Wells Fargo Business Loans Review
While Wells Fargo discontinued its small business loans program, they do have business lines of credit & SBA loans. Is Wells Fargo right for you?
Wells Fargo Business Loans At A Glance
- Convenient infrastructure for loan applications
- Availability of some services may depend on your location
- Recent loss of term loan programs have reduced options for small businesses
- Multiple types of financing available
- High borrowing amounts
- Rates tend to be inexpensive
- Few additional fees
- Website advertising is clear & informative
- High credit score requirements
- Funds can take a while to disburse
Table of Contents
What Is Wells Fargo?
Wells Fargo is the fourth largest bank in America when measured by assets, and has branches in 37 states. While it does business with some of the biggest corporations in the world, Wells Fargo also offers SBA loans and lines of credit to small businesses.
Wells Fargo offers small businesses secured and unsecured business lines of credit. Rather than coming in a single lump sum, lines of credit allow customers to borrow against an established credit limit, drawing upon it at will. They can draw as many times as they want so long as they don’t exceed the credit limit, paying interest only on the amount they use.
The bank also offers SBA loans which are partially guaranteed by the federal Small Business Administration. This guarantee allows borrowers to access terms and rates that would otherwise be unavailable to them.
Wells Fargo uses a number of different guidelines to evaluate potential borrowers. In addition to the prerequisites below, Wells Fargo will also look at your capacity to convert assets to cash. If you’ve declared bankruptcy within the last 10 years, the bank will be unlikely to extend credit to you. You’ll also need to have been profitable for the last two years.
Note: Wells Fargo’s cash flow requirements are on the steep side. Businesses with revenue problems will probably have a hard time meeting these requirements.
|Time in business:
|2 years (except Small Business Advantage LoCs)
|$1.50 in cash flow for every $1 borrowed
Terms & Fees
As a large bank, Wells Fargo offers a wide variety of products through multiple divisions. Below is a look at what the bank offers small businesses.
Lines Of Credit
These are the terms and fees for Wells Fargo lines of credit:
|$10,000 – $150,000 (BusinessLine)
$5,000 – $50,000
(Small Business Advantage)
$100,000 – $1 million
|Until terminated (BusinessLine)
(Small Business Advantage)
|Prime + 1.75% to Prime + 9.75%
Prime + 4.5% to Prime + 6.5%
(Small Business Advantage)
Prime + 0.5% and up
|$90 – $175 annually (BusinessLine)
0.50% of opening amount (Prime LoC)
Advance fees (see below)
|Wells Fargo savings account or CD
Accounts receivable, inventory, equipment, or cash (Prime LoC)
Wells Fargo offers three versions of a revolving line of credit to small businesses: two unsecured and one secured. For the uninitiated, a revolving line of credit functions similarly to a credit card. In fact, you can get it linked to a Mastercard access card for more convenient usage. You pay interest only on the amount of credit you’ve drawn upon, and as you pay off your debt, you free up your credit to be used again.
Wells Fargo’s credit line products are the BusinessLine line of credit and the Small Business Advantage line of credit, which are both unsecured lines of credit for businesses that have been in operation for fewer than two years. For businesses with sales between $2 million and $10 million, there’s also the Wells Fargo Prime Line of Credit. This is a secured line of credit. It has different collateral requisites and higher credit limits than the other products. It also features interest-only payments.
- The Small Business Advantage line of credit has a lower limit, between $5,000 and $50,000.
- The Small Business Advantage line of credit has a 5-year term. The others have no scheduled annual review.
- BusinessLine accounts have no annual fee for credit lines less than $10,000. Above $10,000, you’ll be assigned a tiered fee based on your credit limit.
- The Prime Line of Credit has an origination fee, but no annual fee.
Advance fees are not charged unless otherwise stated. Advance fees are charged as follows:
- BusinessLine: 3% on ATM and over-the-counter transactions from a bank or financial institution. 4% for wire transfers and Casino Cash when using BusinessLine Mastercard. The minimum transaction fee in both cases is $10.
- Small Business Advantage: 4% for wire transfers and Casino Cash when using Small Business Advantage Mastercard. The minimum transaction fee is $10.
These are the terms and fees for Wells Fargo SBA loans:
|Up to $5 million
(SBA 7(a) loans)
Up to $10 million
(SBA 504 loans)
|Up to 25 years, or 10 for commercial real estate
(SBA 7(a) loans)
Up to 10 or 25 years
(SBA 504 equipment or real estate, respectively)
|See current rates
|0% – 3.5% (SBA)
|Varies by product
Wells Fargo is an approved SBA lender, offering both 7(a) and 504 loans to qualifying businesses. With SBA 7(a) loans, expect to make a 10 percent down payment and provide collateral in the form of assets or real estate. Wells Fargo charges no first-party fees on 7(a) loans up to $150,000. Loans from $150,001 to $750,000 are charged 3 percent of the guaranteed part of the loan. That percentage rises to 3.75% for loans above $1 million. All SBA 504 loans are charged a fee of 3.5 percent of the SBA debenture amount.
Depending on the product you’re applying for, and whether or not you are an existing Wells Fargo customer, you can apply online or in person at your local branch. Note that SBA loan applications must be completed in person.
To apply online for a line of credit, you’ll need:
- Business information including, name, address, phone number, and date established
- Tax identification number or Social Security Number
- Number of owners
- Ownership type
- Gross annual revenue
- Annual household income of every owner with 25% or more interest
Prime Line of Credit applicants will also need to provide:
- Two years of personal tax returns
- A personal financial statement (form provided by Wells Fargo)
- Two years of business tax returns
- Two years of company-prepared, year-end financial statements
Wells Fargo will usually inform applicants of their decision in written form within 10 business days. Prime Lines of Credit will take slightly longer to approve, typically two weeks after all documentation has been submitted.
Sales & Advertising Transparency
While Wells Fargo has developed a reputation for behind-the-scenes hijinks, you might be surprised to find that they actually offer one of the most transparent websites of any large bank, with exhaustive breakdowns of fees and terms in their FAQs.
As large banking websites go, Wells Fargo’s site is easy to navigate. Bank personnel appear to be similarly transparent, although you may have to get transferred a few times to reach someone able to answer all of your questions.
Customer Service & Technical Support
|Wells Fargo Business Loans Support
|Dedicated Support Representative
|Knowledge Base or Help Center
|Videos & Tutorials
As a gigantic banking institution, Wells Fargo is not known for its personal touch. Expect to have to navigate through some menus to reach the help you need.
Wells Fargo Reviews, Complaints, & Testimonials
While Wells Fargo can offer a lot of value to small businesses, the bank’s name is almost synonymous with “questionable business practices.” Wells Fargo isn’t accredited with the BBB, but they have an F rating with the organization due to a combination of government actions taken against the bank over the past three years, as well as a few thousand customer complaints. It should be noted that most of these complaints concern personal bank accounts and employment practices more than business loans, but regardless, you’re looking at doing business with a company that is, shall we say, ethically challenged.
Negative Reviews & Complaints
Among the multitude of complaints about Wells Fargo are:
- Customer Service: Most complaints involved customer service, which often comes across as hard to navigate and ineffective at resolving problems. Note that most of these involve banking service complaints, like overdraft disputes.
- Technical Issues: Related to customer service, a number of customers report running into glitches and technical problems that make it difficult to use accounts, accurately track their balances, and have payments credited when they need to be.
- Scandals: This is where it gets wild. Wells Fargo’s reputation has suffered due to a number of scandals, including customers being signed up for fake accounts, fraudulent charges, overcharging credit cards, and retaliation against whistleblowers. Will they ever straighten themselves out? They haven’t yet.
Positive Reviews & Testimonials
While Wells Fargo’s reputation has taken a bit of an online beating, there are positive reviews that praise elements like:
- Efficiency: A number of customers found Wells Fargo’s lending processes to be smooth, efficient, and more modern than many of its competitors.
- Accessibility: Wells Fargo operates in most of the country, making it easy to access and meet representatives face-to-face when necessary.
- Willingness To Work With Small Businesses: While many large banks have become wary of giving loans to small businesses since 2008, Wells Fargo offers a robust line of products to customers who don’t have enormous, commercial resources.
Wells Fargo’s rates, terms, and fees are significantly better than you’ll find in most of the alternative markets and, unlike a lot of other big bank competitors, they’re not completely out of reach of small businesses. In fact, we consider Wells Fargo to be among the best small business loans. The loss of Wells Fargo’s small business term loan programs is a bit of a blow to Wells Fargo’s previous small business-friendly reputation, but its lines of credit still offer a lot of value and decent rates.
On the other hand, the company’s poor consumer reputation can’t be ignored. Are legitimately good products worth dealing with a troubled institution? It all depends on your appetite for chaos, but I’d recommend taking your time, Googling recent news about the bank, and doing your own risk assessment.
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