Wells Fargo Small Business Loans: 2023 Review
Pros and cons of Wells Fargo
| Pros | Cons |
|---|---|
| Competitive interest rates and banking rewards | Can be hard to qualify for the best products and terms |
| Large number of small business financing options | Hard to find detailed information about financing terms on bank website |
| More than 7,200 physical locations if you prefer in-person banking | Businesses must demonstrate at least two years of operation in order to qualify for some products |
Table of contents
Wells Fargo small business loans review
Wells Fargo is one of the oldest brick-and-mortar banks in the U.S. — tracing its origins back to 1852 — and more recently has also developed a strong online presence as well. For businesses, Wells Fargo offers a wide range of small business loan options, including commercial real estate loans, secured and unsecured lines of credit, term loans, equipment financing, health care practice loans, merchant cash advances, working capital loans, accounts receivable financing and SBA loans.
Wells Fargo is a Preferred SBA lender and its interest rates on small business loans are generally nationally competitive. Not all details about financing terms for small business loans are available on the bank’s website, however, so you should be prepared to call a banker or visit a branch directly.
Who is Wells Fargo for?
- Businesses looking to work with a brick-and-mortar bank. Wells Fargo has branches in most states, though there are some exceptions.
- Established businesses with a strong operating history. These types of companies are the most likely to avail of Wells Fargo’s lowest rates and best terms.
- Companies that are looking for an SBA Preferred Lender. As a Preferred Lender, Wells Fargo may be able to fund your SBA loan quicker.
Wells Fargo small business financing at a glance
| Product | Loan amounts | Repayment term | Starting APR range | Fees |
|---|---|---|---|---|
| SBA 7(a) loans | Up to $5,000,000 | 10 years for most purposes; 25 years for purchase of commercial real estate | Rates vary, subject to SBA maximums* | Not disclosed |
| SBA 504 loans | Up to $5.5 million for certain projects; Wells Fargo adds up to an additional $6,500,000 | Up to 300 months for commercial real estate, or 120 months for machinery or equipment | About 3.00%* | Not disclosed |
| Unsecured line of credit (businesses 2+ years old)) | $10,000 to $150,000 | Revolving | Prime + 1.75% to prime + 9.75% | Annual fee of $95 to $175, waived for the first year |
| Unsecured line of credit (businesses less than 2 years old) | $5,000 to $50,000 | Five-year revolving term | Starting at prime + 4.50% | No annual fee 4% cash advance fee |
| Secured line of credit (PrimeLine) | $100,000 to $500,000 | 1 year, renewable annually | Prime + 0.00%, subject to minimum floor rate of 5.00% | 0.50% origination fee |
| Commercial real estate loan | $50,000 to $2,500,000 | 60 to 240 months | Not disclosed | Standard escrow and title fees; early closure fee of $3,000 for variable-rate loans or 3% of principal for fixed-rate loans |
| Health care practice loans | Up to $5,000,000 for commercial real estate loans; other maximums not disclosed (contact banker) | Up to 120 months | Not disclosed (contact banker) | Not disclosed (contact banker) |
*Terms and rates based on SBA guidelines
SBA 7(a) loans
As an SBA preferred lender, Wells Fargo is a source for both 7(a) and 504 SBA loans. SBA 7(a) loans can be used for a variety of business needs, from buying equipment or real estate to expanding a business. Since these loans are backed by the SBA, requirements are spelled out and can often be more flexible than those of conventional small business loans.
The SBA acts as a guarantor for a portion of these loans, making individual lending institutions more willing to extend them to qualifying businesses. SBA 7(a) loans have a standard term of 10 years, though that may be extended to 25 years for real estate purchases. A business must have a net income of $5 million or less, along with a net worth of $15 million or less, in order to qualify.
SBA CDC/504 loans
SBA CDC/504 loans, are designed to help businesses grow through equipment purchases, construction or the acquisition of land or buildings (CDC stands for “Certified Development Company,” a community-based organization that facilitates these loans in conjunction with the SBA.). Although the SBA sets out parameters for CDC/504 loans, they can be modified by individual lenders within those specific limits. For example, on top of the $5 million maximum allowed by the SBA, Wells Fargo provides qualifying businesses with access to an additional $6.5 million.
Lines of credit
Wells Fargo offers three business lines of credit, two of which are unsecured and one secured. Outside of requiring collateral, the main differences between them are the amounts of the credit lines. The two unsecured options — the Business Line of Credit and the SBA-backed line of credit — offer revolving credit lines of $10,000 to $150,000 or $5,000 to $50,000, respectively. The secured option, the Prime Line of Credit, starts at $100,000 and goes up to $500,000.
The Prime Line of Credit is a secured line of credit, and typically for businesses with $2 million to $5 million in sales. The Prime Line of Credit has a 0.50% origination fee, due at opening and with every renewal, while the Business Line of Credit carries an annual fee of $95 or $175. The SBA-backed option does not carry an annual fee.
Commercial real estate loans
Wells Fargo offers commercial real estate loans for purchase, refinance and equity loans, in addition to equity lines of credit. Under a current promotion, available through Sept. 30, 2022, you can get 0.50% off your fixed interest rate on a 15-year loan.
Purchase loans are available for $50,000 to $2,500,000, with up to 80% loan-to-value financing. Refinancing loans are also available for $50,000 to $2,500,000, but the cash-out portion can only be $50,000 to $500,000. The loan-to-value ratio on a refinancing must remain at 75% or lower. Real estate equity loans and lines of credit share the same $50,000 to $500,000 limits, along with an LTV limit of 75%.
Health care practice loans
Wells Fargo offers several types of financing options that can be used to help health care practitioners establish, expand or acquire businesses, from physicians and dentists to veterinarians and optometrists. To this end, equipment loans, lines of credit, commercial real estate loans and other Wells Fargo financing options can be used as health care practice loans.
Wells Fargo borrower requirements
Wells Fargo’s process to get a business loan is somewhat opaque, as the bank doesn’t publish annual revenue, time in business or credit score minimums on its website. You’ll have to complete an application and speak directly with a banker to find out whether or not you meet the minimum qualification standards.
The only publicly available requirement for getting a Wells Fargo Advantage Small Business Line of Credit backed by the SBA is that you meet SBA requirements. However, with most lenders, small business loan requirements include a credit score, your time in business, your business plan and balance sheet, cash flow history and projections, accounts receivable and payable reports and collateral.
Required documents
Specific documents may vary by loan or financing type, but here are the general requirements for business loans and lines of credit at Wells Fargo:
- Legal business name, address and phone number
- Date business was first established (when the date the business originally opened, even if it was done under different ownership)
- Business tax identification or Social Security number
- Ownership type
- Number of owners
- Gross annual revenue
Each owner with a 25% or more interest must be listed as a guarantor and provide additional information, including the following:
- Percentage of ownership
- Annual household income
At least one owner with control and authority over the business must provide this information:
- Name, address and phone number
- Social Security number
- Date of birth
- Citizenship
For the Prime Line of Credit, the additional information required includes:
- Two years of personal tax returns
- Personal financial statement
- Two years of business tax returns
- Two years of company-prepared, year-end financial statements
Alternatives to Wells Fargo
| Wells Fargo | Navy Federal Credit Union | Bank of America | |
|---|---|---|---|
| Minimum credit score | Not disclosed | Not disclosed | Not disclosed |
| Loan products offered | SBA loans, business lines of credit, equipment financing, commercial real estate loans | Term loans, vehicle loans, business lines of credit, commercial real estate loans | SBA loans, business lines of credit, equipment financing, commercial real estate loans |
| Time to funding | Approval within 10 business days or less for unsecured credit line; may be longer for other products | Several business days or less; 30 to 45 days for real estate loans | Depends on speed of documentation; for equipment loans, generally within 10 business days |
| Starting APR | Prime + 1.75% | Not disclosed | As low as 5.25% |
| Maximum loan size | Up to $11.5 million for SBA 504 loans | Not disclosed; speak with banker regarding loans above $50,000 in size | Up to $5,000,000 |
| Minimum annual revenue | Not disclosed | Not disclosed | At least $100,000 for unsecured lines of credit; at least $250,000 for secured lines and equipment loans |
Wells Fargo vs. Navy Federal Credit Union
Navy Federal Credit Union offers lots of perks to its customers, but you’ll need to have U.S. military ties to open an account. Navy Federal Credit Union offers business loans and commercial real estate loans with terms of up to five years. Loans of up to $50,000 are readily available, but beyond that amount, you’ll have to speak with a credit union representative. Business credit lines start at $35,000 and can top $100,000, but they must be secured. If you’re in need of an unsecured line of credit, Wells Fargo would be a better choice for you than Navy Federal Credit Union.
Wells Fargo vs. Bank of America
Bank of America is a large, direct competitor with Wells Fargo, and the two banks offer a number of the same options for business financing. For example, Bank of America offers SBA loans, lines of credit, equipment loans and conventional commercial real estate loans. For better or worse, Bank of America spells out its minimum eligibility requirements for business loans, including two years of operating history and a minimum of $100,000 in annual revenue for unsecured loans and lines of credit ($250,000 for secured loans and lines of credit). These are likely comparable with Wells Fargo, but you won’t know for sure until you speak directly with a banker.