Small business lending platform OnDeck has buddied up with Opus Bank.
Barely a month removed from what was widely hailed as a landmark partnership with JPMorgan Chase, OnDeck has now entered into a marketing and referral agreement with Opus Bank. The terms of the deal are that Opus will offer a “complete solution” to small business customers that require up to $500,000 in funding. These solutions – a selection of term loans and lines of credit – are powered by the OnDeck platform.
The exact mechanics of the “referral” are not wholly clear. For context, the OnDeck-Chase arrangement made no mention of referral. Rather it entails the latter looking at its c. 4m small business customers through the lens of OnDeck’s innovative credit scoring technologies. The words of Stephen H. Gordon, Founding Chairman and CEO at Opus, would suggest that his company’s affiliation with OnDeck will instead hinge upon directing customers towards the platform (and will not entail the deployment of Opus capital):
“Opus offers an extensive suite of lending products through its Commercial Bank and, while we receive a significant amount of inquiry for small business loans through our Retail Bank, OnDeck has proven to be much more proficient in underwriting and funding these smaller loans. This partnership enables Opus to further leverage and scale its strong market presence by offering small balance financing solutions that it was otherwise not able to efficiently accommodate and, in doing so, generate additional revenues while not using Opus’ balance sheet or capital.”
Opus boasts 58 retail bank branches in major metro markets up and down the West Coast, and over $6.2 billion of total assets. The Opus-OnDeck agreement feels mechanically similar to the partnership that was struck between Fundation and Regions Bank in October last year. Fundation CEO Sam Graziano recently hailed the tie-up as a rare example of meaningful platform-bank integration. Might the Opus-OnDeck relationship be held up in a similar light? Mr. Gordon had the final word:
“Opus is now better positioned to provide faster access to capital to those businesses where the availability of small balance financing has an outsized impact on their ability to expand, create new jobs, and succeed.”