Wells Fargo Business Loan Review
Janet Schaaf is a freelance writer, editor and proofreader who considers reader advocacy to be her calling. After taking a few roads less traveled, Janet completed a bachelor’s degree in English Literature from the University of Missouri-Kansas City, with English Department Honors. She has been correcting grammar and checking facts since she could string a sentence together. For the past three years, Janet has focused on making personal finance topics understandable and relatable. Loan terms and credit card agreements can look overwhelming, but understanding what you’re agreeing to is paramount in grasping the impact debt can have on your life.
 | Estimated interest rate range: Prime + 5.00% to prime + 9.75% Best for: Business owners looking for business lines of credit or SBA loans. |
Pros and cons of Wells Fargo
| Pros | Cons |
|---|---|
Relatively transparent about fees on business lines of credit. The most basic SBA products are available. Extremely transparent about paperwork requirements prior to application. | Limited number of small business lending products for a bank of Wells Fargo’s size. Maximum credit line amount is relatively low for unsecured products. While some SBA products are available, the menu is shorter than what you might expect from a large bank. |
Wells Fargo small business loans review
Wells Fargo is a traditional brick-and-mortar bank — the fourth largest in the nation. Despite its size, it offers relatively few small business loan options. It offers conventional secured and unsecured lines of credit, an SBA line of credit, SBA 7(a) and SBA 504/CDC loans.
You’ll find more conventional and SBA lending products at other large, national banks, but the handful of SBA options that Wells Fargo does provide gives you more variety than you’d find at an online lender.
Who is Wells Fargo for?
- Business owners who want a relatively small unsecured line of credit. Wells Fargo’s maximum credit line amounts aren’t incredibly high for unsecured lines of credit, but because of the SBA options, you can get one even if you don’t have a long business history.
- Those with massive revenue who want a secured line of credit. If you want a secured line of credit where you put up collateral, the typical annual revenue threshold of qualifying borrowers starts at $2,000,000.
- Borrowers shopping around for SBA 7(a) and SBA 504 loans. Wells Fargo offers the most common SBA loan products. It’s not overly transparent on the SBA fees it passes on to borrowers, but most financial institutions aren’t, which makes shopping around a good idea.
Wells Fargo small business financing at a glance
| Product | Loan amounts | Repayment term | Estimated interest rate range | Fees |
|---|---|---|---|---|
| Secured line of credit (Prime Line) | $100,000 to $1,000,000 | One-year revolving term | Starting at prime rate + 0.50%, subject to a 5.00% minimum | 0.50% origination fee, due on an annual basis |
| Unsecured line of credit (BusinessLine) | $10,000 to $150,000 | Revolving | Prime + 0 to prime + 0 | Annual fee of $95 or $175, waived for the first year 0% to 4% cash advance fee Late fee of $25, $39 or $50 |
| SBA line of credit (Small Business Advantage) | $5,000 to $50,000 | Five-year revolving term | Prime + 4.50% to prime + 6.50% | No annual fee Wire transfer fee of the greater of $10 or 4% Late fee of $25, $39 or $50 |
| SBA 7(a) loans | Up to $5,000,000 | Up to 300 months for commercial real estate purposes Up to 120 months for all other purposes | Rates vary, subject to SBA maximums* | Not disclosed |
| SBA 504 loans | Up to $15,000,000 | Up to 120 months for commercial real estate Up to 120 months for machinery or equipment | About 3.00%* | Not disclosed |
*Terms and rates based on SBA guidelines
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. You can use any of the following as collateral:
- Non-real estate business assets
- Accounts receivable
- Inventory
- Equipment
While it’s a revolving credit line, it does require an annual review every 12 months for renewal. There is a 0.50% origination 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. You’ll need a guarantee from an owner or owners whose aggregate interest in the company is at least 51%. Each eligible owner must own at least 25% interest in the company by themselves in order to qualify. If you want an unsecured loan, you’ll be funneled towards the BusinessLine if you’ve been in business for at least two years.
Interest rates range from the prime rate + 1.75% to the prime rate + 9.75%. There is an annual fee on this line of credit. 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. 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:
- 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. |
Small Business Advantage unsecured line of credit
If you’ve been in business for fewer than two years, Wells Fargo may offer you a Small Business Advantage unsecured line of credit, backed by the SBA. The credit line limits are lower for the SBA line of credit, ranging from $5,000 to $50,000, and the interest rates start higher, ranging from the prime rate + 4.50% to the prime rate + 6.50% depending on your creditworthiness. On the plus side, there are no annual fees, and your revolving line of credit will only undergo a review once every five years.
Another positive is that there are fewer cash advance fees on the Small Business Advantage line of credit. You’ll only pay wire transfer fees or fees for using your Business Advantage Mastercard to purchase Casino Cash or Quasi Cash. In that instance, the fees will be the greater of 4% or $10. The late fees are identical to those on the BusinessLine line of credit.
You will still need to provide a personal guarantee even though no collateral is required. For the Small Business Advantage line of credit, each owner providing a guarantee must have at least 20% interest, with all signing owners collectively holding 51% interest in the company or more.
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 (or 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, buying equipment, land or property. The amount you can borrow varies by your intended use. Wells Fargo will back up to the first $10 million; then another $5 million can be 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.
Rates are set by the SBA, and are currently around 3.00%. 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.
Healthcare practice loans
If you run a healthcare practice, Wells Fargo does offer a large suite of lending products to meet your financing needs. Healthcare lending products include:
- Term loans
- Working capital loans
- Lines of credit
- Equipment financing
- SBA loans
- Business refinancing
- Practice equity loans
Wells Fargo borrower requirements
| Minimum annual revenue | $2,000,000 for Prime Line secured line of credit Not disclosed for other products |
| Minimum time in business | 2 years for conventional lines of credit Not disclosed for other products |
| Minimum credit score | 680 for unsecured lines of credit Not 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 BusinessLine or Small Business Advantage lines of credit, you typically need a credit score of at least 680 to qualify. If you’ve been in business for two years or more, you’ll be eligible to apply for the BusinessLine product, but if you’re a newer business with fewer than two years under your belt you’re better suited for the Small Business Advantage line of credit. Annual revenue requirements are not disclosed for these products.
Prime Line secured line of credit borrower requirements
Minimum credit score requirements are not disclosed for this product, 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 $10 million.
SBA loan borrower requirements
Wells Fargo doesn’t publicly share many minimum requirements for SBA 7(a) and 504/CDC loans, but minimum credit requirements set by the SBA are a good place to start your research. Wells Fargo does share some maximum limitations for SBA term loan borrowers, though. Your business’ net worth is expected to be under $15 million, and the average net income should be below $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 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
Alternatives to Wells Fargo
| Wells Fargo | Bluevine | American Express Business Line of Credit | |
|---|---|---|---|
| Minimum credit score | 680 for unsecured lines of credit Not disclosed for other lending products | 625 | 660 |
| Loan products offered |
| Unsecured line of credit | Unsecured line of credit |
| Starting interest rate |
| Starting at 6.20% simple interest for a 26-week repayment term |
|
| Maximum loan size |
| $250,000 | $250,000 |
| Minimum annual revenue | $2,000,000 for secured lines of credit Not disclosed for other lending products | $480,000 | $36,000 |
| Minimum time in business | 2 years for conventional lines of credit Not disclosed for SBA lending products | 24 months | 12 months |
Wells Fargo vs. Bluevine
While Wells Fargo does offer SBA products, its primary small business lending products are its business lines of credit. Bluevine’s only lending product is its business line of credit, which comes with extremely high revenue requirements, but much lower minimum credit score requirements. Bluevine’s line of credit is unsecured, and when compared to Well Fargo’s unsecured lines of credit, you can borrow more through Bluevine.
Wells Fargo vs. American Express Business Line of Credit
The American Express Business Line of Credit is a bit easier to qualify for than Wells Fargo’s unsecured lines of credit, as the minimum credit score is 20 points lower. It also comes with an extremely low barrier to entry when it comes to minimum annual revenue requirements. You only need to have been in business for half the time required by Wells Fargo for its conventional unsecured line of credit, and you can borrow up to $100,000 more. However, you won’t be able to get SBA loans like you could through Wells Fargo.