Enova Grows Its Small-Business Book 34% as Its 30-Day Delinquency Rate Climbs to 7.8%
Enova International, the publicly traded parent of OnDeck, grew its small-business book 34% in a year to $3.98 billion, according to the 10-Q it filed on October 22.1 Over the same year, its small-business delinquency rate, the past-due amounts more than 30 days late as a share of the book, rose from 6.2% to 7.8%, after three straight quarterly increases.1 The earnings release led with a different number: the company's consolidated net charge-off ratio for the quarter, consumer and small business together, fell to 8.1% from 8.5%, and it said credit performance "remained strong."2
Bottom line for funders: the number Enova led with is the consolidated one, and it fell. The small-business line underneath it rose: the quarterly charge-off ratio went to 4.8% from 4.4%, and charge-off dollars rose 45%, to $186.0 million from $128.3 million.1 Past-due dollars moved faster still, up 67% while the book grew 34%.1 These are small businesses that, in Enova's words, use alternative financial services "because of their limited access to more traditional credit from banks."1 That is the same kind of borrower the Beige Book line below describes turning to MCAs.
Delinquency path: small-business amounts more than 30 days past due equaled 6.2%, 6.2%, 7.1%, 7.4% and 7.8% of the book at the last five quarter-ends, or $309.4 million at September 30 against $185.1 million a year earlier.1
Charge-offs: the 4.8% is a quarterly ratio of average small-business balances, flat with the second quarter. Enova does not annualize it; four quarters at that pace would be about 19%.1
Margin: small-business net revenue margin, what is left of revenue after the fair-value change for expected losses, fell to 68.3% from 73.3%.1
The limits, in one place. Enova says the 7.8% rate "remains within the range of 6.2% to 8.8% observed over the prior three years and consistent with our expectations for the portfolio."1 Its consumer book improved, with 30-day delinquency at 8.6% against 9.2%.1 Enova lends through installment loans and lines of credit, not merchant cash advances, and it does not disclose vintage, broker-channel or state data, so the read-across to an MCA book is directional.1 This is one lender. The 10-Q table behind every number above is public, so any credit team can rerun it.1
Fed contacts describe the same pressure: the Kansas City District's October Beige Book reported "worsening credit quality and reduced cash flow" among small-business clients, who were "increasingly seeking liquidity through merchant cash advances (MCAs)."3
What Alternative Business Lenders Need to Know
Figures come from the filings and pages cited; percent changes and ratios the filings do not print are our calculations from them. The interpretation in this section, in Our Opinion and in the bold notes under each headline is ours.
What did Enova actually report?
Total revenue was $1.01 billion, up 26% from $803 million, and net income was $107 million, up 34%.2 Combined loans and finance receivables reached a record $5.9 billion on $2.6 billion of originations in the quarter.2 Small business is now 67.4% of the portfolio at fair value and drove the growth: small-business revenue rose 31.7% to $458.7 million, and small-business originations and purchases were $1.76 billion against $1.37 billion, up 28%.1 The consolidated share of loans more than 30 days late rose to 8.0% from 7.2%, and the increase came from small business.1
Why is the charge-off line moving slower than delinquency?
Timing. Enova's accounting note says it "generally charges off a loan or finance receivable when it is probable that it will be unable to collect all of the remaining principal payments, which is generally after 90 days of delinquency and 30 days of non-activity."1 A loan that slipped past 30 days in September cannot reach the charge-off line until late in the fourth quarter at the earliest. That lag is why the charge-off ratio has moved so much less than the 30-day line. The fair value of small-business loans stayed at 112.8% of principal, which Enova explains by saying "performance and outlook remain stable on the portfolio."1 A stable mark means Enova's models still expect these loans to pay. The next two quarters test that.
Is the growth bought or earned?
Partly bought. Marketing expense rose to $229.7 million from $147.4 million, up 56%, which the 10-Q attributes to "higher online advertising costs" and "higher commissionable originations in our small business portfolio."1 The average small-business balance per account rose 13% to $47,668 from $42,157 because of "higher funded amounts," while the average draw stayed flat at $16,322, and lines of credit grew to 54.4% of average small-business balances from 51.5%.1 Larger lines, with more volume sourced through paid channels, is one way a portfolio adds both volume and late payers in the same year.
What does this do to Enova's funding?
Not much yet, and that matters for competition. The weighted average rate on Enova's debt fell to 7.97% from 8.61% on average debt of $5.20 billion.1 On September 25 OnDeck issued $500.0 million of small-business ABS, ODAS IV 2026-1, in four classes at 5.61%, 6.05%, 6.73% and 8.28%, about 6.22% weighted.1 4 As of October 19, Enova had $150.6 million available under its corporate credit agreement and $292.6 million of securitization capacity.1 As long as securitizations like this one fund the book, OnDeck's cost of money moves with ABS investors' view of exactly the delinquency trend above. Its next ABS pricing, against September's 6.22%, is that market's verdict.
If OnDeck tightens, where do its declines go?
Neither the 10-Q nor the earnings release says Enova is tightening.1 2 But the lever is easy to see. OnDeck's published floor is one year in business, $100,000 of annual revenue and a 625 personal FICO for the owner.5 If it raises cut-offs or trims line sizes in the first quarter, the applicants who fall out sit just above that floor and still need the money.
That sends two kinds of file down market. The first is the clean decline: a merchant who missed a new cut-off and carries no other funder. The second needs pricing with care: an existing OnDeck borrower whose line was cut or whose renewal was refused, who arrives still paying OnDeck. It looks like new demand and is really a second position. In the first quarter, ask on every application whether the merchant was declined or cut back by a term or line lender in the last 90 days, and look for an OnDeck debit on the statement before you fund.
Is OnDeck paying ISOs more, and does that change your inbox?
The 10-Q does not give a commission rate, so it does not show per-deal comp rising. It shows only the marketing line above, which mixes online advertising with commissionable originations and does not split them.1 OnDeck's partner page says who those partners are. It asks that they "fund $1M+ in ACH/MCA A-Paper funding per month" and promises "competitive commissions."6 Those are shops already placing MCA and ACH paper, likely the same ones that send you deals.
If OnDeck is paying more for broker volume, an ISO holding an A-paper file has a reason to send it there first, and what reaches an MCA inbox from that ISO would skew toward files OnDeck passed on or priced out. If OnDeck tightens, the borderline files come back, and the ISO wants a fast yes. Track approval rate and first-month performance by ISO. A shift in one ISO's mix toward thinner files this winter will show up in your book before it shows up in any filing.
What does 7.8% mean on a daily-pay MCA book?
There is no clean conversion, but there is a rough one. Enova's 7.8% counts only the overdue amounts on small-business loans more than 30 days late, as a share of the whole book.1 On a daily-pay advance, 30 days late is about 21 missed business-day debits. The matching number is the missed remittances on merchants that far behind, divided by your outstanding receivables. Near 7.8%, your book is slipping at roughly Enova's rate.
Many funders count the whole remaining balance instead, and the filing has one figure on that basis. Loans 90 days or more past due carried $106.6 million of unpaid principal at September 30, against $59.5 million a year earlier.1 Consumer loans are generally charged off after 65 days past due,1 so it should be mostly small-business balance: about 2.7% of small-business principal, up from 2.0%, slightly overstated if any consumer balance is in it. If more than 2.7% of your outstanding balance sits with merchants 90 or more days behind, your book is worse than Enova's on this measure, and the direction matters more than the level.
Our Opinion
Our call: Enova's small-business net charge-off ratio for the fourth quarter of 2026 will be 5.5% or higher. Here is the arithmetic. In each of the last four quarters, small-business charge-off dollars equaled between 66% and 79% of the late dollars Enova reported at the previous quarter-end, 73% on average.1 That is a ratio, not a share of the same loans: a charge-off takes the whole balance, while the late dollars count only the overdue amounts. At September 30 those late dollars were $309.4 million.1 At the average rate, fourth-quarter charge-offs come to about $225 million, and on an average book of $4.0 billion to $4.1 billion, if growth holds near its recent pace, that is 5.5% to 5.6%. The best and worst of those quarters put the range at 5.0% to 6.0%, and 5.5% is its middle. The call is a jump of 0.7 points in one quarter, after moves of 0.2 points or less in each of the last four, which is why the ratio's own history would not predict it.
Using the average rather than the latest rate is a bet that the third quarter's decline reverses. One reason to make it: loans 90 days or more past due, next in line under Enova's policy, carried $106.6 million of unpaid principal at September 30, company-wide, against $60.7 million at the end of 2025.1 That queue has grown 76% since year-end, while the 30-day late dollars behind it grew 49%; the bases differ, so treat it as direction only. Enova calls the 4.8% "fairly consistent with the prior four sequential quarters."1 We think a book that grew 34% while its past-due dollars grew 67% is still carrying late loans that have not yet reached the line.
So the edge goes to funders who track how many borrowers are late this month, not how many were written off last quarter. That is less flattering in a growth year, but it is the number that turns first.
We will be wrong if the fourth-quarter ratio comes in below 5.5%. That happens if conversion stays at the third quarter's 66%, which puts the fourth quarter near 5.0%; if so, Enova's collections are working better than its delinquency line suggests.
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Headlines You Don’t Want to Miss
American Express said in its October 23 10-Q that small-business card balances more than 30 days past due were 1.4% at September 30, against 1.5% a year earlier, and its small-business write-off rate held at 2.3%.7 Proprietary cards in its Commercial Services segment fell 11% to 13.7 million, which the filing links to exiting "two small business cobrand held-for-sale portfolios"; it does not name them.7 Average spend per card rose 13% to $9,953, and the company released reserves in the segment, citing lower delinquencies.7 Company-wide provisions for credit losses were $1.0 billion, against $1.3 billion a year ago.8
Prime small-business card holders are paying better while Enova's borrowers, with limited access to traditional bank credit, pay worse, in the same quarter. Amex's write-off rate and Enova's quarterly charge-off ratio are measured differently, so compare the direction, not the levels.
Allianz Trade economists estimated on October 22 that U.S. direct-lending losses over the next 12 months would be about 1.2% under its baseline of three more quarter-point hikes from today's 3-3/4 to 4 percent range, 75 basis points in all, against a 21-year average of 1.0%. With 50 basis points of further hikes the estimate is 1.05%; with 100, it is 1.33%.9 In their data, loans carrying payment-in-kind interest are about 2.8 times as likely to stop accruing, and "bad PIK," added after the loan was made, is 55% of all PIK.9 Loans priced below 90% of par rose from 4% to 7% in a year.9 These are model estimates, not observed losses.
If a private credit fund is your capital provider and it is adding PIK or amending its own loans, it is reasonable to expect tighter terms at your next renewal.
J.P. Morgan analysts estimated that large U.S. investment banks, along with Japan's MUFG, could potentially have about $1 billion to $3 billion of exposure to CoreWeave, the AI cloud company, while most European and Asian banks have less than $500 million, Reuters reported on October 20.10 11 Much of it is in delayed-draw term loans held in special-purpose vehicles and released as projects reach milestones.10 The analysts called the exposure "well managed and very well secured," while noting that banks disclose little.10 CoreWeave has about $50 billion of debt, and its 2031 notes neared a 16% yield in the selloff, according to the report.10 We covered GPU-backed ABS on October 8.12
Equipment lenders financing GPUs often use a similar milestone-draw structure. Match each draw to the lessee's contracted revenue, not to the build schedule.
Sources
1 Enova International | Form 10-Q for the quarter ended Sept. 30, 2026 (Oct. 22, 2026)
2 Enova International | Enova reports third quarter 2026 results, Form 8-K Exhibit 99.1 (Oct. 22, 2026)
3 Federal Reserve | Beige Book, Kansas City District (Oct. 14, 2026)
4 Enova International | Form 8-K, ODAS IV Series 2026-1 notes (Sept. 25, 2026)
5 OnDeck | FAQs: How do I qualify for OnDeck financing? (accessed Oct. 25, 2026)
6 OnDeck | Partner with OnDeck: minimum partner requirements (accessed Oct. 25, 2026)
7 American Express | Form 10-Q for the quarter ended Sept. 30, 2026 (Oct. 23, 2026)
8 American Express | Third-quarter 2026 earnings release, Form 8-K Exhibit 99.1 (Oct. 23, 2026)
9 Allianz Trade | Private credit and higher rates: losses stay contained, but each hike costs more (Oct. 22, 2026)
10 Reuters via WSAU | CoreWeave debt selloff poses limited risk to global banks, J.P. Morgan says (Oct. 20, 2026)
11 Reuters via Devdiscourse | CoreWeave debt selloff poses limited risk to global banks (Oct. 20, 2026)
12 Beyond Banks | GPU share of $869M ABS goes undisclosed (Oct. 8, 2026)
