Rating Report

OnDeck Asset Securitization Trust II

LLC, Series 2016-1
Sergey Moiseenko
+1 212 806 3225
smoiseenko@dbrs.com

Lain Gutierrez
+1 212 806 3922
lgutierrez@dbrs.com

Kathy Tillwitz
+1 212 806 3265
ktillwitz@dbrs.com

Ratings
Series 2016-1

Amount

Interest Rate

Rating

Rating Action

Class A

$211,540,000

4.21%

A (sf)

Provisional Rating Finalized

Class B

$38,460,000

7.63%

BBB (low) (sf)

Provisional Rating Finalized

Transaction Parties and Related Information

Issuer:

OnDeck Asset Securitization Trust II LLC

Seller:

OnDeck Capital, Inc.

Servicer:

OnDeck Capital, Inc.

Indenture Trustee and Custodian:

Deutsche Bank Trust Company Americas

Backup Servicer:

Portfolio Financial Servicing Company

Primary Asset of the Trust:

Small business loans originated or purchased (from Credit Sponsors) by the Seller

Initial Credit Sponsors:

Celtic Bank and BofI Federal Bank

DBRS Rating Methodology:

Rating Methodology for CLOs and CDOs of Large Corporate Credit 1; Rating U.S. Structured
Finance Transactions

Payment Dates:

Monthly (17th of the month or next business day)

First Payment Distribution Date:

June 17, 2016

Legal Final Payment Date:

Class A: May 2020 Payment Date

Class B: May 2020 Payment Date

Statistical Pool Cut-Off Date:

April 8, 2016

Revolving Period:

Two years ending on April 30, 2018

1 DBRS has adjusted the correlations used in the methodology to reflect the difference in credit risk between large and small to medium-size corporate credits, as described further in the
Cash Flow Analysis section.

Executive Summary
DBRS, Inc. (DBRS) has finalized the provisional ratings on OnDeck Asset Securitization Trust II LLC, Asset-Backed Notes, Series
2016-1 (Series 2016-1) as listed above. Series 2016-1 represents the second term securitization of a portfolio of small business loans
originated by OnDeck Capital, Inc. (OnDeck or the Company).
OnDeck is a U.S.-based finance company focused on small business lending. OnDeck was formed to provide loans to small businesses
in the United States that have historically been underserved by traditional financial institutions and may have experienced
challenges obtaining affordable or timely financing. OnDeck has developed a platform using predictive modeling, data aggregation
and electronic payment technology, which enables it to service this target market. After starting lending in 2007, OnDeck has made
approximately 81,000 term loans (as of December 31, 2015) to more than 42,000 customers, the aggregate principal balance of
which totaled over $3.6 billion. As of December 31, 2015, OnDeck had approximately $834 million in outstanding term loans to
approximately 21,000 obligors.
OnDeck serves as both the originator and servicer for the Series 2016-1 transaction. Portfolio Financial Servicing Company (PFSC)
is the backup servicer for the transaction and has experience servicing daily pay and merchant cash advance loans and receivables.
Since 2010, PFSC has served as backup servicer on multiple OnDecks financing facilities. The presence of a warm backup servicer,
which will assume the role of a hot backup servicer upon the breach of certain collateral performance triggers, mitigates potential
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Table of Contents
Ratings 1
Transaction Parties and Related Information 1
Executive Summary

Rating Rationale

OnDeck 3
Originations and Underwriting

Servicing

Backup Servicing

Transaction Structure

Collateral Description

14

Credit Enhancement

15

Cash Flow Analysis

15

Legal Structure

16

DBRS.COM

servicing disruption that may result from OnDecks inability to continue as servicer.
Deutsche Bank Trust Company Americas is both the Indenture Trustee and
Custodian for the transaction.
The transaction utilizes a master trust structure, which accommodates the
continuous sale of the newly originated unsecured small business loans to a specialpurpose entity and pledge of those assets under an indenture with issuance of the
notes pursuant to an indenture supplement. The transaction will revolve for a twoyear period that expires in April 2018, after which principal on the notes will be paid
down sequentially, beginning with the Class A notes.
Credit enhancement in the transaction consists of overcollateralization (OC),
subordination (in case of the Class A notes), excess spread and a cash reserve
account. On the closing date, the amount of OC is expected to be equivalent to 9.00%
of the Pooled Loans balance. The Class B notes are subordinated to the Class A notes,
thus providing additional credit enhancement to the most senior class of notes. The
non-declining fully funded at closing cash reserve account will be equal to 0.60% of
the Series 2016-1 Required Asset Amount. During the revolving period, the Class A
Required Enhancement Amount will equal 29.87% of the Class A Adjusted Invested
Amount and the Class B Required Enhancement Amount will equal 9.89% of the
Series 2016-1 Adjusted Invested Amount. Interest on the notes is payable monthly at
a fixed rate. The notes will receive interest and principal payments in the respective
sequential order of seniority.

Rating Rationale
The provisional ratings are based on the following analytical considerations by DBRS:
Credit enhancement levels are sufficient to support DBRSs assumptions of 33.1%
and 23.5%, respectively, with respect to the stressed cumulative net default/loss
(Lifetime Total Default/Loss Rate) for the Class A and Class B notes.
The transaction parties capabilities with regard to originations, underwriting
and servicing.
DBRS considers OnDeck to be an acceptable originator of the unsecured small
business loans. DBRS also deems OnDeck to be an acceptable servicer of such
loans with the presence of an acceptable warm backup servicer.
PFSC is an experienced backup servicer in the commercial loan space
(including obligations with more frequent than monthly repayment schedule).
It has been backup servicer for OnDeck since 2010 in a variety of debt facilities.
Credit quality of the collateral and the historical performance of OnDecks small
business loan portfolio and proposed pool.
The Pooled Loans are relatively short term, with a weighted-average (WA)
original term of approximately 12.3 months (Note: all pool data are with
respect to the Statistical Pool as of the Statistical Cut-Off Date).
The Pooled Loans generate a WA yield of 45.6%, which provides a significant
level of first-loss protection in the form of excess spread.
The financial health of the businesses and personal credit of the business
owners in the Pooled Loans is relatively robust. The WA non-zero FICO
Score for the guarantors of the Pooled Loans is approximately 676 and the WA
OnDeck Score (ODS) is 529. More than 70% of the Pooled Loans (by principal
balance) are to companies which have been in business for five years or longer.
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The pool is geographically diverse, with no state accounting for more than 15.3% of the Pooled Loans (by principal balance)
and the top five states comprising 45.1% of the Pooled Loans.
The pool is diversified across a wide range of industries, with no industry accounting for more than 14.6% (by principal
balance) of the total and the top five industries comprising 56.8% of the Pooled Loans.
Renewal Loans, which have historically exhibited lower charge-offs, comprise more than 67% of the Pooled Loans (by
principal balance).
Eligibility criteria to maintain the pools credit quality is set forth in the legal documents for the revolving period.
The transaction incorporates both the collateral performance triggers and servicer financial covenants that will be expected to
protect the noteholders in a stressed environment.
The collateral performance triggers include the minimum yield, minimum excess spread, asset deficiency coverage and
maximum delinquency levels. If these triggers are breached, an Amortization Event will occur without any action to be taken
by the noteholders.
There are also additional collateral performance triggers with respect to the minimum excess spread and maximum
delinquency levels. If these triggers are breached, the backup servicer will transition from warm to hot backup status.
The servicer is required to maintain certain financial covenants with respect to liquidity, tangible net worth, leverage ratio
and unrestricted cash; failure to do so would result in a Servicer Default, which will trigger amortization of the notes and may
result in a transfer of servicing.
The structure and presence of legal opinions, which address the true sale of the assets to the Issuer, the non-consolidation of the
Issuer with the estate of OnDeck and the trustees valid first-priority security interest in the collateral assets.

OnDeck
OnDeck, a Delaware Corporation, is a U.S.-based finance company focused on small business lending. The Company was founded in 2006
and began lending in 2007. OnDeck primarily originates short-term loans to small businesses located throughout the United States.
OnDeck is headquartered in New York, New York, and has regional offices in Arlington, Virginia, and Denver, Colorado. As of
December 31, 2015, OnDeck had over 600 full-time employees. The Company was originally backed by venture capital investors,
including Institutional Venture Partners, Google Ventures, RRE Ventures, First Round Capital and SAP Ventures. Since December
2014, OnDeck has been a public company listed on the New York Stock Exchange. Since it started lending in 2007, OnDeck has made
approximately 81,000 term loans to more than 42,000 customers, the aggregate principal balance of which totaled over $3.6 billion.
As of December 31, 2015, OnDeck had approximately $834 million in outstanding term loans to approximately 21,000 borrowers.
Loan sizes typically range between $5,000 and $500,000, with repayment terms ranging from three to 36 months.
OnDeck focuses on providing term loans to small businesses in the United States, which may have experienced challenges obtaining
affordable or timely financing in the past because they were underserved by traditional lenders. OnDeck has developed a lending
platform using predictive modeling, data aggregation and electronic payment technology, which enables it to service its target
market. OnDeck focuses not only on the small business owners personal credit history, but also on the health and performance of
their business by using a broad array of traditional and non-traditional data sources. The Company has developed a proprietary endto-end online-based lending platform, which encompasses originations relying on the in-house credit scoring model and collections
via automatic clearing house (ACH) through daily or weekly debits.
OnDeck only engages in commercial lending and does not extend consumer loans. The Company lends to borrowers in over 700
industries (as defined by six-digit North American Industry Classification System codes), with the most represented industries
including restaurants, retailers, health-care and service providers. OnDeck originates both term and revolving small business loans
with payment frequencies ranging from once per business day to once per week. The original loan balances range in size from
$5,001 to $500,000 and the original loan terms range from three to 36 months. The original size and tenor of each loan is a function
of the requested financing amount and OnDecks credit risk assessment of the prospective obligors ability to repay the loan. As of
December 31, 2015, the average principal amount outstanding for the OnDecks U.S. term loan portfolio was approximately $39,980
and the average original loan size was approximately $59,500, with a WA Loan Yield of approximately 40% and a WA original term
of approximately 14.24 months.

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OnDecks executive management team has been together since 2011 and has a strong background in financial technology, business
development and marketing. Executive team includes senior members with strong entrepreneurial and technological backgrounds.
The team also includes members with financial experience at American Express and Swift Capital.

Originations and Underwriting

Originations
OnDeck primarily originates new small business loans through three channels: direct marketing (Direct), strategic partners (Partner)
and third-party brokers (Funding Advisor Program or FAP). OnDeck also originates new loans to repeat borrowers (Renewal)
through the same three primary channels by encouraging the performing obligors, which have repaid approximately half of their
original loan, to refinance by taking out a new loan. The share of the Direct and Partner channels has been steadily growing and
increased to 77% in 2015 of term loan originations from 53% in 2013.
The Direct channel allows OnDeck to acquire borrowers through a variety of marketing techniques, including direct mail, online
media, email and television advertising. As of December 31, 2015, OnDecks direct sales team included over 110 dedicated personnel.
OnDeck has been originating loans through the Direct channel since 2007. The Company started originating loans through the
Partner channel in 2011. Through the Partner channel, OnDeck connects with prospective borrowers through customized strategic
relationships with third-party partners that have access to the small business community. Partner institutions include financial
firms, accounting solution providers, payment processors, independent sales organizations, leasing companies, financial websites
and others. OnDecks platform solutions team primarily engages in developing new strategic relationships and providing continued
support to existing partners. As of December 31, 2015, the platform solutions team included approximately seven dedicated
personnel. OnDeck has been using the FAP channel since 2007 to connect with prospective borrowers by entering into relationships
with third-party independent brokers that typically offer a variety of financial services to small businesses, including commissionbased business loan brokerage services. OnDeck enters into non-exclusive relationships with FAPs that identify potential borrowers
likely to satisfy its underwriting criteria. To become a FAP, (1) an authorized representative of the FAP must complete an interview
with OnDeck, (2) the FAP entity must submit to due diligence background checks, including criminal checks, (3) the FAP must sign
an agreement with OnDeck and receive training and (4) the FAP must submit to an annual process to update the due diligence to
be re-certified each year. As of December 31, 2015, OnDeck had current relationships with over 500 FAPs and no single FAP was
responsible for more than 2% of its total origination volume (by loan principal amount). FAP relationships are managed by OnDecks
account management team, which approximately eight dedicated personnel as of December 31, 2015.
OnDeck also purchases small business loans originated by BofI Federal Bank (BofI) and Celtic Bank (Credit Sponsors) that have been
sourced by the Companys origination channels and conform to both OnDecks and the applicable Credit Sponsors underwriting
policies. Credit Sponsors originate these loans in five states where the Company does not directly originate loans because of statelevel licensing requirements. OnDeck may also refer certain loans to Credit Partners in additional states. Small business loans
referred to the Credit Sponsors by the Company that are funded by Credit Sponsors are then purchased by OnDeck. As of the
Statistical Cut-Off Date, originations for which OnDeck relied on the existing Credit Sponsors comprised approximately 19.7% of
the collateral pool for Series 2016-1.
Underwriting
OnDecks underwriting team, comprising seven underwriters and a loan operation team, is primarily located at its Virginia office.
The underwriting team located in Denver underwrites only loans to prospective obligors that may be referred to the Credit Sponsors.
Underwriting is performed pursuant to written guidelines. The underwriters obtain both business and personal credit reports and
a LexisNexis report for every loan originated. The customer must supply (at least) three most current months of bank statements
(in some cases, similar electronic bank information is pulled) to be approved in addition to registering for business daily payments
via ACH. Merchant processing records, public records and social media data may also be reviewed to verify information on the
potential borrowers application. The underwriting process includes the following steps:
1. Applicants Initial Qualification: Confirming that the applicant fits the target profile by analyzing the merchants time in
business, industry, estimated annual revenue and credit history.
2. Credit Evaluation: Using OnDecks proprietary risk scoring model and decisioning system to generate an ODS for the prospective
borrower that drives the credit decision. ODS incorporates an analysis of the following attributes: revenue and operating cash
flow, business credit history and other business records, analysis of history for a repeat borrower, business characteristics and
personal guarantor metrics.

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3. Cash Flow Analysis: Determining the cash-flow profile of business. This analysis may include an analysis of banking activity,
accounting data, cash coverage ratio, debt utilization, credit card processing data and average ticket size.
4. Loan Amount and Pricing: Matching loan term, amount and pricing to optimize the expected profitability by analyzing cash
coverage ratios, debt utilization, risk type and sales channels.
5. Confirmatory Diligence: Ensuring that the applicant is a real business and that guarantors are legal owners by inspecting
LexisNexis reports, completing reviews of all closing documents as well as reviewing tax returns and utility bills. A complete
review of all closing documents is undertaken.
Below is a summary of some of the minimum requirements necessary to obtain a term loan of the type that would be eligible to be
included in the collateral for Series 2016-1:
Requirements
Maximum Loan Term

36 Months 1

Maximum Loan Amount

$500,000 2

Minimum Time in Business 3

Minimum Credit Score (FICO 4) of Personal Guarantor 5

1 Year
500

Most Recent Bankruptcy In File

>2 years

Most Recent Forcelosure In File

>2 years

Minimum OnDeck Score

442

Minimum Annual Revenue 6

$100,000

Number of Monthly Bank Statements (or similar electronic bank information)

Minimum Transactions per Months 7

3
5 Deposits

Minimum Average Bank Balance 7

$1,000

Minimum Ending Bank Balance 7

$0

1 Only Loans with a loan term less than or equal to 18 months will be Eligible Loans.
2 Only Loans with an original principal loan amount less than or equal $250,000 will be Eligible Loans.
3 Time in business may include time the business was operated by previous business owners.
4 FICO is a registered trademark of Fair Isaac & Co.
5 Where there is more than one (1) personal guarantor, OnDeck utilizes the weighted average FICO score by percentage ownership interest of each such personal guarantor.
6 Annual revenue may be estimated based upon bank data, self-reported data, and/or other data OnDeck deems pertinent.
7 Any of these requirements may be overridden, subject to the presence of factors that OnDeck belives will mitigate the risks associated with such exception.

OnDeck underwrites small business loans using its proprietary credit scoring methodology, the OnDeck Score. The ODS, is a
statistically derived credit model that is built on historical loan performance data. The Company uses certain underwriting
guidelines, including minimum ODS scores as well as additional attributes related to the borrowers credit risk and ability to pay
as described above. Through use of the ODS, OnDeck seeks to identify the relative credit risk of potential borrowers on the basis of
cash flow, credit history and business attributes.
Revenue and Cash Flow: analysis of business revenue and operating cash flow and other related indicators, which may include
a review of one or more of bank account balances, deposit frequency, deposit and withdrawal trends as well as bank overdrafts.
Business Credit History and Other Business Records: analysis of business credit history or public records such as tax liens,
judgments, licenses and Uniform Commercial Code (UCC) claims.
Business Attributes: analysis of industry type, time in business, inventory characteristics and exposure to seasonal trends.
According to OnDeck, it requires a personal guarantee for all terms loans from business owners whose aggregate ownership
percentage is greater than or equal to 50%. Consideration is also given to the outlook for each businesss industry. Generally, loans
with higher-risk characteristics are mitigated through lower loan amounts and shorter terms. Ultimately, more weight is placed on
the small business credit scores than on the business owners personal credit scores.
The underwriting team has limited authority to make credit policy exceptions with compensating factors and these exceptions must
not exceed 15% of all approvals (by unit count) for loan applications submitted to OnDeck in a calendar month. Loan proceeds are
delivered to a borrower by wire funding or ACH to the business bank account that was reviewed during the underwriting process.

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Fraud Prevention
Fraud procedures are focused on a multifaceted data-driven approach, with a concentration on bank statement tampering. As a
result, loan processors and underwriters go through training on how to spot fraud in bank statements and merchant processing
statements, which includes metadata checks.

Servicing
OnDeck focuses on identifying payment problems and credit deterioration trends early enough to address these problems, where
applicable, through a workout program. To ensure factual accuracy and good customer service, the Company records all collection
calls. The collections cycle for an account begins at one day of delinquency and delinquent loans may be charged off after 90 days
of delinquency. During the collections cycle, the account goes through five stages that correlate with delinquency severity and the
applicable collection or workout tactics. Accounts primarily move through the stages based on their aging; however, the collection
efforts can be fast tracked if circumstances are deemed to require a more aggressive approach.
Stage One: Upon becoming one-day delinquent, a loan will enter stage one of the collections cycle for delinquent loans. OnDeck will
initiate an auto-debit process for makeup payments. After two consecutive missed scheduled payments, the automated payment
system is suspended until the borrower indicates an intent to resume payment. During stage one, the Company begins to assess
the cause for delinquency and the best course of action to take while pursuing further collections. Automatic emails and phone
calls during business hours are made in an attempt to contact the borrower. Depending on the circumstances of the borrower, the
collections team may consider a workout program.
Stage Two: An account enters stage two on the sixth day of delinquency. The collections team continues to make an effort to contact
the borrower by sending written letters, emails and phone calls during business and non-business hours. Each written letter sent
becomes increasingly more direct. OnDeck may notify borrowers of tailored workout programs in this stage. The collections team
may also enact its skip-tracing process to locate and establish contact with unreachable borrows if it concludes that the borrower
has moved or is evading OnDeck.
Stage Three: Upon becoming 31 days delinquent, a loan will enter stage three of the delinquent collections cycle. Efforts are
continued to make contact with the borrower. All written mailings increase in tone and intensity, expressing OnDecks right to
take legal action against the borrower. A site visit may be conducted by a vendor contracted by the Company to verify location and
hand deliver notices. In some instances, OnDeck may engage in settlement discussions for less than the full principal and interest
amounts owed.
Stage Four: The collections cycle continues onto stage four once the loan becomes 61 calendar days delinquent. During this stage,
the collections team may arrange for a written letter from external legal counsel warning of impending legal action. All contact
attempts from previous stages may be continued.
Stage Five: Once an account becomes 90 calendar days delinquent, a delinquent loan may be charged off. OnDeck may charge off
loans earlier than this upon attainment of a court judgment or if otherwise deemed uncollectible. Once an account is written off,
OnDeck may continue to work the account using any of the collection and enforcement actions previously described. When all
internal collection activities have been exhausted, the account can be placed with a third-party collections agency.
Loss Mitigation
To assess whether a workout program is appropriate for a borrower, a Collections Representative first conducts risk evaluation.
This includes updating the obligors credit reports and conducting a phone interview with a customer to determine whether their
delinquency problem is expense, revenue or receivables related. Other topics addressed on the call include gathering information
on which steps customers have taken to rectify the situation, their plans to reduce expenses during this period, whether they have
defaulted on obligations to other creditors and other basic information about the business status (number of employees on staff,
revenue trends, cash levels, etc.). OnDeck may also require a customer to provide additional documentation to confirm the reduced
capacity to pay.
After a review of the additional documents, the Collections Department may propose a temporary modification to the scheduled
payment amount and/or the frequency of scheduled payments to maximize recovery based on the specific circumstances of a
delinquent borrower. The initial regular workout program for a delinquent borrower is up to 30 days in length. The Collections
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Department, based on its review of the specific circumstances surrounding a borrower, may approve certain delinquent borrowers
for subsequent regular workout programs of longer periods that do not exceed 90 days. The Collections Department may also design
a five-business day workout program to address a borrowers short-term cash flow issues. A five-business day workout is a temporary
modification to the borrowers scheduled payment amount with a maximum duration of five business days. The minimum aggregate
payment requirement over the duration of a five-business day workout is 20% of a borrowers regular scheduled payments during
such period. A borrower need not be delinquent or submit any documentation to be approved for such a workout program.
For all workout programs, to compensate for the missed and slower payments during the workout period, the term of the original
loan is extended until all missed scheduled payments are paid in full. The system will automatically extend out the maturity date by
the necessary amount to ensure that the customer does not have a balloon payment. Interest does not accrue on missed scheduled
loan payments.
Customer Bankruptcy
Whenever an official bankruptcy notice has been received, the account is immediately placed on hold and attempts to contact a
borrower for collections are ceased. In addition, a member of the Collections Department conducts an asset evaluation to determine
what assets such borrower had at origination and determines if OnDeck had any priority liens. If OnDeck is in the first-lien position
for the obligors assets, a lift of stay will be requested through the bankruptcy court and, if approved, the assets will be taken back
by OnDeck and liquidated.

Backup Servicing
PFSC, which is located in Portland, Oregon, is the warm to hot backup servicer on this transaction. DBRS deems PFSC to be an
acceptable backup servicer for the transaction. PFSC has been in business for 24 years and first entered the daily pay loan space in
2009. PFSC entered into its first backup servicing arrangement with OnDeck in February 2010 and has served as the backup servicer
on several of the Companys financing transactions. Over the years, PFSC has conducted several on-site visits to OnDeck, mapped
the portfolio to its system and performed a monthly reconciliation and certification.
For this transaction, PFSC will be acting initially as a warm backup servicer that will convert to a hot backup servicer within 30 days
if certain triggers are breached. These triggers (the Hot Backup Servicer Trigger Events) include the Two-Month Weighted Average
Excess Spread of less than 12.50% and the Two-Month Average Delinquency Ratio of greater than 12.50%. In its role as backup
servicer, PFSC will be receiving daily data files that include all information necessary to facilitate daily ACH processing, including
each obligors ABA routing and account number. PFSC will be conducting monthly reconciliation and issuing a backup servicer
certification noting any exceptions to the Issuer, the Servicer and the Indenture Trustee. Additionally, PFSC will have a view-level
access to the various depository accounts that will convert to full access in the event of the termination of OnDeck as servicer.
There are limited opportunities for PFSC to resign as backup servicer, including specifically (1) the ongoing non-payment of fees
or expenses owed to PFSC, (2) changes to the legal or regulatory environment that, based on an opinion of counsel, would prevent
PFSC from performing its duties as backup servicer or (3) a material unremedied failure by the Issuer to observe a covenant or
agreement under the Backup Servicing Agreement.
Since the OnDeck portfolio is relatively standard from a conversion and servicing perspective (i.e., automated payments via ACH,
no tax escrow, no financed collateral and no insurance tracking), DBRS believes that the backup servicer arrangement with PFSC is
adequate, particularly given its prior experience acting as a backup servicer for OnDeck.

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Transaction Structure
The transaction is structured as a master trust and will allow for future issuance of additional series. Each series of notes will be
created by an Indenture Supplement. The initial series contains a two-year revolving period.
On Deck Capital, Inc.
(Seller)

On Deck Capital, Inc.

(Servicer)

Deutsche Bank Trust

Company Americas
(Indenture Trustee)

On Deck Asset
Securitization
Trust II LLC
(Issuer)

Portfolio Financial
Servicing Company
(Backup Servicer)

5
Series 2016-1 Notes
$250,000,000 mm
Class A $211,540,000 mm
Class B $38,460,000 mm

Future Series of Notes

1 On the Closing Date, the Seller will transfer loans to the Issuer for cash available from the sale of the Series 2016-1 Notes or as a contribution of capital to the Issuer. From time to time
thereafter, the Seller may transfer additional loans to the Issuer for cash available from payments on the loans owned by the Issuer, the issuances of additional series of notes or otherwise
as contributions to capital of the Issuer.
2 The Issuer pledges the loans it acquires from the Seller and certain other assets to the Indenture Trustee to secure its notes, including the Series 2016-1 Notes.
3 The Issuer issues the Series 2016-1 Notes and from time to time in the future may issue additional series of notes.
4 The Servicer services the loans and remits payments on the loans received from the obligors to the lockbox account or the collection account. The Backup Servicer will provide certain
services in respect of reports generated by the Servicer and other matters and, in the event that the Servicer is terminated after a Servicer Default, will agree at the request of the
Indenture Trustee to act as the successor servicer.
5 The Issuer uses collections on the loans allocated to the Series 2016-1 Notes to make payments on the Series 2016-1 Notes pursuant to the payment priorities and will use collections
allocated to any other series of notes issued by the Issuer to make payments on those notes in accordance with the priorities set forth in the applicable indenture supplement.

The Issuer will apply the net proceeds from the sale of Series 2016-1 Notes to acquire the pool of loans from OnDeck, some of which
are currently financed in warehouse facilities or the Companys previous term asset-backed securities (ABS) transaction, and to
make the initial deposit to the reserve account.
OnDeck as Seller and Servicer will make certain representations and warranties with respect to each loan sold pursuant to the Loan
Purchase Agreement, including those comprising the initial and subsequent transfers of loans to the Issuer. Each representation
and warranty will be made as of the Closing Date in the case of the initial contracts and on the applicable date of each transfer with
respect to additional contracts. All rights and remedies in respect of such representations and warranties will be assigned to the
Indenture Trustee for the secured parties.
The Servicing Agreement will require the Servicer to cause all funds collected and received pursuant to each Pooled Loan to be
paid directly into the Lockbox Account or the Collection Account. The Issuer, the Collection/Lockbox Account Depository and

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the Indenture Trustee will enter into the Collection Account Control Agreement and the Lockbox Account Control Agreement
pursuant to which the Collection/Lockbox Accounts will be established and maintained for the benefit of the noteholders.
Under the Base Indenture (and Supplemental Indenture), the Issuer and the Indenture Trustee are authorized to cause all collections
due and to become due to be remitted directly to the Collection or Lockbox Account. The Issuer agrees that, if any Collections
shall be received by the Issuer in an account other than the Collection Account or the Lockbox Account, such monies will not be
commingled by the Issuer with any of its other funds, but shall be held in trust by the Issuer for and immediately (but in any event
within two business days from receipt) remitted to the Indenture Trustee.
Total Available Collections means, with respect to any Payment Date,
1. Aggregate amount of Collections allocated to the Series 2016-1 Notes;
2. In the case of the Payment Date on June 18, 2018, in the absence of an Amortization Event, the lesser of (a) any amounts on deposit
in the Series 2016-1 Collection Account as of the last day of May 2018 that are attributable to Collections that were allocated to the
Series 2016-1 Notes prior to May 1, 2018 and (b) the amount, if any, by which the Series 2016-1 Required Asset Amount exceeds
the Series 2016-1 Asset Amount;
3. In the case of the first Payment Date following the occurrence of an Amortization Event, any amounts on deposit in the Series
2016-1 Collection Account on the last day of calendar month that are attributable to Collections that were allocated to the Series
2016-1 Notes prior to that calendar month;
4. Investment income on amounts on deposit in the Series 2016-1 Collection Account; and
5. Investment income on amounts on deposit in the Series 2016-1 Interest and Expense Account
Priority of Payments
On each Payment Date, the Indenture Trustee will apply the Total Available Amount in the Series 2016-1 Settlement Account in the
following order of priority:
1. To the Indenture Trustee and Custodian, all accrued and unpaid fees, expenses and indemnities then due, but not exceeding the
Annual Indenture Trustee Fee Limit and the Annual Custodian Fee Limit ($150,000 per annum (p.a.) in aggregate) as long as no
Event of Default has occurred;
2. To the Servicer, the servicing fee (3.00% p.a.);
3. To the Backup Servicer, the backup servicing fee but not exceeding the Annual Backup Servicer Fee Limit ($200,000 p.a.);
4. To the noteholders:
a. Interest on the Class A notes, and
b. Interest on the Class B notes;
5. As long as no asset deficiency exists (i.e., sufficient Eligible Loans are available in excess of the outstanding notes balance plus
required credit enhancement plus excess concentration amount), to reinvest in additional loans;
6. To the Reserve Account until its balance is equal to the Required Reserve Account Amount;
7. To the Indenture Trustee, the Custodian and/or the Backup Servicer any additional fees, expenses and indemnities not otherwise
paid in (1) or (3) above; and
8. To the Issuer, an amount equal to the balance remaining in the Settlement Account.
During the Amortization Period, but prior to the occurrence of an Event of Default or an Amortization Event, the Principal Payment
Amount will equal the sum of (1) the outstanding principal balance of the Pooled Loans which became Charged-Off Loans during
the immediately preceding month, (2) the Pooled Loans which became subject to repurchase by the Seller during the immediately
preceding month, (3) the outstanding principal balance of each Pooled Loan that became a 30 Missed Payment Factor (MPF) Pooled
Loan (if not included in clause (1)) during the immediately preceding calendar month and (4) the amount, by which the outstanding
principal balance of each Pooled Loan as of the first day of the preceding calendar month exceeded the outstanding principal
balance of such Pooled Loan as of the first day of the following calendar month. After the occurrence of an Event of Default or an
Amortization Event, the Total Available Amount remaining after paying the items (1) through (4) of the Priority of Payments will be
paid as principal payment to the notes.

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Events of Default, with respect to Series 2016-1, means any one of the following events:
1. The Securities and Exchange Commission or other regulatory body with jurisdiction reaches a final determination that the Issuer
is an investment company, within the meaning of the Investment Company Act of 1940;
2. The Issuer receives a final determination that it will be treated as an association taxable as a corporation for federal income
tax purposes;
3. Bankruptcy or insolvency of the Issuer;
4. Default in payment of interest on any note (five-business day grace period);
5. Default in the payment of principal of any note when due;
6. Default in the observance or performance of any covenant or agreement of the Issuer made in the transaction documents, which
default materially and adversely affects the interests of the noteholders (30-day grace period which, in certain circumstances,
may be extended to 60 days); and
7. Failure by the Indenture Trustee to have a valid and perfected first-priority security interest in any material portion of the Collateral (five-business day grace period) or the Issuer, the Seller or an affiliate of either asserts that the Indenture Trustee does not
have a valid and perfected first-priority security interest in any material portion of the Collateral.
Amortization Event, with respect to Series 2016-1, means any one of the following events:
1. The occurrence of a Trigger Event:
a. The Three-Month Weighted-Average Loan Yield was less than 38.00%,
b. The Three-Month Weighted-Average Excess Spread was less than 10.00%, or
c. The Three-Month Average Delinquency Ratio was greater than 16.00%;
2. The occurrence of a reserve deficiency (the amount on deposit in the Series 2016-1 Reserve Account is less than the Series 2016-1
Required Reserve Account Amount) (three-business day grace period);
3. The occurrence of an asset deficiency (the Series 2016-1 Asset Amount is less than the Series 2016-1 Required Asset Amount)
(three-business day grace period);
4. The occurrence of an Event of Default with respect to the Series 2016-1 Notes;
5. Bankruptcy or insolvency of either the Seller or the Servicer;
6. The aggregate amount of funds on deposit in the transaction accounts exceeds the aggregate outstanding principal balances of
the Pooled Loans; or
7. The occurrence of a Servicer Default shall occur;
a. Failure by the Servicer to make any payment, transfer or deposit (five-business day grace period);
b. Any representation or warranty made by the Servicer in the Servicing Agreement or in any statement or certificate pursuant
to the Servicing Agreement or the Indenture is incorrect when made and such inaccuracy has a material and adverse effect
on the interests of the noteholders (30-day grace period);
c. Failure by the Servicer to comply with any of its agreements or covenants, which has a material and adverse effect on the
interests of the noteholders (30-day grace period);
d. Bankruptcy or insolvency of the Servicer; or
i. The occurrence of any of the following events with respect to the Servicer (Additional Servicer Default) as of the last
day of any fiscal quarter:
ii. Consolidated Liquidity is less than $30,000,000;
iii. Tangible Net Worth is less than $100,000,000;
iv. The Leverage Ratio is greater than 8:1; or
v. Unrestricted cash and cash equivalents of OnDeck and its subsidiaries are less than $20,000,000.
If a Servicer Default is not remedied, either the Indenture Trustee or the Requisite Noteholders may terminate all the rights and
obligations of the Servicer under the Servicing Agreement.

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The following events will result in the occurrence of an Amortization Event with respect to Series 2016-1 only if, after any applicable
grace period, either the Indenture Trustee or the Majority in Interest declares that an Amortization Event has occurred:
1. Failure by the Issuer to make a payment or deposit when required to under the Indenture (five-business day grace period);
2. Failure by the Issuer to observe or perform any its covenants or agreements, which materially and adversely affects the interests
of the Series 2016-1 noteholders (30-day grace period from notice);
3. The Issuer makes a representation or warranty that was incorrect when made or when delivered, which materially and adversely
affects the interests of the Series 2016-1 noteholders (30-day grace period from notice);
4. Failure by the Seller to make any payment required by the terms of the Loan Purchase Agreement (or within the applicable grace
period which will not exceed five business days);
5. Failure by the Seller to duly observe or perform any of the Sellers covenants or agreements in the Loan Purchase Agreement,
which materially and adversely affects the interests of the Series 2016-1 noteholders (30-day grace period from notice);
6. The Seller makes a representation or warranty in the Loan Purchase Agreement or in any information that it is required to deliver
to the Issuer or the Indenture Trustee that was incorrect in any material respect when made or when delivered (30-day grace
period from notice); or
7. Any of the Transaction Documents ceases to be in full force and effect, other than in accordance with its terms.
Eligible Loan means a loan that satisfied each of the following criteria as of transfer date for such loan:
1. Such loan represents a legal, valid and binding obligation of the related obligor and related guarantor, enforceable against such
obligor and related guarantor in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors rights generally or by equitable principles relating to enforceability;
2. Such loan was originated in the ordinary course of the Sellers or the Credit Sponsors business;
3. Such loan was underwritten and originated in accordance with the Credit Policies;
4. Such loan was originated in all material respects in accordance with and complies in all material respects with all applicable
Requirements of Law, including any applicable usury laws and credit protection laws;
5. Such loan is due from an Eligible Obligor;
6. All obligations under such loan are guaranteed pursuant to an unconditional personal guaranty by the related guarantor;
7. Such loan is fully amortizing over its term with an Outstanding Principal Balance that amortizes each day Payments are
received thereunder;
8. Payments are due and payable under such loan in equal installments, a portion of which is applied thereunder to the payment of
interest and a portion of which is applied thereunder to the payment of principal;
9. The obligor thereof submitted no fewer than three bank account statements (or similar electronic bank information) in respect
of its operating checking account to the Seller in connection with its application for such loan;
10. Such loan is a Daily Pay Loan or a Weekly Pay Loan;
11. Such loan is denominated and payable in Dollars;
12. Such loan is an ACH Loan and is being paid by the direct debit of scheduled loan payments from the obligors operating
bank account;
13. Such loan has been fully disbursed, the obligor thereof has no additional right to further fundings under the related Loan
Agreement and the related Loan Agreement requires that the Loan proceeds be used for business purposes and not for personal,
family or household purposes;
14. The proceeds of such loan were not used to satisfy, in whole or part, any indebtedness owed or owing by the obligor thereof to the
Seller, a Credit Sponsor, the Issuer or any affiliate of the Seller, except for any refinancing of an existing loan if all payments under
such existing loan were contractually current prior to its refinancing and at least the Minimum Payment Percentage in effect on
such transfer date of all payments due and payable at the time of origination under such existing Loan were paid at the time of
its refinancing;
15. Such loan (a) is not subject to any defense (including any defense arising out of violations of usury laws), counterclaim, right of
set off or right of rescission (or any such right of rescission has expired in accordance with applicable law) and (b) is due from an
obligor that has not asserted any defense, counterclaim, right of set-off or right of rescission with respect to such loan;

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16. Such loan was originated by the Seller or a Credit Sponsor without fraud on the part of any person including, without limitation,
the obligor thereof or any other party involved in its origination;
17. Such loan is not a Charged-Off Loan and has not been Re-Aged;
18. (a) If such Loan is a Daily Pay Loan, as of the Loan Determination Date in effect for such transfer date, at least one payment had
been received on such loan, such loan was not a Delinquent Loan and the Seller had no actual knowledge of the existence of any
default, breach, violation or other event permitting the acceleration of the maturity of such Loan under the terms of the related
Loan Agreement or that with notice or the lapse of time would permit acceleration of such loan under the terms of the related
Loan Agreement; or (b) if such loan is a Weekly Pay Loan, as of the Loan Determination Date in effect for such transfer date, such
Loan was not a Delinquent Loan and the Seller had no actual knowledge of the existence of any default, breach, violation or other
event permitting the acceleration of the maturity of such loan under the terms of the related Loan Agreement or that with notice
or the lapse of time would permit acceleration of such Loan under the terms of the related Loan Agreement;
19. Such loan has an original principal amount of the Maximum Initial Principal Balance ($250,000 for Series 2016-1) in effect on
such transfer date or less;
20. Such Loan has an original term that does not exceed the Maximum Original Term (18 months) in effect on such transfer date;
21. Such loan has a Loan Yield greater than or equal to 19.0% p.a.;
22. Such loan is due from an obligor that was assigned an ODS greater than 441 as of the date of its underwriting;
23. Such loan is guaranteed by guarantors that had a WA FICO score of 500 or greater as of the date of its underwriting;
24. Such loan has been serviced by OnDeck since origination in all material respects in accordance with the Servicing Standard;
25. None of the terms, conditions or provisions of such loan or the related Loan Agreement has been amended, modified, restructured
or waived except in accordance with the Credit Policies;
26. Such loan constitutes an account (as defined in the UCC), a payment intangible (as defined in the UCC) or proceeds thereof and
is not Chattel Paper;
27. If such loan was originated by the Seller, it was originated in and is governed by the laws of Virginia;
28. If such Loan was originated by a Credit Sponsor, (a) such Credit Sponsor underwrote, approved, processed and disbursed the
proceeds of such loan out of an office or branch of such Credit Sponsor in a jurisdiction where such Credit Sponsor is authorized
to do business and (b) such loan is governed by the laws of a jurisdiction where such Credit Sponsor is authorized to do business;
29. Immediately prior to the sale or contribution of such loan to the Issuer pursuant to the Loan Purchase Agreement, the Seller
had good and marketable title to such loan, free and clear of all liens (other than any lien which has been or will be terminated
concurrently with such sale or contribution to the Issuer);
30. Under the related Loan Agreement, such loan is freely assignable and does not require the consent of the obligor thereof or any
other person as a condition to any transfer, sale or assignment of any rights thereunder to or by the Issuer;
31. When sold or contributed to the Issuer by the Seller pursuant to the Loan Purchase Agreement, such loan will be owned by the
Issuer, free and clear of all liens (other than Permitted Liens);
32. The Seller has caused its master computer records relating to such loan to be clearly and unambiguously marked to show that
such loan has been sold and/or contributed by the Seller to the Issuer pursuant to the Loan Purchase Agreement and pledged by
the Issuer to the Indenture Trustee pursuant to the Base Indenture;
33. Such loan (a) had an original unpaid principal balance of $75,000 or less or (b) (i) the Seller has filed a UCC-1 Financing Statement
against the Obligor thereof describing such Loan and the Related Security and naming such Obligor, as debtor, the Seller or the
UCC Agent (or a wholly owned Subsidiary of the UCC Agent), as secured party; and (ii) if such UCC-1 Financing Statement
names the UCC Agent (or a wholly owned subsidiary of the UCC Agent) as secured party, (x) the Agency Agreement is in full
force and effect and (y) the related Loan Agreement states that the Seller may file UCC Financing Statements against the obligor
thereof which names the Seller or its secured party representative as the secured party thereon;
34. Copies (or electronic copies) of each of the documents required by and listed in the Document Checklist attached to the Custodial
Agreement are included in the Loan File with respect to such loan and such Loan File has been delivered to and accepted by the
Custodian in accordance with the Custodial Agreement;
35. If such loan is an E-Sign Loan, it was originated in accordance with all applicable laws governing the collection of electronic
signatures or records; and
36. Such loan was selected from all loans owned by the Seller or, in the case of the initial transfer date, all loans owned by the Seller
or one of the Sellers Subsidiaries, in each case satisfying each of the aforementioned criteria as of such transfer date using no
selection procedures known to be or intended to be adverse to the Issuer or the noteholders.
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Eligible Obligor means an obligor that satisfied each of the following criteria as of the transfer date for the related loan:
1. Such obligor is domiciled in the United States (or a territory thereof );
2. Such obligor is not a Governmental Authority;
3. Such obligor is not subject to any proceedings under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect;
4. Such obligor is not an employee or affiliate of the Issuer or the Seller or an employee of an affiliate of the Issuer or the Seller;
5. Such obligor is not a natural Person (other than in case of sole proprietorship);
6. Each guarantor with respect to such obligor is a natural person and is a legal U.S. resident;
7. Such obligor has not closed or sold its business;
8. Such obligor does not operate in a prohibited industry as described in the Credit Policies;
9. Such obligor is not a party to any other loan or advance arrangements similar to those provided by the Seller with another lender or
advance provider, in each case that lends or advances funds based on such obligors future collections or credit card receipts; and
10. Such obligor is a business that has been operating for at least one year.
Aggregate Excess Concentration Amount is the sum of the amount by which the aggregate outstanding principal balances of all
Pooled Loans (excluding all 30 MPF Pooled Loans) falling within each of the following concentration limits exceeds the following
percentages of the aggregate outstanding principal balances of the Pooled Loans (excluding all 30 MPF Pooled Loans):
Concentration Amount

Percentage of Pool Outstanding Principal Balance

Series 2016-1

Series 2014-1

Obligors located in California

20.00%

20.00%

Obligors located in Florida

15.00%

15.00%

Obligors located in New York

15.00%

15.00%

Obligors located in Texas

15.00%

15.00%

Obligors located in any other single state

10.00%

10.00%

Obligor businesses in highest concentration Industry Code

25.00%

25.00%

Obligor businesses in any other single Industry Code

20.00%

20.00%

Obligor businesses in SIC Industry Code Group A

0.00%

N/A

Obligor businesses in SIC Industry Code Group B

2.00%

N/A

Obligor businesses in SIC Industry Code Group C

5.00%

N/A

Obligor businesses in SIC Industry Code Type 1

15.00%

N/A

Obligor businesses in SIC Industry Code Type 2

10.00%

N/A

Obligor businesses in SIC Industry Code Type 3

10.00%

N/A

Loans with original terms in excess of the One Year Equivalent

30.00%

20.00%

Loans with original terms in excess of the One Year Equivalent to Obligors with OnDeck
Scores of less than 470

0.00%

N/A

Loans with original terms in excess of the One Year Equivalent to Obligors with OnDeck
Scores of less than 500

5.00%

N/A

Loans with original terms in excess of the One Year Equivalent to Obligors with OnDeck
Scores of less than 530

20.00%

N/A

Loans with Outstanding Principal Balances in excess of $75,000

40.00%

30.00%

Loans with Outstanding Principal Balances in excess of $125,000

20.00%

12.50%

Loans with Outstanding Principal Balances in excess of $200,000

7.50%

3.50%

Obligors with OnDeck Scores of less than 470

10.00%

20.00%

Obligors with OnDeck Scores of less than 500

30.00%

60.00%

Obligors with OnDeck Scores of less than 530

65.00%

80.00%

Obligors in business less than 2 years

10.00%

10.00%

Obligors in business less than 5 years

40.00%

40.00%

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Loans subject to Material Modifications

5.00%

5.00%

Loans that are not Renewal Loans

65.00%

65.00%

Loans originated through third-party brokers part of the Funding Advisor

Program channel that are not Renewal Loans

25.00%

N/A

Weekly Pay Loans

50.00%

N/A

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Series 2016-1 Average Balance Maximum Amount is $55,000.

Series 2016-1 Maximum Original Term is 18 months.
Series 2016-1 Maximum Outstanding Principal Balance is $250,000.

Collateral Description
The Series 2016-1 pool characteristics described below are as of the April 8, 2016, Statistical Cut-off Date. The receivables securitized
in this transaction will be a pool of small business loans with the characteristics which are expected to be representative of the actual
loans that will be transferred by the Seller to the Issuer on the Closing Date. Summary statistics of the pool data are presented below,
with a comparison to the previous term ABS sponsored by OnDeck (the percentages are based on the outstanding principal balance).

Current Aggregate Principal Balance

Pool Factor
Number of Loans

Series 2016-1

Series 2014-1

245,324,948.81

183,246,078.66

69.59%

72.65%

7,045

5,397

Average Current Balance

$34,822.56

$33,953.32

Average Original Balance

$49,826.03

$46,733.40

Maximum Original Balance

250,000.00

250,000.00

Minimum Original Balance

5,001.00

5,001.00

Weighted Average APR

45.65%

54.40%

Maximum APR

90.69%

134.40%

Minimum APR

19.30%

28.65%

Weighted Average Original Term (months)

12.3

11.0

Weighted Average Remaining Term (months)

9.2

8.4

Weighted Average FICO

676

688

Weighted Average OnDeck Score

529

508

New Customer

67.18%

55.52%

Renewal

32.82%

44.48%

<= 549

1.57%

0.67%

550 to 599

6.77%

2.59%

600 to 649

24.13%

17.86%

650 to 699

35.09%

39.05%

700 to 749

21.51%

28.19%

750 >=

10.93%

11.65%

442 to 469

4.71%

12.80%

470 to 499

15.70%

44.60%

500 to 529

28.96%

22.27%

530 >=

50.64%

20.32%

FICO Score

OnDeck Score

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Industry (top 5)
Industry 1

Business Equipment & Services (14.6%)

Building and Development (12.5%)

Industry 2

Building & Development (12.8%)

Food Service (12.3%)

Industry 3

Food Service (10.3%)

Automotive (11.4%)

Industry 4

Automotive (9.7%)

Business Equipment & Services (11.2%)

Industry 5

Health Care (9.5%)

Retailers (except food & drug) (10.9%)

State 1

CA (15.3%)

CA (16.2%)

State 2

TX (9.2%)

FL (8.4%)

State 3

FL (8.9%)

NY (7.6%)

State 4

NY (8.0%)

TX (7.0%)

State 5

IL (3.9%)

NJ (4.1%)

State (top 5)

Credit Enhancement
Credit enhancement for the Series 2016-1 will comprise OC, subordination (for the benefit of Class A notes), a reserve account and
available excess spread.
Overcollateralization
The required OC amount will be in the amount equivalent to 9.00% of the Outstanding Principal Pool balance.
Subordination
Subordination for the Class A notes will be in form of the Class B notes, which are sized to equal approximately 14.0% of the initial
Outstanding Principal Pool balance.
Reserve Account
A non-declining reserve account will be fully funded at closing in the amount equal to 0.60% of the Series 2016-1 Required Asset Amount.
Excess Spread
The collateral pool is expected to generate substantial excess spread. DBRS assigns credit to excess spread in its cash flow modeling
analysis up to the level of the minimum required WA Loan Yield of 38% for the collateral pool.

Cash Flow Analysis

DBRSs cash flow modeling analysis for this transaction comprises three stages. First, DBRS develops, based on the review of
the historical quarterly static pool vintage performance, the expected default/loss assumption for the collateral pool, given
concentration limits with respect to new and renewal originations, ODS, payment frequency and original term. DBRS then uses this
expected default/loss assumption as an input to the DBRS CLO Asset Model to assess the stressed default/loss level (Lifetime Total
Default/Loss Rate) at each targeted rating level. Finally, DBRS measures the Lifetime Total Default/Loss Rate against the breakeven amount of defaults/losses that the Series 2016-1 can withstand, given other cash flow modeling assumptions such as senior
expenses, coupon on the notes, timing of defaults as well as the transactions structure including available credit enhancement and
the priority of payments under the cash flow waterfall.
DBRS reviewed the performance of OnDecks quarterly static pools from 2007 to 2015. The quarterly vintages were segmented
by a number of key risk dimensions, including credit score bands, original term, payment frequency and classification as new loan
or renewal with an existing borrower. In its evaluation of the expected default/loss, DBRS focused primarily on the ODS bands
and loan term. DBRS developed the matrices, which overlaid (1) the static pool vintage data based on the ODS bands with (2a)
the static pool data sets for new and renewal origination vintages, as well as (2b) the static pool data sets for the vintages with the
original maturity of less than one year and the original term of 12 months to 18 months. DBRS also reviewed the quarterly static pool

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performance based on the loan payment frequency. Because of the relatively limited sample of the vintages with weekly payment
schedules, DBRS uses this data point mostly for reference purposes.
DBRS assumes no recoveries (which historically have been small) for defaulted loans. DBRS also factored into its assessment a
potential migration in the collateral pools composition from its initial characteristics by taking into account the transaction
eligibility and excess concentration criteria as described in the Transaction Structure section. As such, DBRS assumes the expected
blended default/loss rate of 5.63%.
DBRS uses the DBRS CLO Asset Model to assess a Lifetime Total Default/Loss Rate at each targeted rating level. In doing so, DBRS
constructs a hypothetical collateral pool to be input in the DBRS CLO Asset Model. In addition to the original term, the collateral
pool is constructed to reflect the WA loan balance limit of $55,000 while also taking into account the single industry and loan size
concentration limits.
In this analysis, DBRS uses higher correlation assumptions than typically used for large corporate credits set forth in the methodology,
given the higher potential credit risk embedded in small business loans. For example, correlations for obligors in similar industries
were increased by over 50% versus the assumptions, which are typically used for the portfolios comprising large corporations. The
stressed default/loss rates assumed for the collateral pool in the A and BBB (low) targeted rating scenarios are approximately
33.1% and 23.5%, respectively.
DBRS performs a cash flow modeling analysis to determine the break-even default/loss rate for each class of notes at the respective
targeted rating levels. The cash flow modeling incorporates certain assumptions, including compression of the Loan Yield to the
trigger level, maximization of senior expenses and the assumption that the prepayments in the stressed environment will be de
minimis. The cash flow modeling analysis indicates that both the Class A and Class B notes are able to withstand the stressed
default/loss rates at or above the Lifetime Total Default Rate at the respective targeted rating levels.

Legal Structure
The Seller will transfer the loan assets to the Issuer. On the closing date, the counsel to the Seller will render opinions indicating the
true sale of the assets from the Seller to the Issuer and the enforceability of the documents against the Seller, Issuer and the assets of
the Issuer. Counsel to OnDeck will also render an opinion stating that the Indenture and the pledges and grants thereunder create a
valid security interest in the obligations for securing payment of the notes issued by the Issuer and that the creditors of OnDeck or
any of its affiliates could not successfully look to the assets of the Issuer for satisfaction of such parties obligations. The transaction
will have an initial two-year revolving period expiring in 2018, after which time the principal on the notes will amortize sequentially,
beginning with the Class A notes. In addition, the Series 2016-1 structure, representation and warranties as well as documentation
were reviewed for consistency with DBRSs Legal Criteria for U.S. Structured Finance Transactions.

Note:
All figures are in U.S. dollars unless otherwise noted.
2016, DBRS Limited, DBRS, Inc. and DBRS Ratings Limited (collectively, DBRS). All rights reserved. The information upon which DBRS ratings and reports are based is obtained by DBRS
from sources DBRS believes to be reliable. DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information
in every instance. The extent of any factual investigation or independent verification depends on facts and circumstances. DBRS ratings, reports and any other information provided by DBRS
are provided as is and without representation or warranty of any kind. DBRS hereby disclaims any representation or warranty, express or implied, as to the accuracy, timeliness, completeness,
merchantability, fitness for any particular purpose or non-infringement of any of such information. In no event shall DBRS or its directors, officers, employees, independent contractors, agents
and representatives (collectively, DBRS Representatives) be liable (1) for any inaccuracy, delay, loss of data, interruption in service, error or omission or for any damages resulting therefrom,
or (2) for any direct, indirect, incidental, special, compensatory or consequential damages arising from any use of ratings and rating reports or arising from any error (negligent or otherwise) or
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Structured Finance: Small Business Loans

May 17, 2016