Earlier this month, Enova International, the parent company of OnDeck, announced it will acquire Grasshopper Bank, a digital-first bank with a national charter and a strong SBA lending footprint.
On the surface, this sounds like a big win for small businesses. A fintech lender gets access to cheap bank deposits. Lower funding costs should mean lower rates… right?
Not so fast.
If you actually read the investor presentation, the story being told is much more revealing — and much more useful for business owners who want to avoid overpaying for capital.
What Enova Is Really Buying
Grasshopper isn’t just “a bank.” It brings three things Enova badly wants:
- Low-cost deposits
Grasshopper’s deposit costs are roughly 3%, compared to Enova’s existing funding stack at around 8–9%. - A national bank charter
This allows Enova to originate loans nationwide under a unified regulatory framework instead of navigating state-by-state complexity. - SBA lending infrastructure
Grasshopper is an SBA Preferred Lender, something most online lenders lack.
Enova is explicit about the goal: improve funding costs, expand margins, and increase shareholder returns — with expected EPS accretion north of 15% in year one and even higher once synergies are fully realized Grasshopper IR Presentation – E….
That framing matters.
What the Presentation Does Not Say (And Why That’s Important)
Here’s what you won’t find anywhere in the deck:
- No promise to lower borrower APRs
- No discussion of passing savings to small businesses
- No strategy to move upmarket by competing on price
- No acknowledgement that broker markups inflate borrower costs
Instead, Enova highlights:
- Target net interest margins above 45%
- Target returns on tangible equity above 25%
- Loan yields paired with cheap deposits to create a “highly profitable organization”
Those numbers only work if borrower pricing remains high.
In other words: lower cost of capital is being captured internally, not pledged externally.
This Deal Exposes a Quiet Truth About “Fintech Lending”
For years, business owners have been told:
“Banks are slow and conservative. Fintech lenders are fast but expensive.”
That line is increasingly obsolete.
Many so-called “fintech lenders” are actively trying to become banks — or at least bank-funded lenders — because deposits are the cheapest form of capital available.
What doesn’t automatically change?
- Broker commissions
- Loan pricing discipline
- Aggressive repayment structures
A lender funding loans with 3% deposits can still charge 40–60% APR if the market allows it.
And unless borrowers force competition, it usually does.
Where Brokers Fit Into This (Spoiler: They Don’t)
This merger quietly undermines the entire broker value proposition.
Once a lender:
- Is federally regulated
- Has direct online applications
- Funds loans with insured deposits
- Runs SBA programs in-house
…it becomes very hard to argue that a broker is “unlocking access” or “negotiating better terms.”
In reality:
- Brokers add customer acquisition cost
- That cost shows up as higher APRs or hidden fees
- The borrower pays for it, whether it’s disclosed or not
If anything, as lenders become more bank-like, brokered deals become riskier and less attractive for them — not more.
What This Means for Small Business Owners
Here’s the practical takeaway:
- A lender having cheaper capital does not mean your loan will be cheaper.
- Savings flow to borrowers only when lenders are forced to compete.
- Brokers reduce competition by inserting themselves between you and the lender.
- Applying direct gives you leverage. Using a broker gives you opacity.
This deal reinforces something we say often at BrokerFreeCapital:
Transparency doesn’t come from better lenders.
It comes from better borrower behavior.
The Bigger Trend: Embedded Banking Is Replacing Brokered Lending
Look at where the industry is heading:
- Square
- Shopify
- PayPal
- Stripe
- Now Enova + Grasshopper
The future is integrated banking + lending, not middlemen shopping deals for commissions.
Brokers aren’t being regulated out of existence — they’re being structurally outcompeted.
Final Thought
The Enova–Grasshopper deal is not “bad news” for small businesses.
But it is clarifying.
It shows that:
- Even when lenders dramatically lower their own cost of capital, they don’t volunteer to lower your rate.
- The only reliable way to avoid overpaying is to understand your options and apply direct.
- Broker-free doesn’t mean anti-lender. It means pro-transparency.
That’s the entire reason brokerfreecapital.ai exists.
If you want help figuring out whether you should borrow at all — and if so, which lenders actually make sense for your business — that’s exactly what Diogenes is built to do.
No commissions. No hidden incentives. Just the math.