Wells Fargo Business Loans: The Complete 2020 Review

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Wells Fargo Business Loans: All You Need to Know

Wells Fargo small business loans are some of the best out there. It might come as a surprise, though—Wells Fargo is one of the biggest banks in the nation, with more than 5,800 branches and nearly $2 trillion in assets. But that doesn’t mean they’re focused solely on big business.

In fact, Wells Fargo business loans offer ten different types of small business-focused funding options:

  1. BusinessLoan term loan
  2. FastFlex small business loans
  3. Advancing term loans
  4. SBA 7 (a) loans
  5. SBA CDC/504 loans
  6. Equipment Express loans
  7. Unsecured lines of credit
  8. Secured lines of credit
  9. Wells Fargo Prime lines of credit
  10. Commercial real estate loans

Here is your ultimate guide to Wells Fargo small business loans:

 

Wells Fargo Business Loans: Some Background

Because the ten types of Wells Fargo business loans are so apt at addressing small business funding needs, Wells Fargo is one of the best banks for small business loans.

Over the last decade, small businesses and large national banks have grown far apart. Banks have difficult qualification requirements, and they often deal in loan sizes that are much larger than the typical small business owner needs. Fortunately, the economy is looking up, and banks are lending more and more to small business owners. And Wells Fargo small business loans are following suit with this upward trend.

In this guide, we’ll walk through all the business loans Wells Fargo offers to help you decide if any of the ten Wells Fargo small business loan options are the right choice for you.

The 10 Wells Fargo Business Loans, Explained

Wells Fargo Business Term Loans

Wells Fargo offers two general term loans: the BusinessLoan term loan and FastFlex term loan. Both of these are unsecured business term loans, which means you don’t need to supply any collateral to qualify. Wells Fargo business loan rates are fixed for the duration of this loan, so your payment always stays the same.

    Wells Fargo BusinessLoan Term Loans

    Wells Fargo Unsecured business loans are one- to five-year term loans, with fixed rates currently starting at 8.25%.

    This Wells Fargo business loan offers amounts ranging from $10,000 to $100,000, and the loan can be used for any business purpose, such as business expansion, renovating facilities, working capital, or emergency expenses.

    The interest rate on this Wells Fargo term loan will be fixed, so your monthly payment is always the same. Your rate depends on the term length and your credit history—but in general, expect to have at least an 8.25% interest rate. And if an account default occurs, your interest rate will bump up.

    This Wells Fargo loan also comes with a one-time opening fee of $150 (waived for Business Choice Checking or Platinum Business Checking account holders). Other than that, you don’t have to worry about any other annual fees or prepayment penalties on your loan.

    Wells Fargo FastFlex Small Business Loans

    Another unsecured business loan option that Wells Fargo offers is their FastFlex small business loan. This Wells Fargo small business loan offers loan amounts from $10,000 to $35,000, so it will be best fit for business owners looking for smaller Wells Fargo business loans.

    FastFlex small business loans offer repayment terms of one year with weekly scheduled payments. Rates for this Wells Fargo small business loan will start at 13.99%. You might be thinking, “Why would I choose this more expensive unsecured business loan option over the Wells Fargo BusinessLoan term loan?”

    Well, as the name indicate, the FastFlex small business loan will fund faster than its longer-term counterpart. Plus, because this Wells Fargo small business loan comes with a shorter repayment term, it will have a lower total cost of capital.

    Wells Fargo Advancing Term Loan

    The Wells Fargo Advancing term loan is a working capital loan that offers limits of anywhere from $100,000 to $500,000. Wells Fargo doesn’t disclose any details on the rates they attach to this loan option, but they do specify that they charge an origination fee of 0.50% at funding.

    This Wells Fargo business loan actually works a lot like a combination of a traditional term loan and a business line of credit: You’ll have a whole year to draw funds up to your credit limit, and after that year is up, your balance will convert to a five-year term loan. You’ll repay however much you end up spending in that year with scheduled monthly payments as if it were a traditional, five-term loan.

    Unlike unsecured Wells Fargo business term loans, the Advancing term loan will require collateral. You’ll be able to secure this loan option with business assets like accounts receivable, inventory, equipment, or cash—you just won’t be able to secure it with real estate.

    Be sure to note, though: These Wells Fargo business loans are meant for business with $2 million to $5 million in annual revenues, so they might not be the best fit for businesses on the smaller side of things.

     

    How to Apply for a Wells Fargo Term Loan

    Applying online is the easiest option if you think you’ll meet these Wells Fargo business loan requirements. The online application is available as long as you’ve had a Wells Fargo checking or savings account for at least one year (personal or business account).

    Here’s what you’ll need to gather for your Wells Fargo term loan application:

    Business information

    Think business name, address, tax identification number, business establishment date, type of ownership, and so on. You need to have a physical business address in order to be approved for any Wells Fargo business loans.

    Business’s annual revenue

    Your personal information

    Home address, social security number, citizenship information, annual household income, and personal banking account number and balance.

    List anyone who owns 25% or more of the business on the application, as each of them will need to provide income history and sign a personal guarantee. Once you apply online, you’ll need to visit a Wells Fargo branch to submit your paperwork and complete the loan process.

Wells Fargo SBA Loans

You’ll also find SBA loans in the lineup of Wells Fargo small business loans. Wells Fargo is regularly among the top 10 SBA loan providers in the country, in terms of number of loans and dollar amount.

The SBA (Small Business Administration) guarantees a large portion of loans—up to 85%—to incentivize big banks like Wells Fargo to lend to small businesses. Ordinarily, large banks view small business borrowers as risky, and smaller loan requests aren’t very profitable for large banks. The SBA covers most of the lender’s risk, so more small business owners get access to the capital they need.

Wells Fargo participates in both the 7(a) and CDC/504 loan program, offering small business owners loans with longer repayment terms and lower Wells Fargos business loan rates.

    Wells Fargo SBA 7(a) Loans

    Wells Fargo provides SBA 7(a) loans of up to $5 million to small businesses. If you secure a 7(a) loan with Wells Fargo, you’ll be able to use the capital for a variety of business needs. The 7(a) loan program is the SBA’s most common catch-all program, so what you use the funds for is pretty much up to you. That said, you can’t use your Wells Fargo SBA loan to pay delinquent taxes, refinance existing debt where Wells Fargo would take on a loss, or affect a change in business ownership.

    If you fund with a Wells Fargo SBA 7(a) loan for working capital, you’ll be able to access a repayment term of up to seven years. For equipment purchases, Wells Fargo SBA 7(a) loans will carry repayment terms as long as 10 years. And for real estate financing, Wells Fargo SBA 7(a) loans can carry repayment terms as long as 25 years.

    Wells Fargo SBA CDC/504 Loans

    If you fund with an SBA CDC/504 loan from Wells Fargo, you’ll only be able to use the loan proceeds for major fixed asset purchases. That means real estate and equipment purchases and renovations only.

    Wells Fargo will lend up to $6.5 million for an SBA CDC/504 loan, with repayment terms that stretch as long as 20 years.

    How to Apply for Wells Fargo SBA Loans

    The SBA sets overall guidelines for SBA loans but leaves a lot of discretion to lenders in terms of how they process and underwrite the loan.

    You’ll need to visit a Wells Fargo branch in person to apply for an SBA loan. And get ready to prepare a lot of documentation for your Wells Fargo SBA loan to meet both lender and SBA requirements.

Wells Fargo Equipment Loans

One of Wells Fargo’s most popular loan offerings is their Equipment Express loan. These loans range from $10,000 to $100,000, depending on the equipment you’re purchasing. The term on your Equipment Express loan also depends on the kind of equipment, but you can expect a term of anywhere between two to six years.

The structure of this loan is similar to a term loan, but these Wells Fargo small business loans are used specifically for equipment and vehicle financing. Business owners looking to buy equipment, upgrade existing equipment, or purchase new or used vehicles or trucks can apply for the Equipment Express loan. Financing for new and used personal computer purchases—including laptops, desktops, monitors, keyboards, and printers—is not eligible.

Like most equipment loans, Wells Fargo equipment loan rates are based on the loan’s term length, your credit history, and the type of equipment being purchased. But in general, you can expect fixed interest rates starting at 7% for vehicle purchases and 7.50% for equipment purchases.

There are no application, opening, prepayment, or other fees to worry about for these Wells Fargo equipment loans. Wells Fargo will even give a 0.25% discount on the interest rate if you set up automatic loan payments from a Wells Fargo business checking account.

    How to Apply for a Wells Fargo Equipment Loan

    The Equipment Express loan application process is almost the same as it is for other Wells Fargo commercial loans.

    You’ll need to provide your business’s background and financial standing, along with information about your personal finances. The equipment or vehicle serve as collateral for the Equipment Express loan. This makes the qualification process a little less demanding, but Wells Fargo will need to see some information about the equipment you plan on buying.

Wells Fargo Lines of Credit

When you’re considering all the Wells Fargo small business loans available, you should make sure to put their business lines of credit on your list. Wells Fargo offers two types of unsecured business lines of credit and one type of secured business line of credit. The unsecured lines aren’t backed by collateral. The secured line of credit is backed by a Wells Fargo savings account or certificate of deposit (CD).

A commercial line of credit gives you access to a pool of funds that you can draw on for your business whenever you want or need to. You only pay interest on what you draw from your credit line, and once you pay Wells Fargo back, your credit line goes back up to its original amount. That’s why business lines of credit are called known as “revolving” credit lines.

Both the Wells Fargo business lines of credit work well for covering unexpected business expenses and opportunities, expenses during busy or slow seasons, and operational costs.

Wells Fargo also suggests that both products are great for new business owners who need to establish their credit or rebuild their credit rating.

    Wells Fargo Unsecured Lines of Credit

    Wells Fargo’s unsecured lines of credit include the BusinessLine line of credit and the Small Business Advantage line of credit. Both of these range $5,000 and $100,000. There is a graduated annual fee on the account depending on the size of the credit line. Current Wells Fargo business loan rates start at 7.25% (Prime plus 1.75%) for this option.

    The BusinessLine product is best for businesses that have been operating for over two years. The Small Business Advantage product is best for newer businesses. Businesses under two years old typically receive lines of credit no larger than $50,000.

    With the unsecured line of credit, Wells Fargo takes on a little more risk because they don’t require borrowers to put down collateral. To protect themselves against lending to riskier borrowers, they’ll charge higher Wells Fargo business loan rates than for the unsecured line of credit.

    The annual fee varies based on the size of the credit line—$0 for lines of credit less than $10,000, $95 for lines of credit between $10,000 to $25,000, and $175 for lines of credit over $25,000.

    Wells Fargo Secured Lines of Credit

    Wells Fargo’s secured line of credit is backed by the money in your Wells Fargo savings account or CD. If you’re unable to pay back the credit, Wells Fargo can use the cash in your savings account or CD to get its money back.

    The size of the credit line is the same as the unsecured line, ranging from $5,000 to $100,000. But, since there’s security, the rates are slightly lower (starts at Prime plus 1.00%). There is a $50 annual fee on the secured line of credit.

    Wells Fargo Prime Lines of Credit

    Finally, for businesses with annual revenues ranging from $2 million to $5 million, Wells Fargo offers the Prime Line of Credit. This business line of credit offers revolving credit limits from $100,000 to $500,000 that are secured by non-real estate business assets like accounts receivable, inventory, or equipment.

    This Wells Fargo funding option will work much like the Advancing term loan, with one crucial distinction: With this Wells Fargo business line of credit, your credit limit will replenish after you pay back the funds you withdraw, plus interest.

    How to Apply for a Wells Fargo Business Lines of Credit

    The application process for both the secured and unsecured line of credit is pretty similar to that for other loan products. You’ll need to provide the usual information about your personal and business financials for both.

    If you go the secured route, you’ll have to provide information about the collateral you’re planning on securing the credit line with. A Wells Fargo secured line of credit is typically secured by a certificate of deposit (CD) or a Wells Fargo savings account—so you’ll need to provide the account number for whatever you choose to offer as collateral.

Wells Fargo Commercial Real Estate Loans

In conjunction to SBA CDC/504 loans, Wells Fargo also offers traditional (non-SBA) commercial real estate loans between $50,000 and $750,000. The maximum loan-to-value (LTV) on these loans is 80%. For example, if the value of a building you’re trying to purchase is $400,000, the maximum loan Wells Fargo will give you is $320,000. You must bring the remaining 20% as a down payment.

You can use a Wells Fargo commercial real estate loan on almost any kind of commercial property, including office space, warehouses, mixed-use properties, and multi-family properties. You might be able to use a Wells Fargo loan to refinance existing commercial debt. Wells Fargo business loan rates could be either fixed or variable with this option, but competitive fixed rates are only available for the most qualified borrowers.

    Wells Fargo Commercial Real Estate Loan Fees

    There are more fees on a commercial real estate loan compared to other loans due to the large dollar amounts and the amount of time it takes Wells Fargo to process the loan. If you close out the loan in the first three years, there’s a $3,000 early closure fee and a prepayment penalty. There’s also an origination fee that Wells Fargo changes up front, and it’s equal to the lesser of 1% of the loan amount, or $5,000. They’ll waive the origination fee during certain promotional periods.

    How to Apply for a Wells Fargo Commercial Real Estate Loan

    The application process for a Wells Fargo commercial real estate loan is a bit more involved than it is for other loans. There’s a lot of money at stake, and you’ll need to pay for a professional valuation of the property. For these reasons, you can’t apply online. You need to call Wells Fargo or visit a branch to apply.

    Before you go in, you’ll need to have some information about the property ready to go, including the address, any repairs needed, estimated value, and sales agreement.

    Having this information will make the process go more quickly, but expect a commercial real estate loan to take several weeks, even months, to complete.

Wells Fargo Business Loans: The Pros

Even if you qualify for a Wells Fargo small business loan, there are advantages and disadvantages you should be aware of. Knowing the pros and cons will help you compare Wells Fargo to other small business loan options, including online alternative lenders.

Long Repayment Terms

Wells Fargo small business loans, like most bank loans, have long repayment terms. 10-year terms are common, but they go up to 25 years for real estate purchases. Long terms mean lower monthly payments.

Wells Fargo Business Loan Rates

Wells Fargo business loan rates start at low as 5.75%, making them some of the lowest rates you’ll find among small business loans.

Good Online and Mobile Experience

While some things need to be completed in person, Wells Fargo does have pretty good online and mobile banking to help you upload documents and see the status of your loan.

Wells Fargo Business Loans: The Cons

Even if you qualify for a Wells Fargo business loan, there are disadvantages you should be aware of before agreeing to the loan.

Takes Time to Apply and Approve

Bank loans can take several weeks, even months, of processing. Banks have to meet a lot of regulations and do extensive underwriting before they can issue your funds.

Lots of Paperwork

Be prepared to submit a few years’ worth of business and personal financial information.

In-Person Application for Non-Customers

You don’t need to be a Wells Fargo customer to apply and qualify for a Wells Fargo small business loan.

However, you must have a Wells Fargo savings or checking account that’s been open for at least one year to apply online. Otherwise, you’ll need to visit a Wells Fargo branch to apply for a business loan product.

Difficult to Qualify For

Like any bank business loan, you’ll need strong credit and an established, profitable business to secure funding with Wells Fargo.

Wells Fargo Business Loans Requirements

Wells Fargo will decide your small business’s borrowing eligibility for their business loans based on several Wells Fargo business loan requirements. These requirements have to do with your personal credit history and financials, as well your business’s history and financials.

Here are the requirements that Wells Fargo underwriters will look at to determine whether you qualify for one of the Wells Fargo small business loans  offers:

    Strong Personal Credit History

    Wells Fargo will check your personal credit history to evaluate your ability to pay back the loan on time. Although there’s no specific Wells Fargo business loan requirement for credit scores, it helps to have a score of at least 680 or so. And if you’re not quite there yet, here are some ways to improve your credit score.

    Strong Business Credit History

    Wells Fargo also looks at your business’s payment history with trade suppliers and other lenders. This history shows up on your business’s credit report.

    No Recent Bankruptcies or Tax Liens

    Your credit report should be free of bankruptcies within the last ten years (if you’ve repaid creditors, you might be eligible). And you must clear any tax liens and judgments against you or your business before applying. Getting a business loan with a tax lien is tough. If you have one, you should probably look at your loan options with online lenders instead of banks.

    Time in Business

    Businesses that have been operating for at least three years have the best chances of qualifying for a Wells Fargo small business loan.

    Profitability

    Your chances of qualifying are best if your business has been profitable for at least two years. This helps convince the bank that you’ll be able to afford your loan payments over time.

    Cash Flow

    Wells Fargo looks to your cash flow as the primary source of repayment for the money they lend you. Their rule of thumb is that for every $1 in total loan payments, your business has to generate $1.50 in cash flow. To assess whether you meet this Wells Fargo business loan requirement, estimate your monthly loan payment, and look at last month’s incoming cash (revenue plus other sources of income). Dividing your incoming monthly cash by your estimated monthly payment should give you at least 1.5.

    Capacity

    Wells Fargo will want to see that you have the capacity to convert other assets to cash—so they’ll get your loan repayments no matter what. You can prove your “capacity” by real estate holdings, certificates of deposit, stocks, and other sources of savings that can be liquidated into cash quickly.

    Collateral

    Wells Fargo makes both secured and unsecured business loans. If you’re applying for one of the secured Wells Fargo business loans, you’ll need to pledge a valuable asset (e.g. real estate, equipment, inventory) as collateral for the loan.

This is a long list of requirements, and qualifying for a small business loan from a bank like Wells Fargo is not easy. If you’re not able to meet most of theseWells Fargo business loan requirements, then it might be helpful to seek out an alternative lender while you build up your business’s credit and profitability and your personal financials.

Don’t Qualify for Wells Fargo Business Loans? Try Their Business Credit Cards Instead

What all these Wells Fargo small business loans have in common is that they’re hard to qualify for. You need to have strong business financials, a relatively long time in business, and stellar personal credit.

If that’s not you at the moment, then another Wells Fargo credit option is one of their business credit cards.

You’ll be able to get a small amount of capital for your business in the form of a credit line on a business credit card. You can use your credit card to cover the regular expenses of running a business—while building business credit and earning valuable rewards at the same time.

Wells Fargo offers three credit cards for business use.

Wells Fargo Business Platinum Credit Card

The Wells Fargo Business Platinum Card offers a credit line up to $50,000. As a major perk, this business credit card comes with no annual fee. There’s a 0% introductory APR for the first nine months, after which a variable APR sets in based on your creditworthiness. This rate will also vary with the market prime rate, so check with Wells Fargo for the latest APR information.

With this business credit card, you can choose your rewards structure—cash back or points rewards. If you go the cash back route, this card earns 1.5% cash back for every $1 spent on net purchases. Or, you can choose to earn points when you spend, earning a base of one point for every $1 of spending.

You’ll receive 1,000 bonus points when your business spend reaches $1,000 in any monthly billing period. You’ll also get a 10% bonus when you redeem points online. You can redeem these points for gift cards, merchandise, airline tickets, and so on. Right now, you can also take advantage of Wells Fargo’s introductory offer—receive $500 in cash back when you spend at least $5,000 on the card in the first three months.

Wells Fargo Business Secured Credit Card

This business credit card is a secured business credit card—meaning you put up a cash deposit between $500 and $25,000 against the card. This card (as with all secured business cards) is a great option if you’re a brand new business and don’t qualify for many other financing options.

A secured business credit card also works well for borrowers who need to build or rebuild their credit scores. Use a secured business credit card responsibly, and you’ll see your score grow with good behavior. But expect to pay slightly higher interest rates on this card—starting at Prime plus 11.90% for purchases—since this is a secured card for building credit.

Wells Fargo offers a credit line of $500 to $25,000 on this card and offers 1.5% cash back or one rewards point for every $1 you spend on the card. There’s a $25 annual fee. It’s impressive to have cash back or rewards on a secured credit card.

A secured business credit card is like a secured business loan. Your cash deposit acts like collateral for your credit card, giving Wells Fargo reassurance that they’ll get the money they lent to you back even if you can’t pay your credit card balance. In this worst case scenario, Wells Fargo could seize your cash deposit to recoup their losses.

Wells Fargo Business Elite Card

Wells Fargo’s Business Elite Card is probably their hardest to qualify for. According to Wells Fargo, it’s best for businesses with annual sales above $1 million, businesses that want to earn more valuable rewards, or businesses that need dedicated customer service.

This card offers a credit line of up to $300,000, so you can use it to make substantial purchases. As with the other cards, you can choose 1.5% cash back or one rewards point for every $1 of spending. You’ll receive 5,000 bonus points when your spending reaches $10,000 in any monthly billing period. And you’ll get a 10% bonus when you redeem points online.

Right now, Wells Fargo is offering a bonus of $1,000 if you spend $25,000 on the card in the first three months after opening the account. There’s a $75 annual fee if you enroll in the cash back or points program.

Wells Fargo Business Loans: The Bottom Line

Now that you have everything there is to know about Wells Fargo commercial loans, should you take the plunge and apply for one?

Every small business has different financing needs, but in general, the business owners who benefit most from Wells Fargo commercial loans have strong financials and credit ratings.

Wells Fargo commercial loans are bank loans. They’re hard to qualify for. The best candidates are those who can prove a top-notch credit score, strong cash flows, and profitability. On the other hand, if you have a less-than-stellar credit score or you’re struggling to pay off other debts you owe, you probably won’t qualify for most of the Wells Fargo commercial loans available. But there are plenty of other financing options to help you grow your business.

Also, Wells Fargo might not be the right bank for you. To get the full picture of your options, check out other banks offering business loans. Chase business loans, Bank of America business loans, PNC small business loans, and US Bank small business loans are all top options in the bank loan space.

Senior Contributing Writer at Fundera

Priyanka Prakash, JD

Priyanka Prakash is a senior contributing writer at Fundera.

Priyanka specializes in small business finance, credit, law, and insurance, helping businesses owners navigate complicated concepts and decisions. Since earning her law degree from the University of Washington, Priyanka has spent half a decade writing on small business financial and legal concerns. Prior to joining Fundera, Priyanka was managing editor at a small business resource site and in-house counsel at a Y Combinator tech startup.

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