Enova Hits $1.2B Q2 SMB Lending

Enova has experienced a significant surge in its small business loan originations in 2025, driven largely by Main Street businesses seeking alternatives to traditional bank financing.

In the second quarter of 2025, Enova’s loan originations reached $1.8 billion, marking a 28% year-over-year increase, with small business loans accounting for a record $1.2 billion in that figure.

This segment now represents about two-thirds of the company’s portfolio. Enova’s small and medium-sized business (SMB) revenue also increased 30% year-over-year to a record $326 million.

Several factors underpin this growth:

• Strong Demand for Nonbank Lenders: 76% of small businesses now prefer nonbank lenders for their speed and convenience—a record high. As traditional bank lending options have narrowed, small businesses have increasingly turned to FinTech platforms like Enova to access capital quickly and efficiently.

• Optimistic Small Business Outlook: Over 90% of small business owners surveyed expect moderate to significant growth in the coming year, and 92% report feeling optimistic about their future growth prospects.

• Shift Away from Traditional Banks: Surveys indicate that 73% of small business owners are bypassing traditional bank loans in favor of alternative lenders, reflecting a structural shift in how Main Street sources financing.

• Credit Quality and Diversification: Enova management notes that the credit performance of its SMB portfolio remains strong and well diversified across industries and geographies, contributing to stable margins and risk management.

The rise in Enova’s lending highlights a broader market trend: Main Street businesses increasingly value digital access, fast approval, and flexible underwriting often available through nonbank lenders. This positions Enova and similar FinTechs favorably for continued growth, especially as small businesses continue to invest in expansion and prize agility in navigating economic uncertainty.

Enova’s Competitive Positioning and Pricing

OnDeck (Enova's brand) offers business loans with factor rates ranging from 1.037 to 1.45 for term loans, translating to APRs ranging from approximately 27% to over 90%. Term loan amounts range from $5,000 to $250,000, while lines of credit range from $6,000 to $100,000.

These rates significantly exceed traditional bank financing and SBA 7(a) loans, which typically carry maximum rates around 10.5%-14%.

Credit Performance Metrics

Enova's consolidated net charge-off rate for Q2 2025 was 8.1%, down from 8.6% in the previous quarter. The company's 30+ day delinquency rate improved to 7.1% year-over-year. Net revenue margin held at 58% in Q2 2025.

Industry Context

Federal Reserve data shows that 37% of small businesses applied for financing in 2024, with small banks achieving 54% full approval rates compared to lower rates at large banks and online lenders. Nonbank online lenders emerged prominently after the 2007-09 financial crisis when bank lending tightened.

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