Wells Fargo SBA Loans Review

Updated on January 24, 2023
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Wells Fargo SBA Loans: What You Need to Know

Wells Fargo SBA loans come in three forms: SBA 7(a) loans, SBA Express Loans, and SBA CDC/504 loans. Wells Fargo SBA lending offers the low rates, long repayment terms, and large loan amounts that small businesses expect from SBA loans. But they’ll also be tough to secure—SBA bank loans like Wells Fargo SBA loans are typically only available to the most qualified small business borrowers

In this article, we’ll go through everything you need to know about Wells Fargo SBA Loans, including rates, requirements, and application processes.

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What Is a Wells Fargo SBA Loan?

First, “Wells Fargo SBA Loan” is a bit of a misnomer.

When people talk about SBA loans, what they’re really referring to are SBA-guaranteed loans. Considered generally, SBA loans are much like any other traditional business term loan you can get through small business lender.

The main difference is that the U.S. Small Business Administration serves as a resource for small business owners to help them get bigger business loans than they’d otherwise qualify for.

They do this by agreeing to guarantee or back large portions of the loans administered to small businesses in the event that the small business fails or defaults on their loan.

This means that if a small business defaults on their SBA-guaranteed loan, the government will be partially responsible for covering it, meaning lenders won’t lose as much of their money.

This incentivizes lenders to take more risks when lending to businesses—making it much easier for small business owners to secure funding they may not be eligible for otherwise.

Under the U.S. Small Business Administration’s various “SBA loan” programs, you can get funding for almost any business purpose.

This includes, but is not limited to:

  • Adding to working capital
  • Purchasing inventory or equipment
  • Refinancing other debts
  • Buying real estate
  • Funding the acquisition of other businesses

Why Choose the Wells Fargo SBA Lending Program?

Wells Fargo is one of the best banks for small business lending. In fact, they call themselves “America’s leading small business lender.”

It’s not just hot air—Wells Fargo lends tens of billions of dollars in small business loans each year, more so than any other large U.S. bank. Wells Fargo has also been the nation’s top SBA lender in dollar volume since 2009.

Additionally, Wells Fargo is part of the SBA Preferred Lender Program, which means they can push your application through faster than other non-preferred lenders.

The SBA Preferred Lender Program is designed to connect small businesses with banks like Wells Fargo that are more likely to provide you with better terms and a smoother application and closing process.

Wells Fargo SBA Loan Requirements

All lenders and loan programs have their own unique eligibility requirements, but Wells Fargo is uniquely able to help you with the process of figuring out if you’re a fit for an SBA Loan.

This includes Wells Fargo SBA 7(a) loan requirements and Wells Fargo CDC/504 loan requirements.

Other eligibility requirements and restrictions will apply, but the Wells Fargo SBA team specialist will be able to review requirements with you when the time is right.

Just know that not all SBA loans are created equal, and you should consider their differences when choosing what’s right for your business.

SBA Eligibility Requirements

To be eligible for an SBA loan, your business must:

  • Exist as an ongoing, for-profit business.
  • Not have a tangible net worth exceeding $15 million and/or have an average net income greater than $5 million over the past two years.
  • Be officially registered through the government and legally operating.
  • Be physically located and operated in the U.S. or its territories.
  • Be owned by someone who has invested their own time or money into the business.
  • Not have access to funds from any other financial lender.
  • Not have any delinquencies or defaults on debt obligations to the U.S. government (including student loans)

Do I Need to Be a Wells Fargo Customer to Qualify?

Wells Fargo SBA loan applications are available to all small businesses, even if they don’t have prior customer history with the bank.

Generally speaking, SBA loan eligibility is based on how a business makes its money, the demonstrated resource management skills of the business, and where the business operates. The business must meet small business size requirements, show that they have the capacity to repay the loan, and have a sound business plan and purpose.

Wells Fargo SBA Loans: The Different Options

Wells Fargo offers three different types of the many different SBA loans available. We’ve broken them down for you below.

1. Wells Fargo SBA 7(a) Loan Program

The SBA 7(a) loan is what most people think of when consider an SBA Loan. The SBA 7(a) loan program is the most prevalent SBA loan program out there.

  • How much can a Wells Fargo SBA 7(a) Loans get you?

    You can secure up to $5 million. It’s an excellent product for small businesses looking for a flexible, low-cost option to manage or grow their business.

  • How quickly can you receive the loan if you qualify?

    It usually takes 3 weeks or longer, so it won’t be the best option if you’re looking to secure funding quickly.

  • How can you use Wells Fargo 7(a) Loans?

    Wells Fargo 7(a) loans can be used to purchase equipment or inventory, purchase or expand an existing business, supply working capital, or refinance existing debt. (There are also Wells Fargo equipment finance if you’re looking for this purposes specifically.)

  • Wells Fargo SBA 7(a) loan terms

    Terms vary depending on what the loan is used for, but can range anywhere between 7 and 25 years.

  • Wells Fargo SBA 7(a) loan rates

    Interest rates for 7(a) loans generally fall between between 6 – 13%. They can be fixed or variable, but the SBA puts restrictions on how much a lender can make off your SBA loan.

    For example, if your 7(a) loan term is less than 7 years, the maximum spread on your interest rate will be up to 2.25%. You can expect a maximum spread of 2.75% for longer loans

  • What else do you need to know about Wells Fargo SBA 7(a) loans?

    Most 7(a) loans come with a “guarantee fee” attached to the loan. This fee is based on the loan terms and loan amount guaranteed by the SBA. The lender usually pays this fee up front, but they may pass this expense onto the borrower in other ways.

    Amounts more than $700,000 will have a guarantee fee of about 3.5%. There’s an additional fee of 0.25% on any guaranteed portion of more than $1 million. However, if your loan is $150,000 or less, there won’t be guarantee fee.

2. Wells Fargo SBA Express Loans

Wells Fargo SBA Express Loans are an extension of SBA 7(a) loans.

They’re a good option for businesses who need operating capital more quickly and/or desire a lower dollar amount. However, don’t think you’ll have money in hand as quickly as you might with an online lender.

If you qualify, the SBA Express Loan program will approve you for a loan in 36 hours or less, but processing the loan itself and time to funding could still be a few weeks.

Also, even though the application process is more streamlined and the loan amounts are smaller, it does not mean that the SBA Express Loan program is easier to qualify for.

SBA Express Loans have roughly the same standards as an SBA 7(a) loan, with maximum loan amount being $350,000.

SBA Express Loans carry a lower maximum with a lower percentage of the loan guaranteed—only up to 50%. Since a small portion of the loan is guaranteed, interest rates on SBA Express Loans can be slightly higher, though still competitive.

3. Wells Fargo CDC/504 Loan Program

The CDC/504 program is a type of asset-based lending. It’s designed for small businesses that need a loan that’s for a specific item with a specific purchase price.

This is known as a “major fixed access purchase.”

  • Wells Fargo CDC/504 Loans max out at $6,500,000 for the Wells Fargo portion of the loan.
  • The typical time to funding is as little as three weeks.
  • They can be used to purchase equipment, purchase commercial real estate, or fund construction or renovation on a business.
  • Terms are varied but range up to 10 years on equipment and up to 20 years on real estate
  • What can a Wells Fargo CDC/504 Loan get you?

    • Wells Fargo CDC/504 Loans max out at $6,500,000 for the Wells Fargo portion of the loan.
    • The typical time to funding is as little as three weeks.
    • They can be used to purchase equipment, purchase commercial real estate, or funding renovations as business construction loans.
    • Terms are varied but range p to 10 years on equipment and up to 20 years on real estate
  • How does the CDC/504 Loan Program work?

    The CDC/504 program is made up of two loans—50% of the loan comes from Wells Fargo, and 40% is facilitated by a Certified Development Corporation.

    The borrower is required to cover 10% of the cost of the loan upfront.

    Once the loan offer is made, CDCs will auction your project to a pool of investors who will provide funding for the 40%.

    You won’t know the exact interest rate until this is done—about 45 days after you make a deal with the CDC. However, you can expect a rate between 4 – 5%.

    When your loan gets blended with the bank’s rate for their 50%, you’ll likely wind up with a rate around 5 – 6%.

    Loan fees for the CDC/504 program are around 3% of the loan amount, but it’s possible to finance this fee as a part of the loan.

    As with any loan, the terms you get will depend on your business’s history and qualifications for the loan amount you seek. But you can use the above as a general guideline.

What Do I Need to Apply for a Wells Fargo SBA Loan?

SBA loans are highly sought-after. This means the process of applying to one can be arduous.

There are a lot of SBA loan requirements you’ll need to get in order before you get into the process of applying for one.

What does this mean exactly?

It means you’ll need to go through the application process and provide documentation to both Wells Fargo and the Small Business Administration.

Each program has its own paperwork you’ll need to fill out. But generally, you can expect to see some SBA loan requirements on any SBA application. It’s important to get to know them.

It’s important to be careful in the process of getting your documentation together. You don’t want to be disqualified for a loan you’d otherwise qualify for simply because of a typographical error or financial miscalculation.

Wells Fargo will want to see that you are responsible enough to handle a business loan, and proficiently putting together your loan documents will greatly help them see that you are.

Know that this is not necessarily a complete list—other documentation and information may be requested by Wells Fargo. To truly know everything you need for a Wells Fargo SBA Loan application, it’s best to go through the actual process.

Here’s what you’ll need:

  • SBA Form 1919 Guide

    Borrower Information Form – identifying information such as your name, address, previous names and addresses, social security number, criminal records etc.

  • SBA Form 912 Guide

    Statement of Personal History – a letter describing who you are that demonstrates your character as a business owner.

  • SBA Form 413 Guide

    Personal Financial Statement – used for assessing your personal financial history as well as all other business proprietors. This includes a credit reports and financial statements from your personal bank

  • SBA Form 159 Guide

    Fee Disclosure Form and Compensation Agreement – if you hire someone to help with your SBA loan application, this form details how much you paid them and what services they provided.

  • A Business Plan Including:

    • A description of your business that quickly summarizes what can be found in the business plan.
    • An explanation of how a loan will help the business—Wells Fargo will want to see that you’re using the loan for a “sound business purpose.”
    • Financial projections including future sales, cash flow, and income.
    • Market analysis for your industry that explains your business’s unique opportunity demonstrates an understanding of the competition.
    • A list of qualitative goals for the business: What makes your business special? How do you see the company growing?
    • Information on the company’s organizational structure, including the management team’s experience and operational workflows.
    • A comprehensive marketing and sales strategy.
  • Business background and financial statements, including:

    • 2-3 years of business financial statements from your business bank
    • 2-3 years of federal business tax returns
  • Legal documents, including:

    • Business licenses and registrations that prove you conduct a legal business
    • Any Articles of Incorporation
    • Contracts with third parties such as clients or suppliers, if applicable
    • Franchise agreements, if applicable
    • Leases for commercial real estate or business equipment, if applicable

How Can I Apply for a Wells Fargo SBA Loan?

As you may have figured out, applying for a Wells Fargo SBA Loan isn’t the most straightforward process on the planet.

First, you will have to find out if you are eligible for a loan without an SBA guarantee. If you qualify for a loan without the SBA guarantee, then you’re not eligible to apply for an SBA-backed loan—with Wells Fargo or any other lender.

This means you’ll have to apply to certain loan programs before you can apply for an SBA Loan through Wells Fargo—which is why the loan process for SBA-guaranteed loans can take so much longer.

However, once you go through this process and determined SBA eligibility, you can contact a business lending specialist through Wells Fargo who can assist you by phone or in person with the loan application process. Call or make an appointment online.

Frequently Asked Questions

The Bottom Line

If you’re looking for Wells Fargo SBA financing, odds are you’re looking for bank financing.

If, for some reason, an SBA loan isn’t exactly what you need, you could seek out Wells Fargo for other financing options that can better meet your financing needs.

For instance, if you need more flexible financing than a long-term loan, a Wells Fargo business line of credit could make sense for you.

And if an SBA loan is right for you, be sure to compare your options with other banks. Chase SBA loans and Bank of America SBA loans are good options as well.

Always remember, bank financing can be tough to qualify for, so don’t rule out similar options with alternative lenders.

Priyanka Prakash, JD
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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