On Deck Capital has launched OnDeck Marketplace, a platform that enables institutional investors to purchase small business loans originated by OnDeck and drive small business success.
The general availability of OnDeck Marketplace comes after a one-year pilot program with a group of inaugural institutional investors, including asset managers, hedge funds and business development companies. To use the platform, each institutional investor opens its own OnDeck Marketplace account, purchases loans on a programmatic basis, and then receives daily principal and interest payments from the loans it owns. OnDeck services the loans institutions purchase, making the process seamless, transparent and efficient.
“Institutional investors have been seeking a platform to gain credit exposure to Main Street business loans at scale,” says Noah Breslow, chief executive officer, OnDeck. “OnDeck Marketplace is a natural extension of the increased predictive power of our OnDeck Score, and further diversifies the company’s sources of revenue and capital.”
One of the key drivers for the OnDeck Marketplace platform is the company’s proprietary OnDeck Score – a business credit score that leverages big data for small business customers rather than relying solely on the small business owner’s personal credit history. Loans in OnDeck Marketplace are graded A through F mostly based on their OnDeck Score, and these grades set the prices institutional investors pay for individual loans. These comprehensive metrics allow OnDeck and institutional investors to better evaluate risk when making small business loan decisions.
“OnDeck has created a platform to give institutional investors the opportunity to participate in its small business loan origination program,” says Christopher Johnson, managing director, Prospect Capital Management. “We chose to join as one of the inaugural investors in OnDeck Marketplace because we were impressed with the ability of the company’s OnDeck Score to help generate attractive returns.”
Now that OnDeck Marketplace is generally available to institutional investors, the company expects the program to be an important part of its multiple funding sources strategy. Today's Marketplace announcement follows several recent company initiatives, including: the first securitisation of non-SBA small business loans, crossing the USD1.7 billion mark in lifetime capital delivered to Main Street and the commencement of trading on the New York Stock Exchange this past December under the ticker symbol ONDK.
