Wells Fargo Small Business Loans Review
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Pros and cons of Wells Fargo
Pros
- Relatively transparent about fees on business lines of credit
- Preferred Lender status for SBA loans can mean quicker funding time
- High maximum loan amount for SBA 504 loans
- Offers brick-and-mortar locations and in-person support
Cons
- Limited number of small business lending products for a bank of Wells Fargo’s size.
- Some eligibility requirements are fairly steep compared to those of other lenders
- Can only apply for up to $100,000 of funding online. Beyond that, you must visit a branch.
Wells Fargo small business loans review
Wells Fargo is a traditional brick-and-mortar bank — the fourth largest in the nation. However, despite its size, it offers relatively few small business loan options. It offers only two different options for lines of credit, an SBA 7(a) loan product and an SBA 504/CDC loan.
You’ll likely find more lending products at other large, national banks, but the handful of options that Wells Fargo does provide give you more variety than you’d find with most online lenders.
- Newer business owners who want a relatively small unsecured line of credit. With a maximum credit limit of just $150,000, Wells Fargo’s BusinessLine line of credit’s borrowing limits aren’t particularly high for unsecured lines of credit, but it only requires a six-month business operating history, making it a good choice for startup funding.
- Businesses with substantial revenue that want a larger, secured line of credit. If you want a secured line of credit worth up to $3,000,000, you’ll need to meet an annual revenue requirement of at least $2,000,000.00 .
- Borrowers shopping around for SBA 7(a) and SBA 504 loans. Wells Fargo offers the most common SBA loan products. Plus, as an SBA Preferred Lender, it can help you shorten your funding timeline, so it could be worth taking a look at.
- Those who want all-in-one business banking or in-person service. Wells Fargo is a large banking chain with a full suite of business products, making it possible for you to do all your business banking in one place or visit a branch if you need in-person assistance.
Wells Fargo small business financing at a glance
| Product | Loan amounts | Repayment term | Estimated APR range | Fees |
|---|---|---|---|---|
| Secured line of credit (Prime Line) | $100,000 to $3,000,000 | 36-month revolving term for lines of credit up to $500,00012-month revolving term for larger amounts | Starting at 7.25%
Based on the current prime rate of 6.75% + an added 0.50% from Wells Fargo, subject to a 5.00% minimum
| 0.25% annual fee |
| Unsecured line of credit (BusinessLine) | $10,000 to $150,000 | Revolving | 8.50% to 16.50%
Based on the current prime rate of 6.75% plus 1.75% to 9.75% added by Wells Fargo
| Annual fee of $95 or $175, waived for the first year0% to 4% cash advance feeLate fee of $25, $39 or $50 |
| SBA 7(a) loans | Up to $5,000,000 | Up to 300 months for commercial real estate purposesUp to 120 months for all other purposes | 9.75% to 13.25% for variable loans
Some borrowers may qualify for lower rates. Based on the current prime rate of 6.75% + a rate maximum set by the SBA.
| Not disclosed |
| SBA 504 loans | Up to $15,000,000 | Up to 300 months for commercial real estateUp to 120 months for machinery or equipment | Not specified | Not disclosed |
Prime Line secured line of credit
The Wells Fargo Prime Line is a secured business line of credit, which means you’ll have to put up collateral. Specifically, Wells Fargo files a lien on your business:
- Non-cash personal property
- Accounts receivable
- Inventory
- Equipment
While it’s a revolving credit line, the term renews every 12 months on amounts over $500,000. It’s a 36-month term for credit limits up to that amount.
There is a 0.25% annual fee you’ll have to pay when you initially open your credit line and at renewal every year, but there are no cash advance fees.
BusinessLine unsecured line of credit
BusinessLine is Wells Fargo’s conventional unsecured line of credit. While you won’t need collateral, you will need to provide a personal guarantee and have at least a six-month business operating history to qualify.
Interest rates are based on the current prime rate (6.75%) and range from the prime rate + 1.75% to the prime rate + 9.75%.
There is an annual fee on this line of credit. It’s waived for the first year, but after that, if your credit line is $10,000 to $25,000, the annual fee is $95. If your credit limit is $25,000 to $150,000, the fee jumps up to $175.
Plus, the fees don’t end there — you’ll also need to account for cash advance fees and late fees. Cash advance fees vary depending on circumstance, and can get expensive for large draws:
- No cash advance fee: Access checks, Bill Pay, online transfers or telephone transfers.
- Greater of 3% or $10: ATM transactions or over-the-counter transactions.
- Greater of 4% or $10: Wire transfer advances, casino cash or quasi cash transactions.
Late fees are also different depending on your situation. You’ll pay either $25, $39 or $50.
| Late Fee | Circumstance |
|---|---|
| $25 | You pay late, but the balance on your previous statement was less than $100. |
| $39 | You pay late, but the balance on your previous statement was $100 or more. |
| $50 | You pay late and you’ve been delinquent at least twice over the past 12 billing cycles. |
SBA 7(a) loans
SBA 7(a) loans are term loans that can be used for a number of different purposes. Wells Fargo outlines common uses of its SBA 7(a) loans in particular as:
- Business acquisition
- Partner buy-out
- Expanding your business to another location
- Real estate purchases
- Equipment purchases
The maximum amount you can borrow is $5,000,000. Terms can be as long as 300 months (25 years) if you’re using the loan for commercial real estate. Otherwise, the max term is 120 months (10 years). Rates can be either fixed or variable and are subject to SBA interest rate maximums.
The SBA does charge fees to banks when it issues these loans, and it is highly likely that you will see Wells Fargo pass these fees on to you as the borrower, though Wells Fargo does not publicly disclose fees for SBA products.
SBA 504/CDC loans
SBA 504 loans are built for construction or real estate purposes. At Wells Fargo, you can use them for construction or buying equipment, land or property. The amount you can borrow varies by your intended use. Wells Fargo will back up to $10 million,with $5 million provided by a Certified Development Company. However, if you’re a small manufacturer or working on an energy project, you may be eligible for a max of $5.5 million from the Certified Development Company, increasing the total maximum.
Rates are set by the SBA and are typically competitive. Maximum loan terms are 120 months (10 years) for machinery or equipment purchases. The max jumps up to 300 months (25 years) if you’re using the funding for construction or other commercial real estate endeavors.
Once again, this is one product where you’re likely to see SBA fees passed on to you as the borrower, but those fees are not disclosed before application.
Wells Fargo borrower requirements
| Minimum annual revenue | $2,000,000.00 for Prime Line secured line of creditNot Specified for other products |
| Minimum time in business | 6 months for BusinessLine line of credit24 months for Prime line of creditNot disclosed for SBA products |
| Minimum credit score | 680 for BusinessLine line of creditNot disclosed for other products |
Wells Fargo shares glimpses of its underwriting requirements, but it’s hard to get a full picture for any particular product. Let’s take a look at the information it does provide for how to get a business loan and line of credit.
Unsecured line of credit borrower requirements
For the BusinessLine line of credit, you typically need a credit score of at least 680 and 6 months in business to qualify. Annual revenue requirements are not disclosed for these products.
Prime Line secured line of credit borrower requirements
Minimum credit score requirements and minimum time in business requirements are presumably two years, as you will be asked for your past two years of business tax returns when you apply. Wells Fargo does share that most qualifying businesses have annual sales between $2 million and $25 million.
SBA loan borrower requirements
Wells Fargo doesn’t publicly share many minimum requirements for SBA 7(a) and 504/CDC loans, but minimum SBA loan credit requirements set at the national level are a good place to start your research.
Wells Fargo does share some maximum limitations for SBA term loan borrowers, though. Your business’s net worth is expected to be under $20 million, and the average net income should be below $6.5 million.
Required documents
When you apply for a Wells Fargo business line of credit, you’ll need to provide the following information:
- Business name, address and phone number
- Date the business was first established
- Business tax identification or Social Security number
- Ownership type
- Number of owners
- Gross annual revenue
- Name, address, phone number, Social Security number, date of birth and citizenship status of at least one business owner who is serving as guarantor
- Percentage of ownership and annual household income of each guarantor
If you’re applying for a Prime Line secured line of credit, you will also need to provide:
- Two years of personal tax returns
- Two years of business tax returns
- Two years of company-prepared, year-end financial statements
- Personal Financial Statement form provided by Wells Fargo
Alternatives to Wells Fargo
| Wells Fargo Bank | Bluevine | American Express Business Line of Credit |
|
|---|---|---|---|
| Minimum credit score | 680 for BusinessLine line of creditNot disclosed for other lending products | 625 | 660 |
| Loan products offered |
| Unsecured line of credit | Unsecured line of credit |
| Starting interest rate |
| Not disclosed | 3.00%
Total loan fees for installment loans range from: 3% to 9% for 6-month terms; 6% to 18% for 12-month terms; 9% to 27% for 18-month terms; 12% to 18% for 24-month terms. Each draw counts as a separate installment loan. Single-repayment loans will have different rates and terms.
|
| Maximum loan size |
| $250,000 | $250,000 |
| Minimum annual revenue | $2,000,000.00 for secured lines of creditNot Specified for other products | $120,000 | $36,000 |
| Minimum time in business | 6 months for BusinessLine line of credit24 months for Prime line of creditNot disclosed for SBA products | 12 months for weekly repayment plans | 12 months |
Wells Fargo Bank vs. Bluevine
While Wells Fargo does offer SBA products, its primary small business lending products are its business lines of credit. Bluevine’s primary lending product is also its business line of credit, though it partners with other lenders that offer loans.
Bluevine’s line of credit is unsecured and, when compared to Wells Fargo’s unsecured lines of credit, you can borrow more through Bluevine. Bluevine also boasts a lower minimum credit score when you use its weekly repayment plan. For smaller businesses, the best choice will probably come down to which lender offers you a better rate — though you won’t get that information until after you apply.
Wells Fargo Bank vs. American Express Business Line of Credit
The American Express Business Line of Credit is easier to qualify for than Wells Fargo’s unsecured line of credit. To start, the minimum credit score is a bit lower, and you only need to have been in business for half the time required by Wells Fargo.
You can also borrow more with American Express’s unsecured product. However, you won’t be able to get SBA loans like you could through Wells Fargo. And for larger businesses, Wells Fargo’s Prime Line line of credit offers higher borrowing amounts at competitive rates.
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