potential of the company’s partnership with American Express. GreenSky shared that since the alliance launched 3,600 merchants have been referred to GreenSky for enrollment evaluation. In February 2019, the program was extended to include elective healthcare.

Below is a look at how their merchant network has grown over time and the verticals they currently serve.

GreenSky also noted new relationships with a field services software company, a dental practice management software company and an HVAC home services software enterprise. In all of these relationships, the GreenSky financing platform is integrated into the software. These types of relationships and the market GreenSky focuses on is what makes them different from many of the fintech companies around today.

In Q1 2019 GreenSky also repurchased 4.3 million shares at a cost of $50.9 million which is part of their $150 million share repurchase program. Since then the company has purchased more shares and in total has repurchased 9.1 million shares.

OnDeck Q1 2019 Earnings

OnDeck reported Q1 2019 earnings last week. Originations fell for the quarter to $636 million compared to $658 million for the previous quarter. This was attributed to OnDeck tightening their credit box during the quarter. The company shared that their line of credit product reached an all time high of $150 million for the quarter. Further information on their quarter is available in their press release.

Women in Fintech Demolish Glass Ceiling

LendIt Fintech Woman of the Year 2019 award finalists target diversity, equality, education

April 2, 2019 By admin Leave a Comment

[Editor’s note: This is a guest post from Mark Lusky of Mark Lusky Communications, a writing and marketing communications firm, operating since 1982. He specializes in ghostwriting expert advice articles, blogposts and other bylined content for clients, along with writing e-books, whitepapers, case studies, websites, opinion pieces and other communiques—incorporating marketing skills and perspectives acquired as a regional marketing director for Ringling Bros. and Barnum & Bailey Circus. He will be attending LendIt in San Francisco this April.]

LendIt Fintech’s Fintech Women of the Year 2019 award finalists champion the causes of diversity, equality and education—and shout it from the rooftops. In the process, they’re demolishing glass ceilings for women and other diversity-challenged groups.

They are dedicated to achieving gender, ethnic and racial equality. And they are educating a variety of audiences— including borrowers, investors and the Fintech industry—about ways to grow and thrive by becoming savvier and open to all people.

These finalists are changing not just their world—but the whole world.

Promote diversity, respect, collaboration
Valerie Kay, Chief Capital Officer at LendingClub, is responsible for overseeing LendingClub’s Investor Group. She addresses the need for diversity, inclusion, mutual respect and collaboration. She emphasizes the vital importance of diversity to drive better workplaces, happier customers and more profits.

[Read more…]

OnDeck Q4 2018 Earnings Review

Today OnDeck hosted their Q4 2018 earnings call and provided an update across all aspects of their business.

February 12, 2019 By Ryan Lichtenwald 1 Comment

Last quarter the the big news for OnDeck was the creation of their technology subsidiary called ODX, a platform that houses their lending as a service offering. While OnDeck has had a longstanding partnership with JP Morgan Chase it showed a renewed focus on that side of the business and a look into what the future at OnDeck may look like.

The company achieved much of what they set to do in 2018 and posted another solid quarter as they rounded out the year. Q4 2018 net income came in at $14 million on gross revenues of $109.5 million. The company ended the year with a total of $27.7 million in net income. Below is a snapshot of their Q4 and 2018 full year highlights.

After coming off a tough Q1 2018, the company turned the rest of the year around and moved well into profitable territory. What has been a main driver of profitability for the company has been decreasing funding costs since Q2 2018 even as originations have increased and interest rates broadly have increased. Sales and marketing expenses as a percentage of originations have also held steady at 1.7% for Q4. As of Q4 2018 the company still had $246 million of excess debt capacity.

You can see below how OnDeck has been able to consistently increase revenue over time even as their business model shifted. Gain on sale revenue, or loans sold to investors was just a small sliver of revenue back in Q4 2017. What I imagine many investors are keeping a close eye on is the other revenue category which has remained stagnant over the past year.

It appears as though the partnership with OnDeck hasn’t yet resulted in a meaningful increase of revenue. OnDeck noted that JP Morgan Chase volume increased in Q4 after a dip both in Q2 and Q3. ODX is slated for a full rollout in 2019 and OnDeck plans to expand their work with PNC, which was announced late last year as their second bank partner. Commenting on the pipeline of bank partnerships through ODX, CEO Noah Breslow noted that the pipeline has strengthened since the last earnings call and there is a mix of large scale banks and mid-sized to smaller banks which have entered the pipeline.

On the origination side, the company increased volume $10 million sequentially. OnDeck did share that they saw an increase in charge offs and delinquencies in Q4 which were attributed to some selective testing the company was doing. They have since ended these tests and kept the ones that were performing well.

Looking forward there are a few interesting things happening at OnDeck. While it won’t have a meaningful impact on their business in 2019, OnDeck recently announced they were entering the equipment finance space. OnDeck also has their Australian business which is not often talked about. They grew their portfolio organically 80% in 2018 albeit this is likely off of a smaller base. Last December OnDeck shared they were merging their Canadian business with Evolocity Financial Group creating OnDeck Canada which will be the second largest online small business lender in Canada once the deal closes midyear.

OnDeck provided the below guidance for Q1 2019 and the full year.

Equipment Financing Market to Get Boost From OnDeck

The small business online lending leader will offer equipment finance loans in 2019

December 19, 2018 By Mike McEnaney 1 Comment

Hoping to transform the traditionally slow-moving, opaque, and complicated process of the equipment financing market, online small business lender OnDeck has announced it will enter the market for small ticket ($250,000 and under) loans in this category. OnDeck will offer loans online of up to $100,000 to U.S. small businesses beginning in 2019.

Here is what CEO and Chairman, Noah Breslow said in the press release:

With more than a decade of success and over $10 billion funded to small businesses online, we believe OnDeck’s technology is primed to revolutionize how small businesses finance their equipment needs. We expect OnDeck equipment finance loans to quickly become a vital source of online financing for small business owners seeking simple, transparent equipment financing they can understand and utilize.

OnDeck’s decision to add only the third lending product in its history is based on a successful pilot program begun last summer and resulting data indicating that the equipment financing market is vulnerable to disruption. According to the Equipment Leasing and Finance Association, 68% of all capital purchases in the United States are financed, with small-ticket (under $250,000) equipment finance loans and leases representing $35 billion in originations in 2017. Applying for and receiving the majority of those small ticket loans remains a cumbersome, time consuming and paper-based process. That is a similar scenario to the market for small business loans that OnDeck first began disrupting in 2008.

In 2019, OnDeck will begin making its own equipment finance loans, ranging from $5,000 up to $100,000, with terms ranging from 24 to 60 months, secured by new and used equipment. OnDeck plans to offer only equipment finance loans, rather than leases.

OnDeck also announced the appointment of Mark Erickson as Vice President of Equipment Finance. Erickson is a veteran of the equipment finance market, previously serving in executive roles in sales, operations, syndications, and risk at Key Equipment Finance, Inc., a unit of Key Corp. He was also the managing director of the firm’s Australia and New Zealand subsidiary from 2000 to 2004. He had this to say about his new position:

I look forward to working with the team to leverage OnDeck’s online originations and underwriting technology to deliver speed and convenience for small business owners seeking equipment finance loans. With speed, service and transparency, we are poised to transform this market to the benefit of small businesses.

PeerIQ’s Q4 2018 Lending Earnings Insights Report

PeerIQ's latest Lending Earnings Insights Report points to a strong economy but bank and card issuer CEOs are cautious about being late in the credit cycle.

November 20, 2018 By Todd Anderson 1 Comment

PeerIQ released their Q4 2018 Lending Earnings Insights Report which points to a number of themes showing the economy is strong but CEOs are striking a cautious tone. Delinquencies and defaults continue to be low as consumers have seen their wages rise and taxes drop. Lenders are increasing reserves as they anticipate credit to renormalize in the near future, saying the economy right now was too good to be true.

The report covers earnings reports from big banks and fintech lenders. Stock performance was mixed with the flattening yield curve causing banks and card issuer stocks in particular to suffer. Companies covered include Enova, LendingClub, One Main Financial, OnDeck, GreenSky, Bank of America, Citibank, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Wells Fargo, Capital One, Discover, Synchrony and American Express.

One of the growing trends has been the pull back by banks lending directly to consumers and small businesses. Banks are instead increasing funding lines to non bank lenders, credit facility volume has grown 6x since 2010. The growth in originations from non bank lenders has forced regulators to look at them more closely, while the FDIC is considering granting ILC charters to non banks.

Broadly across the credit spectrum fintech lenders have seen delinquencies and charge offs remain at near record lows. All the companies in this segment saw double digit revenue and origination growth YoY. Lenders have started to raised borrowing rates, though not at the same pace as the Fed Funds Rate. The flattening yield curve has raised the cost of borrowing on credit facilities, causing margins for lenders and investors to be compressed.

Big banks experienced another strong earnings quarter as all covered in the report saw double digit increase in earnings. Revenue drivers vary from bank type to bank type. Big banks covered within the report saw deposits rise due to a better digital banking experience, an integration between wealth and banking products and a retail branch expansion. As a group the banks are growing, albeit slower than in the past, through digital means and are focused on the long term potential of products they are currently building.

Credit card issuers all saw their earnings grow by more than 20 percent YoY. Most card issuers also saw growth in revenue and their loan books. Growth in total allowances for losses outpaced loan growth, pointing to the fact that most card issuers see a credit normalization coming. Card issuers have used the partnership model with stores like Walmart, JC Penney and Lowes to grow revenues.

Overall economic health, low delinquencies and low charge offs show that the credit space is doing quite well. Though the report points out that most of these companies do not expect this environment to last forever, they are in the midst of preparing for a change while they keep growth humming along.

Roundup of Q3 2018 Earnings: GreenSky, OnDeck, LendingClub

Three US based public fintech companies reported Q3 earnings today.

November 6, 2018 By Ryan Lichtenwald Leave a Comment

Today OnDeck, GreenSky and LendingClub all reported their Q3 2018 earnings. Like last quarter we review the highlights from the respective companies.

OnDeck

Separate from their earnings release, OnDeck announced significant news over the last couple of weeks. First was the announcement of their technology subsidiary called ODX, the platform that would house their lending-as-a-service offering previously called OnDeck-as-a-Service. Shortly thereafter, OnDeck announced their much anticipated second bank partner, PNC Bank which is the 9th largest bank in US.

Not surprisingly this was a hot topic on the Q&A portion of the earnings call. Here are a few takeaways from analyst questions:

OnDeck is making $15 million of incremental investment in strategic growth initiatives including ODX. Two-thirds of this will be in ODX with the remaining one-third allocated to international investments in 2019.
The revenue model for ODX generally speaking is technology licensing, professional services and customization with a volume based component.
The pipeline for ODX has never been stronger. They have been working with PNC for over a year and are seeing interest both internationally and in the US. The ODX announcement has helped drive further interest in the offering.
OnDeck is getting better at bringing banks on, making incremental improvements and aspects of on-boarding repeatable . Ultimately there is customization with every bank and OnDeck is also at the whim of banks’ decision making timeline.
ODX and OnDeck’s on balance sheet loans are complimentary products. In the case of PNC they are serving the same customers, but providing a digital experience. OnDeck is focused on underserved small business finance which we haven’t seen traditional banks tackle.
We will see more bank partnerships in 2019.

Moving on to Q3 2018 financials, OnDeck posted gross revenues of $103 million, up 8% from the previous quarter and 23% from the prior year period. OnDeck is benefiting from higher interest income due to rate increases as well as their origination growth while being able to decrease funding costs. Effective interest yield was 36.5%, up from 33.1% last year.

Net income came in at $9.8 million for the quarter, up from a loss of $4.1 million from the prior year period.

Origination volume reached an all time high of $648 million, representing a 10% increase from the prior quarter and 22% from the prior year period. The company officially crossed the $10 billion mark in originations and also shared that their next lending product would be announced before year-end. The company ended trading today up over 30%.

OnDeck also raised 2018 guidance:

Gross revenue of $392 million to $396 million, up from $380 million to $386 million,
Net income of $20 million to $24 million, up from $10 to $16 million, and
Adjusted Net income of $40 million to $44 million, up from $30 million to $36 million.

OnDeck reported before the opening bell in New York this morning and the stock closed up 32% today.

GreenSky

GreenSky reported record transaction volume in the third quarter of $1.4 billion, up 33% year over year. Revenue increased 29% to $113.9 million year over year. GAAP net income was $45.7 million.

CEO and Chairman David Zalik noted in the press release that they are still in the early stages of penetrating the total addressable market spanning home improvement, elective healthcare and e-commerce. However, the company adjusted guidance downwards due to anticipated seasonal headwinds in the fourth quarter along with a steeper yield curve than anticipated.

GreenSky added two new bank partnerships in the quarter with BMO Harris Bank and Flagstar Bank added to their lending consortium. Total commitments from bank partners now stand at $11.5 billion, up $3.5 billion from the prior quarter. The company relies on these commitments to fund their loan book. Last quarter we discussed GreenSky’s partnership with American Express. The cross-marketing campaign officially went live in early September and GreenSky reported over 1,000 Amex merchant referrals in 8 weeks. The Amex consumer direct installment loan pilot is slated to begin in the first quarter of 2019 in Atlanta, Chicago, Dallas, Los Angeles and Tampa. The product will be advertised as “powered by GreenSky” and will offer home improvement loans.

Along with today’s earnings the company announced a share repurchase program of up to $150 million of the company’s Class A common stock. Due to the adjustment of guidance downwards GreenSky’s stock price ended the day down significantly, almost 37%.

LendingClub

LendingClub had a quarter marked with a few records. Net revenues were $184.6 million, up 20% from the prior year period and originations were $2.9 billion, up 18% from last year. Applications also reached their highest levels, up 30% year over year. While originations grew slightly from the previous quarter it is important to note the steps LendingClub has taken to tighten underwriting this year which is why application growth doesn’t necessarily translate to significantly higher originations. It does however represent an opportunity for the company as they continue to improve features and better target their customers.

The company continues to drive to GAAP profitability. In Q3 2018 GAAP Consolidated Net Loss was $22.7 million, or $7.3 million if you exclude $15.5 million of expenses related to outstanding legacy issues.

The mix of investors over the quarter are relatively stable from the previous quarter as shown below.

A few other milestones from LendingClub’s perspective include the near $1 billion in investments for their CLUB Certificate program which launched less than a year ago. LendingClub also settled legacy issues with the Department of Justice, SEC and lawsuits stemming from May 2016 which we wrote about at the beginning of October. According to LendingClub, they have “continued constructive engagement with the FTC regarding ongoing litigation”. LendingClub is also opening a new facility in the Salt Lake City area to further enhance operating efficiency and customer service.

Total loans issued by the company now stands at over $40 billion.

LendingClub raised their full year guidance for Adjusted EBITDA*, adjusted net revenue projections slightly and increased the high end of projections for GAAP net losses:

Net Revenue in the range of $688 million to $698 million.
GAAP Consolidated Net Loss in the range of $129 million to $124 million, reflecting expenses related to outstanding legacy issues through the third quarter partly offset by higher Adjusted EBITDA guidance.
Adjusted EBITDA in the range of $89 million to $94 million.

LendingClub reported after the closing bell but was up just over 1% as of this writing.

(Disclosure: Peter Renton, the founder of Lend Academy owns less than one thousand shares of both OnDeck and LendingClub)

OnDeck Announces Lending Technology Subsidiary

OnDeck has split their OnDeck-as-a-Service offering into a new company.

October 16, 2018 By Ryan Lichtenwald 2 Comments

OnDeck has been powering JPMorgan small business loans through their OnDeck-as-a-Service offering since late 2015. OnDeck has been keeping details of the partnership close, but their CEO Noah Breslow has hinted that they would be announcing a new bank partner soon. Preempting that announcement, the company announced today the launch of a new subsidiary that will pursue these partnerships.

The wholly owned subsidiary called ODX is currently hiring and some OnDeck employees have moved over to support the new venture. In an American Banker article covering the news, Breslow stated, “This is about signaling our commitment to the market, and really scaling up.”

Brian Geary, who was vice president of OnDeck’s partnership program will be president of ODX. What’s interesting is that while the initial focus will be powering online small business lending, the firm may expand into other asset classes according to Geary.

Just a few weeks ago, we wrote about Avant’s rebrand of “Powered by Avant” to a new name, Amount. Amount has similar goals on the personal loan side while Avant will still offer loans themselves, just like OnDeck.

Both companies previously worked with bank partners, but these moves show a renewed focus on this aspect of their business. Perhaps this is a sign of the times of banks warming up the idea of partnering with fintechs to power their lending programs.

Below a quick video of Brian Geary and Noah Breslow introducing the new platform as a service company. You can learn more by checking out https://www.odxsolutions.com/

OnDeck Surpasses $10 Billion in Lending

The small business lender crossed the milestone after being in business for 11 years.

September 12, 2018 By Ryan Lichtenwald 2 Comments

Back in 2007, OnDeck started making loans to US small businesses. Since then, the company weathered the financial crisis, lending to small businesses at a time when few were. In 2010, they surpassed the $100 million mark. Fast forward to today and the company officially crossed $10 billion in originations. This makes OnDeck the world’s largest non-bank online lender to small businesses by total volume.

It’s interesting to look back at OnDeck’s history and see how far they have come. The marketplace in 2007 was vastly different than it is today and they still managed to lend $100 million in the first three years. Consumer lending companies Lending Club and Prosper were just getting started so lending online to a small business was a novel idea. Small businesses have embraced online loans over the years as evidenced by OnDeck originating $2.1 billion in 2017 alone but there is still room for growth. In 2017, 24% of small businesses who were seeking credit applied online compared to 21% in 2016. CEO Noah Breslow provided the below comment as part of the press release:

If reaching $10 billion dollars in total loan volume online tells us anything, it’s that the days of old-fashioned lending to small businesses are numbered. We created OnDeck because we believed the Internet could revolutionize and speed up the way underserved small businesses access capital. Today, we are helping to fill a credit gap across hundreds of industries by providing fast, secure and transparent loans that enable small businesses to grow, generate economic activity and create jobs. We look forward to providing billions more in financing and powering the small business lending migration to the online model via our OnDeck-as-a-Service platform.

I expect that we will see a steeper curve in the adoption of online small business loans going forward but it’s difficult to predict just how long it will be until a majority of small businesses seek financing online. In my opinion it will depend largely on the way in which OnDeck and other online lenders reach new customers. The company has had a longstanding partnership with JP Morgan Chase through their OnDeck-as-a-Service platform and another large partnership is in the works. We have yet to hear just how big of an impact these sources are having on OnDeck’s business, but working with institutions that have a large customer base could play a significant role in scaling originations even further.