OnDeck clinches $200m credit facility from Credit Suisse

By Ryan Weeks on Friday 9 December 2016

Alternative Lending

Fintech business lending giant wins revolving credit facility from Credit Suisse.

OnDeck, the online lender for small businesses, has announced the closing of a $200m asset-backed revolving debt facility with major investment bank Credit Suisse. The deal includes $125m of committed capacity, with a further $75m available at the discretion of the lenders.

Loans under the facility will be made to Prime OnDeck Receivable Trust II LLC, or PORT II, a wholly-owned subsidiary of OnDeck, to fund PORT II’s purchases of small business loans from the OnDeck platform. The revolving pool of small business loans that are purchased by PORT II will serve as collateral under the facility. The Class A loans under the facility were rated by DBRS.

OnDeck will initially use a portion of the facility to optionally prepay the existing $100m Prime OnDeck Receivable Trust, LLC facility, which was scheduled to expire in June 2017. As a result, the platform will benefit from obtaining additional funding capacity through December 2018.

Chief financial officer Howard Katzenberg (pictured above) said that the deal marked the continuation of OnDeck’s strategy to “diversify funding sources”. The firm’s cost of funding during the third quarter of 2016 decreased to 5.7 per cent, down from 5.8 per cent in Q3 2015. But OnDeck nonetheless posted a $12.9m loss for the quarter, despite significant growth in origination and loans under management.

Sales of loans through the firm’s marketplace sale programme have slowed in 2016, but the Credit Suisse facility may be seen as a portent of rebounding investor confidence.

"OnDeck has emerged as a leading provider of growth capital to small businesses around the country," said Jon-Claude Zucconi, managing director at Credit Suisse. "The team's innovative vision and commitment to financing is vital to expansion and growth in the small business community."

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