US lender OnDeck partners with MYOB for Australian launch

US specialist small business lender OnDeck has formed a partnership with the accounting software provider MYOB to launch OnDeck Australia, with plans to start offering loans later this year.

OnDeck is one of the new generation of online lenders relying on sophisticated decision analytics to develop proprietary credit scores and using online systems to turn approvals around very quickly.

The company has been operating in the US market since 2007 and has originated more than US$2 billion of loans. Its expansion into the Australian market is its first move outside the United States.

OnDeck will hold a 55 per cent stake in the Australian business, MYOB will hold 30 per cent and an investor group will hold 15 per cent. The business will be capitalised with an initial equity investment of A$15 million.

MYOB will be the key to OnDeck's distribution. It will supply de-identified customer data from its one million-plus user base to OnDeck, which will select those customers that fit its lending criteria.

OnDeck Australia chief executive Cameron Poolman sad the company would combine credit bureau data, third party credit scores and data from a range of additional sources to generate a proprietary score.

"The IP in this business is the score," Poolman said.

"The keys to success are the score, accessibility and speed."

In the United States a typical OnDeck borrower is a business with turnover of US$100,000 to US$2 million a year. Unsecured loans range from US$10,000 to US$250,000 and terms are from six months to 24 months.

Poolman said OnDeck took on more credit risk than a bank would usually accept and its rates were higher.

Initially, funding for the Australian business will come from its parent, which will provide a facility of around A$10 million, but Poolman expects to have bank funding lines in place next year. OnDeck in the US has done some loan securitisations.