Wells Fargo Lines of Credit Review


What is Wells Fargo?

Wells Fargo & Co. started in 1852 as both a bank and an express delivery service that at one point ran the western leg of the famous Pony Express. In 1905, the banking side of the business separated from the express division, first establishing itself in San Francisco and then spreading throughout California and eventually nationwide.

It has grown to become the third-largest U.S. bank and has made a push to expand its small business offerings. In 2014, the bank set a five-year goal to provide $100 billion in new lending to small businesses by the end of 2018. It offers a wide variety of loan products and lines of credit for small businesses in many industries.

But the bank has recently suffered a hit to its reputation after a string of scandals involving improper banking and lending practices, some that have resulted in fines from the federal government.


Lender highlights

Several options: Wells Fargo has several options for lines of credit, designed for a specific type or size of business. The options are both secured and unsecured options with different interest rates and fees.

Variable prime-based rates: Rates for these lines of credit are based on prime rates such as Wells Fargo Prime Rate, but include a small percentage added on top of that. It’s important for consumers to remember that these rates are variable and can increase or decrease based on changes in the prime rate.

Various fees: The bank’s lines of credit can include several fees that vary depending on type. The unsecured lines have a complex annual fee structure. The Secured BusinessLine® line has a low annual fee, while the Prime line has a percentage-based origination fee.

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What Wells Fargo offers?

Wells Fargo offers several business lines of credit that can serve borrowers of all types. The Wells Fargo Business Lines of Credit are unsecured; this category includes Wells Fargo BusinessLine® Line of Credit and Wells Fargo Small Business Advantage® Line of Credit. The former is aimed at businesses that have been in operation for two years or more, while the latter is for less-established companies.

Because collateral is required for the bank’s two secured lines of credit – the Secured BusinessLine® Line of Credit and the Prime Line of Credit – they have lower interest rates than the unsecured lines. The size of the secured line is determined by how much you pledge as collateral. You also can change the size of the line as your business grows.

Loan product Loan amount Loan term APR range/ factor rate Fees Time to funding
Wells Fargo Business Lines of Credit (includes Wells Fargo BusinessLine®  Line of credit and Wells Fargo Small Business Advantage®  Line of credit) $5,000-$100,000 Revolving line of credit no scheduled annual review (5-year term for Small Business Advantage) 3.99% for first 12 months, (promotional rate)

then rates range from Prime + 1.75% – 9.75%

Annual fee: $0 for credit lines of $5,000-$9,999; $95 for credit lines of $10,000-$25,000; $175 for credit lines of $25,001-$100,000.

Cash advance: No cash advance fee unless over the counter or at an ATM.

Not provided by the lender
Secured BusinessLine® Line of Credit $5,000-$100,000 Revolving line of credit, no scheduled annual review Rates range from Prime +1.00% – 5.00% Annual fee: $50

Cash advance: No cash advance fees unless over the counter or at an ATM

Not provided by the lender
Prime Line of Credit $100,000-$500,000 Unlimited access, up to line limit, during one-year draw period; one year term,  renewable annually Competitive Prime-based rates, subject to a floor rate of 5% Origination fee: Variable Approximately two weeks from submission of application and financial package

Rates current as of 6/18/2018

These lines of credit have no foreign transaction fees. They all feature a Mastercard® access card, checks, online access, and phone support. You can set up set up automatic payments from your business checking account.

The Prime Line of Credit has interest-only payments during the one-year draw period. If the loan is not renewed, the balance will be converted to a fully-amortized five-year loan.


Additional eligibility factors

Borrowers must be U.S. citizens or permanent residents. Strong credit history is required, including five or more sources of credit and a record of timely personal debt payment. Their business must have made a profit for the last two years and generate $1.50 in cash for every $1 in debt payments.

Borrowers for a Secured BusinessLine Line of Credit also must have an existing Wells Fargo checking or savings account open at least one year.


Businesses that are not eligible for Wells Fargo loans:

Businesses that don’t have strong credit, have undergone bankruptcy within the last decade, or have any liens and judgments against them will not be eligible for borrowing from Wells Fargo.


How to apply for Wells Fargo financing

You can apply online or in person for the unsecured and secured business line of credit. To apply for the bank’s Prime Line of Credit, you must call 1-844-807-5060.

To apply, have the following handy:

  • Legal business name, address, and phone number
  • Date business was first established
  • Business tax identification or Social Security number
  • Ownership type
  • Number of owners
  • Gross annual revenue

Each owner with 25% or more interest must be listed as a guarantor and provide:

  • Percentage of ownership
  • Gross annual income
  • Personal checking and savings account number(s) and balance(s)

Additional information required for the Secured BusinessLine® Line of Credit:

  • Name of collateral owner
  • Account number for Wells Fargo savings account or certificate of deposit

Additional information required for the Prime Line of Credit:

  • Two years personal tax returns
  • Personal Financial Statement (form provided)
  • Two years business tax returns
  • Two years company-prepared, year-end financial statement

Pros/Cons

Pros Cons
 Several options for a variety of business needs.   APRs and some fees based on prime rates that can change.
  Reasonable rates for flexible borrowing.   Will likely need to call Wells Fargo to understand all the details.
  No collateral required for some lines.   Reputation has suffered following recent lending scandals.

Who is the best fit?

Wells Fargo lines of credit are good options for businesses that anticipate regular needs for short-term access to capital to smooth over temporary cash flow shortfalls. With several types of credit lines available, many businesses can access and benefit from these products.


Fine print

Collateral is not required on the unsecured Wells Fargo Business Lines of Credit. The Secured BusinessLine® Line of Credit requires a Wells Fargo savings or certificate of deposit account to be used as collateral. The Prime Line of Credit must be secured by non-real estate, business assets: accounts receivable, inventory, equipment or cash.


The bottom line: How Wells Fargo stacks up

Wells Fargo’s lines of credit provide flexible access to capital at reasonable rates, allowing businesses of all sizes to get the funds they need when they need them. Wells Fargo’s offerings can be confusing, however, and borrowers who haven’t vetted the products well may be surprised by some of the fees or rates.

If you are considering a Wells Fargo line of credit, contact the bank to make sure you understand the details and the fine print, including the potential for interest rates to increase over time. As always, shop around at different lenders to compare options and choose the best option for your business.

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