Wells Fargo Small Business Loans: 2022 Review


Wells Fargo is a traditional bank with both branch access and strong online options. Wells Fargo business loan offerings include two business loans backed by the U.S. Small Business Administration (SBA), as well as commercial real estate loans, health care practice loans and business lines of credit, both secured and unsecured. The bank works with a wide range of borrowers, but be prepared to contact the lender directly to receive information on interest rates and terms.



Overview: Amounts, rates and fees

Wells Fargo offers a variety of financing options for small business owners: These loans from the SBA, as well as loans for commercial real estate (CRE) loans and health care practices and business lines of credit.

Wells Fargo Small Business Loans At a Glance

AmountTermsStarting rateFees
SBA 7(a) loanUp to $5,000,00010 years for most purposes; 300 months for purchase of CRERates vary, subject to SBA maximums
SBA fees:
  • 2% of guaranteed portion for loans of $150,000 or less
  • 3% of guaranteed portion for loans of $150,001 to $700,000
  • 3.5% of guaranteed portion for loans of $701,001 to $1 million, plus 3.75% of amounts over $1 million
SBA 504 loanUp to $11.5 million (maximum of $6,500,000 from Wells Fargo and $5 million from the CDC)120 months for machinery and equipment; 300 months for purchase of CRESBA interest rates:
  • Pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues
  • Totals approximately 3 % of the debt, rate may be financed
Fees charged depend on the bank and CDC partners
Commercial real estate loan$50,000 to $1,000,00060 to 240 monthsNot disclosed
  • No origination or appraisal fees and no closing costs.
  • Nonrefundable deposit of up to $1,000 applied to any existing fees upon closing.
  • Possible environmental assessments or environmental insurance fees if required.
  • Prepayment fees apply if the loan is closed in the first three years.
  • Fee for variable rate loans is $3,000; for fixed rate, 3% of the principal.
Health care practice loanVariesUp to 120 monthsNot disclosed, interest rates are fixed only; variable not availableNot disclosed
Unsecured business line of credit: Business Line$5,000 to $100,000Revolving line of credit; no scheduled annual reviewPrime rate + 1.75%
  • Annual fees: $95 for lines of credit $10,000 to $25,000; $175 for lines of credit $25,001 to $100,000
  • Cash advance fees: 3% fee for ATM and over the counter transactions
Unsecured business line of credit: Small Business Advantage$5,000 to $50,00060-months revolving line of credit, no scheduled reviewPrime rate + 1.75%
  • Annual fees: $0 for lines of credit less than $10,000; $95 for lines of credit $10,000 to $25,000; $175 for lines of credit $25,001 to $50,000
  • Cash transaction fees: $0 for ATM or over the counter transactions, checks, BillPay or transfers made online or by phone
Secured business line of credit: PrimeLine$100,000 to $500,000Monthly interest only; 12-months term; may be renewed annuallyBased on prime; competitive0.50% origination fee of line amount (due at account opening and annual renewal)

*Editor’s note: Wells Fargo did not disclose a minimum credit score to qualify for its loan products.

SBA 7(a) loans

Wells Fargo SBA 7(a) loans can be used to acquire an already-existing company, expand your business, buy out a partner, purchase equipment or real estate or for a combination of these business needs.

SBA loans are backed by the SBA, which means they can often be more flexible in their requirements than lenders of conventional small business loans. The loan term for most purposes is 10 years; if, however, the loan is used to purchase real estate, the term can extend to 25 years.

To qualify, your business needs to have a net worth not exceeding $15 million and net income not greater than $5 million.

  • Minimum and maximum loan amount: Up to $5,000,000
  • Repayment terms and schedule: Up to 10 years for most purposes; up to 300 months for real estate purchase
  • Interest rates: Fixed or variable
  • Fees: In addition to SBA fees, lender fees were not disclosed
  • Typical time to funding after approval: Not disclosed

SBA 504 CDC loans

SBA 504 Certified Development Company (CDC) loans are specifically for growth of your business through construction, equipment purchases or acquisition of buildings or land.

These loans are also backed by the SBA, so the requirements can be more flexible than conventional loans.

To qualify, your business’s net worth can’t exceed $15 million and the average net income can’t exceed $5 million.

  • Minimum and maximum loan amount: Up to $11.5 million total (as much as $6,500,000 for the part funded by Wells Fargo and as much as $5 million for the part funded by a CDC)
  • Repayment terms and schedule: Up to 120 months for equipment or machinery purchase and up to a 300 months term for real estate
  • Interest rates: Fixed rate or variable
  • Fees: Not disclosed
  • Typical time to funding after approval: Not disclosed

Commercial real estate loans

Wells Fargo offers small businesses commercial real estate loans (CRE). You can use CRE loans to purchase property for your business or an investment property to lease to tenants. In addition to the CRE purchase loans, the bank offers CRE equity loans and a commercial equity line of credit.

CRE loans can be used to purchase business property, including office buildings, retail space, warehouses, light industrial properties, mixed-use properties, multifamily properties with five or more units and commercial condominiums (the latter must be in first-lien position).

You’ll need to provide specific information about the real estate you plan to purchase when applying, such as property type and usage. In addition, all owners are required to be on the application. For business entities, all owners who have an ownership interest of 25% or more will need to apply, and  at least 51% of business ownership must be represented on the application.

  • Minimum and maximum loan amount: $50,000 to $1,000,000
  • Repayment terms and schedule: 60 to 240 months
  • Interest rates: Rates are determined by multiple factors, including personal credit history, the loan amount, term chosen and property type. You may choose variable or fixed interest rates (variable rates are based on the prime rate).
  • Fees: Escrow and titles fees. No origination or appraisal fees and no closing costs. There is a required deposit (up to $1,000) that is nonrefundable if the loan does not close; if it is closed, however, it will be applied to any existing fees upon closing. If environmental assessments or environmental insurance is required, you will be responsible for these. Prepayment fees apply if you close a loan in the first three years. For variable rate loans, the fee is $3,000; for fixed rate loans, it’s 3% of the principal amount.
  • Typical time to funding after approval: Expedited options are available

Health care practice loans

Health care practice loans are designed for several types of practitioners: physicians, dentists, optometrists and veterinarians.

You can get a health care practice loan to establish a practice, build or equip your own facility or buy an existing one — either a full practice, an associate or partner buy-out or purchase of satellite locations. Health care practice loans also allow you to expand or purchase technology or equipment.

  • Minimum and maximum loan amount: Varies
  • Repayment terms and schedule: Up to 120-months terms; multiple repayment options
  • Interest rates: Fixed only
  • Fees: Variable
  • Typical time to funding after approval: Varies

Wells Fargo also offers health care practitioners expansion financing, equipment financing, CRE financing, a practice equity loan and a line of credit.

Wells Fargo unsecured business line of credit

Wells Fargo business line of credit offerings include two unsecured business lines of credit (unsecured means that no collateral is required). Both can be used for augmenting cash flow, meeting expenses and expanding the business.

The BusinessLine line of credit is meant for businesses that have been operating for at least two years and have established business credit. Meanwhile, the Small Business Advantage line of credit is ideal for newer businesses that are establishing or rebuilding business credit. The Small Business Advantage is backed by the SBA.

BusinessLine

  • Minimum and maximum line of credit amount: $10,000 to $100,000
  • Repayment terms and schedule: Revolving line of credit with no annual review
  • Interest rates: Beginning at prime plus 1.75%
  • Fees: Annual fees of $95 for lines of credit between $10,000 and $25,000; $175 for lines of credit $25,001 to $100,000. There are also cash advance fees of 3% fee for ATM and over the counter transactions.
  • Typical time to approval: Varies
  • Guarantors: Any business owner with 25% or more of the applicant business, as well as a minimum combined aggregate of 51% ownership, must personally guarantee the credit line.

Small Business Advantage

  • Minimum and maximum loan amount: $5,000 to $50,000
  • Repayment terms and schedule: 60-months revolving line of credit, with no scheduled annual review
  • Interest rates: As low as prime plus 1.75%
  • Typical time to approval: Varies
  • Annual fee: $0 for lines of credit less than $10,000; $95 for lines of credit between $10,000 and $25,000; $175 for lines of credit between $25,001 and $50,000. There is no fee for ATM or over the counter transactions, checks, BillPay or transfers made online or by phone.
  • Guarantors: Personal guarantees from each owner holding 20% or more of the applicant business must be given.
  • Additional requirements: Must meet U.S. SBA requirements (household personal liquid assets less than $200,000, for-profit businesses only).

Wells Fargo secured business line of credit

Wells Fargo offers a secured line of credit called Prime Line. It’s designed to be used for short-term working capital expenditures, large purchases and purchasing in bulk for pricing advantages.

Prime Line must be secured by your business assets: These include accounts receivable, inventory or equipment, though real estate is excluded. You’ll also need to have annual sales between $2 and $5 million to qualify.

  • Minimum and maximum loan amount: $100,000 to $500,000
  • Repayment terms and schedule: Monthly interest-only payments; 12-months term, but may be renewed yearly
  • Interest rates: Competitive, prime-based
  • Fees: Competitive 0.50% origination fee of line amount, due at account opening and annual renewal
  • Typical time to approval: Varies


Requirements: Are you eligible?

The loan amounts you qualify for, as well as the interest rates, repayment terms and schedules for all Wells Fargo business loan products, are often variable and depend on a number of factors. These factors typically include your personal credit history, how long your business has operated and your business’s annual revenue, among others.

Because of this, Wells Fargo recommends speaking with one of its lenders to discuss these factors and receive customized advice.

If you apply for an unsecured business line of credit, you don’t need to select the BusinessLine or Small Business Advantage — Wells Fargo matches you depending on qualifications like your credit history, household income, yearly sales, time in business and deposit balances. If you’re in a for-profit business, you’ll have to have less than $200,000 in household personal liquid assets to be qualified for a Small Business Advantage line of credit (this is a U.S. SBA requirement).

Required documents

You often have to begin an application online to see the documents required for each specific product. In general, small business loan lenders require the following:

  • Your name, date of birth, address and phone number
  • Social Security number
  • A personal statement of assets and liabilities
  • Legal business name, address and phone number
  • Business tax identification number
  • Business registration and license
  • Ownership type and number of owners
  • Gross annual revenue
  • Two years of personal and business tax returns
  • Two years of company-prepared, year-end financial statements (balance sheet, cash flow, profit-and-loss statements)


Pros and cons of Wells Fargo

ProsCons
  Multiple loan and credit options, depending on your sector and need  Relatively stringent eligibility requirements
  Wide range of small business products  Lack of transparency about interest rates, required credit scores and other factors
  Strong branch network if in-person banking is important to you  Must have been in business a minimum of two years for some products


Review: Should you apply?

It’s always prudent to look at several alternatives when applying for small business loans to see which is the right fit for you. Wells Fargo provides potential benefits, such as multiple loan and credit options and a wide range of products. But there are also drawbacks, like tougher eligibility requirements and a relative lack of transparency about interest rates, credit score thresholds, payment structure and other factors.

Many products also require the business to have been operating for at least two years, so these products may not be suitable for start-ups.



Alternatives to Wells Fargo

When looking at small business loan products, it’s always prudent to compare both products and overall terms: Here’s how some alternatives stack up.

Wells Fargo vs. Navy Federal

If you have U.S. military ties, consider Navy Federal. It’s a credit union, and credit unions are often able to offer lower rates and other benefits. It offers business loans in amounts of up to $50,000 with a term of 60 months; higher amounts can be discussed with a credit union representative. CRE loans of up to $50,000 and terms of up to 60 months are also available.

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 and a 0.50% origination fee for lines above $100,000, as well as lien-search and recording fees for this line of credit.

Note that you must be a member in order to use its services. However, if you’re looking for an unsecured line of credit, you’ll want to stick with Wells Fargo — Navy Federal’s business lines of credit must be secured.

Wells Fargo vs. Bank of America

Bank of America is a large traditional bank that offers a wide range of options, including SBA loans with a maximum amount of $5,000,000 and a 300 months term. Bank of America does have stringent eligibility requirements, including two years in business and $250,000 in annual revenue for secured loans and lines of credit. Its unsecured loans and lines of credit require $100,000 in annual revenue.

If you’re eligible, Bank of America offers health practitioner loans of up to $5,000,000, secured loans from $25,000, unsecured loans from $10,000 to $100,000 and CRE loans from $0. If you’re in the market for a line of credit, it offers a secured line of credit with a $0 minimum and an unsecured line from $100,000.

Wells Fargo vs. OnDeck

OnDeck is an online lender that offers small business owners term loans of between $5,000 and $250,000 and terms of up to 24 months. It also offers a line of credit ranging from $6,000 to $100,000, with a 12-month term that resets at every withdrawal. The term loan interest rate is 29.90% and the line of credit interest rate is 29.90%. Eligibility requirements include personal and business credit scores, time in business and annual gross revenue.

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 in annual gross revenue. Because of its relatively high interest rates, however, you may want to shop around.