Small business owners looking to acquire funding may be able to obtain financing from Wells Fargo’s business line of credit offerings. The financial services company offers both unsecured and secured business lines of credit. Here are some of the main benefits and drawbacks of obtaining a Wells Fargo business line of credit:
|There are different lines of credit available to suit diverse business needs||Longer time to funding|
|Competitive rates||Detailed application process|
|Secured and unsecured options||Information isn’t all available online, will likely need to contact Wells Fargo for more details|
Business owners can apply for a business line of credit from traditional banks and non-bank, online lenders. If approved, business owners can withdraw (up to a predetermined limit) however much they need from the line of credit.
Similar to business credit cards, a business line of credit is revolving, meaning that once the funds are paid off, you have access to the full amount again. You only need to pay interest on what you borrow. Business lines of credit can be either unsecured or secured by collateral.
Wells Fargo Bank offers three business lines of credit: the unsecured Wells Fargo BusinessLine and Wells Fargo Small Business Advantage and the secured Wells Fargo Prime Line of Credit.
|Wells Fargo Business Lines of Credit at a Glance|
|BusinessLine||$10,000– $100,000||Revolving line of credit, no scheduled annual review||Prime plus 1.75%||Annual fee: $0 for credit lines of under $10,000; $95 for credit lines of $10,000-$25,000; $175 for credit lines of $25,001-$100,000 (promotional offers may waive annual fee for first year)
Cash advance fee: 3% fee for ATM and over-the-counter transactions with the BusinessLine Mastercard
|Small Business Advantage||$5,000– $50,000||60-months term, revolving line of credit, no scheduled annual review||Prime plus 1.75%||Annual fee: $0 for credit lines of under $10,000; $95 for credit lines of $10,000-$25,000; $175 for credit lines of $25,001-$100,000 (promotional offers may waive annual fee for first year)
Cash advance fee: Doesn’t charge an ATM fee, with the exception of a 3% fee when using Small Business Advantage Mastercard for casino cash
|Prime Line of Credit||$100,000– $500,000||Unlimited access, up to line limit, during 1-year draw period; 12-months term, renewable annually||Interest rates are based on analysis of competing U.S. lenders||0.50% origination fee of line amount to be paid at account opening and renewal|
|Commercial Equity Line of Credit||$50,000– $500,000||5-year draw period, 180-months amortizing repayment period||Interest rates are based on analysis of competing U.S. lenders’ rates and fees||1.00% origination fee paid at closing, annual fee 0.25% of line (minimum of $250, maximum of $1,000), $3,000 fee for closing line in first 3 years|
Wells Fargo offers a pair of unsecured business lines of credit. The BusinessLine line of credit is meant for businesses that have been operating for two or more years and have established business credit, while the Small Business Advantage line of credit is ideal for newer businesses that are establishing or rebuilding business credit. The Small Business Advantage line of credit is backed by the U.S. Small Business Administration.
The Wells Fargo BusinessLine line of credit offers amounts ranging from $10,000 to $100,000, and the Small Business Advantage line of credit spans from $5,000 to $50,000. Both are revolving lines of credit with no scheduled annual review, the Small Business Advantage line is a five-year term. Rates are prime plus 1.75% to prime plus 9.75% for BusinessLine and prime plus 1.75% to prime plus 6.50% for Small Business Advantage. Both are dependent on a credit evaluation of personal and business credit.
There is no annual fee for credit lines less than $10,000, a $95 annual fee is charged for credit lines of $10,000 -$25,000, and a $175 annual fee is charged for credit lines of $25,001- $100,000.
Wells Fargo BusinessLine charges a 3% cash advance fee for ATM and over the counter transactions with the BusinessLine Mastercard. The Small Business Advantage line doesn’t charge an ATM fee. However, there is a 3% fee when using Small Business Advantage Mastercard for casino cash.
Wells Fargo Prime line of credit is secured by business assets and intended for businesses with annual sales of $2-$5 million. The revolving credit line amount ranges from $100,000– $500,000.
The Prime line of credit has monthly interest-only payments and competitive prime-based rates subject to a floor rate of 5% depending on your credit history. It has a 0.50% origination fee of the line amount, which is due when the account is opened and at renewal periods.
It takes about two weeks to process an application for a Prime line of credit. The line has a 12-months term but it may be renewed annually.
The Wells Fargo commercial equity line of credit is funding that you secure with an owner-occupied property. Wells Fargo will hold a second-position lien on your property, meaning it has second rights to the property if you fail to follow through on your payments. However, Wells Fargo requires a first-lien position on commercial condos and special-purpose buildings.
Funding ranges from $50,000 to $500,000. You have a five-year draw period followed by a 180-months amortized repayment period. If you make a withdrawal during the draw period, you’ll make monthly payments that will adjust up and down based on the prime rate. Once you enter the 180-months repayment period, your monthly payments will adjust annually.
This Wells Fargo line of credit charges multiple fees:
Beyond business lines of credit, Wells Fargo offers various lending options with the SBA including SBA 7(a) loans and SBA 504 loans.
SBA 7(a) loans are intended for businesses seeking long-term financing for business acquisitions, buying out a partner, expanding to a different location, buying real estate or equipment, or lumping together several of those needs into a single loan. The loan amount ranges up to $5,000,000 with terms of up to 25 years for commercial real estate, and up to 10 years for anything else.
SBA 504/CDC loans are meant for businesses that want to expand with land or building acquisition, construction, or purchasing equipment. It’s a long-term financing option of up to $6.5 million from the Wells Fargo portion, and typically up to $5 million for the Certified Development Company (CDC) funded portion. Terms for commercial real estate range up to 25 years, and up to 10 years for machinery or equipment.
Wells Fargo recommends speaking with one of its bankers to determine the time-in-business, annual revenue and credit-score requirements for a business line of credit.
If you apply for an unsecured business line of credit, you don’t need to specify which option (BusinessLine or Small Business Advantage) you’re looking for — Wells Fargo matches you depending on your credit qualifications such as time in business, deposit balances, household income and/or annual sales. You’ll receive written notification within 10 business days of submitting your unsecured business lines of credit. If you’re approved for the line of credit, the notification will state the amount available to you.
When completing a Wells Fargo business line of credit application, at least one business owner or guarantor who has authority and control must apply and provide information including:
Each owner that has 25% or more interest in a business must be listed as a guarantor (with the exception of nonprofits). You must also provide details on their ownership percentage, gross annual income, and personal checking and savings account numbers and balances.
You’ll also need to provide details on the business entity, such as:
Business owners seeking the Prime line of credit will be required to provide additional documentation, including:
Wells Fargo’s business lines of credit offer several different options, both secured and unsecured, to fit unique business needs. Wells Fargo provides competitive rates, as well as a wide range of funding from as low as $5,000, up to $500,000.
However its application process is more extensive, and time-to-funding is longer than what other lenders offer. Also, not all of the information about the business lines of credit is available online.
If you’re considering applying for a Wells Fargo business line of credit, make sure to speak with a Wells Fargo banker and ask questions about the fine print. Get quotes from other lenders, too, to ensure you’re getting the best deal for your business.
Readers may want to consider other options when shopping for funding. Here’s how Wells Fargo stacks up to the following lenders:
Navy Federal’s business line of credit starts at $35,000 and can exceed $100,000. There is a $325 annual fee for equity up to $100,000, a 0.50% origination fee for lines above $100,000, as well as lien-search and recording fees. You must be a member in order to use their services — if you have U.S. military ties consider looking into Navy Federal as credit unions are usually able to offer lower rates and other benefits. However, if you’re looking for an unsecured line of credit, you’ll want to stick with Wells Fargo as Navy Federal’s business lines of credit must be secured.
Online lender Fundbox offers business lines of credit ranging from as low as $1,000 and up to $150,000. The only fees it charges are interest rates, which start at 4.66% for 12-week terms and 8.99% for 24-week terms. Fundbox generally requires at least six months in business, a business revenue of at least $100,000, and either two months of activity from an approved accounting software or three months of activity from a business bank account. This could be a good option to consider if you’re looking for quick funding — the application process is significantly easier than Wells Fargo’s, and you can start drawing funds right after approval.
OnDeck is an online lender that offers small business owners revolving lines of credit ranging from $6,000 to $100,000. Its interest rates start at 35.90% and the average rate is 48.06%. The total cost depends on factors including personal and business credit scores, time in business, and annual revenue and cash flow. OnDeck typically has a fast time to funding and is recommended for established businesses as it requires applicants to have been operating for at least one year, a personal FICO Score of at least 600, and a minimum of $100,000 annual revenue.