On Deck Capital Inc (NYSE:ONDK) is collaborating with JPMorgan Chase & Co. to boost up the loan process to its 4 million small-business customers. This deal has resulted in OnDesk’s stocks register 28% rise in extended trading.
OnDeck Capital, the company known for providing loans to over 4 million small time traders, is excited about the deal.
After going public, OnDeck Capital has received several setbacks despite gaining a whopping 30% rise in the first day itself. The first-day success couldn’t be replicated in the long run and the company saw a drastic drop of 67% after just sixteen days.
OnDeck confirmed the news of JPM working with OnDeck on Tuesday. There were a lot of speculations after JPMorgan’s CEO Jaime Dimon statement that the bank would be entering into agreements with small-time-lenders.
JP Morgan’s company will be working with OnDeck to build a new Chase lending product to be launched in January 2016 for small loans to small-business clients in 2016. Small business lending, which currently takes days or several weeks for approval, will be made available within a matter of hours or a day. “By combining Chase’s relationships and lending experience with On Deck’s technology platform, we’ll be able to offer almost real-time approvals and same- or next-day funding.” Said Jennifer Piepszak, head of business banking, JPMorgan, in a telephonic interview.
Under the Chase scheme, around 4 million small businesses will be offered a loan of about $250,000 with real time approvals and same or next day funding.
The roll-out of the program is expected to be started in January next year. JP Morgan’s lending experience and OnDeck’s disruptive customer experience will make the lending process easier. Hindrances faced by businesses seeking small business loans will be abolished, believes Jennifer Piepszak.
This news has shot up OnDeck’s stock price to $11.50, which is reassuring for the online small business lender. OnDeck has had a big impact on the economy, with some estimating that around $ 11 billion were generated because of lending to small businesses. Over $3 billion have been lent by OnDeck since its inception.
OnDeck intends to scale up the Chase program because of its already established data and IT functions and its investments in building out compliances.
The decision to build a new product in-house was made earlier before deciding OnDeck as its partner in the venture. The partnership marks the beginning a new era where online lending is moving to the mainstream.