Following its disclosure that JPMorgan Chase would no longer originate new small business loans through OnDeck’s platform hosting Chase Business Quick Capital, shares in OnDeck fell 22 percent. However, the company will still function as a servicer for up to two years when it comes to loans originated previously via the platform, Seeking Alpha reported.
In the second quarter, OnDeck reportedly had a $0.9M impairment charge for “the remaining capitalized technology supporting JPM originations,” per Seeking Alpha. The partnership allowed the bank to offer small businesses loans online. JPMorgan reportedly will still offer online small business loans; however, it will not do so through an OnDeck partnership.
OnDeck CEO Noah Breslow said JPMorgan’s decision was a “setback” for the company, per American Banker. The bank said in a written statement, according to the outlet, “It’s been a great collaboration with OnDeck. They helped us create and launch an online loan application process that gave business owners faster decisions and easier access to credit, something we will continue to do on our own platform.”
OnDeck also provides loans to small businesses via its website. Additionally, the company reportedly announced it is seeking a bank charter, either through an application or via a bank acquisition. Breslow noted that the company found the benefits of becoming a bank are higher than the costs. However, the company did not say what kind of bank charter it might be seeking, and did not release a timetable for becoming a bank.
In separate news from April, OnDeck was accelerating access to capital for its users via the rollout of a same-day funding option. OnDeck also announced the launch of its Same-Day ACH transfer functionality, enabling small businesses that have lines of credit or term loans with OnDeck to receive funds on the same day they draw on their lines of credit.
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