Wells Fargo Small Business Loans Review


What is Wells Fargo?

Founded in 1852 to serve the American West during the gold rush, Wells Fargo & Co. was both a bank and an express delivery service in its early days, becoming famous for delivering by stagecoach. By 1905, the bank—Wells Fargo & Co’s Bank, San Francisco—formally separated from the express company.

Over the next decades, it expanded statewide in California and became the seventh largest U.S. bank by the 1980s. Today, Wells Fargo is the third-largest bank in the U.S., serving consumers and businesses around the country, overseas and online. The bank has recently been in the news for improper consumer lending and banking practices that resulted in fines from the federal government.

Its small business lending products include a variety of loan options, including loans backed by the U.S. Small Business Administration and the quickly accessible FastFlex Small Business Loan, which is designed to compete with alternative online lenders.


Lender highlights

Many options: Wells Fargo has a range of small business loan products that can help many types of small business borrowers get access to the funding they need. These include unsecured business loans, vehicle and equipment loans, advancing term loans and two types of SBA loans.

Reasonable rates: Borrowers can be confident the rates they get at Wells Fargo are in a reasonable range for business lending. Certain companies like disruptive online lenders may offer lower rates, but Wells Fargo is solid, stable, and experienced in working with a wide range of borrowers.

Little information online: It’s difficult to obtain all necessary information about each loan product for comparison shopping without contacting the lender by phone. Wells Fargo’s website largely steers potential borrowers to call or schedule an in-person visit with one of its lending representatives as part of the process.

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What Wells Fargo offers?

Wells Fargo offers a variety of small business loans:

  • Unsecured Business Loans: These are for one-time expenses. They come in various repayment terms and require only one application that provides a range of options.
  • Equipment Express Loan: This loan is for established businesses to procure vehicles or other equipment.
  • Advancing Term Loan: This type of loan provides permanent working capital to help businesses expand, grow or upgrade operations.
  • SBA 7(a) Loan: This government-backed loan helps businesses acquire other businesses, expand to new locations, purchase equipment, buy land or buildings or some combination thereof.
  • SBA 504 Loan: This other government-backed loan is designed for construction or for purchasing equipment, land or buildings.

Wells Fargo offers two unsecured business loan products: Wells Fargo BusinessLoan Term Loan and the FastFlex Small Business Loan. Rates are accurate as the date of publishing.

  • Wells Fargo Business Loan Term Loans: Loan amounts between $10,000 and $100,000; one- to five-year term options with fixed monthly payments; and fixed rates starting at 7.75%.
  • FastFlex Small Business Loan: Loan amounts between $10,000 and $35,000; one-year term with fixed weekly payments required from a Wells Fargo business account; and fixed rates starting at 13.99%.

The Equipment Express Loan includes 100-percent vehicle and equipment financing. Multiple purchases of vehicles or equipment are permitted with a single loan. There is no annual or prepayment fee.

The Advancing Term Loan balance converts to a full amortized five-year loan at maturity or by request.


Eligibility factors

Borrowers must be U.S. citizens or permanent residents. They should have strong credit history with five or more sources of credit and a good record of paying personal debt on time. Their business should be profitable for the last two years and generate $1.50 in cash for every $1 in debt payments.
For unsecured business loans, you need to have an existing Wells Fargo checking or savings account open for at least a year.

Businesses that are not eligible for Wells Fargo loans:

Businesses that do not meet the standards above, have a bankruptcy record in the last 10 years or have any liens and judgments against them likely won’t qualify for a Wells Fargo loan and should work on improving their creditworthiness before applying for one.


How to apply for Wells Fargo financing

You can apply for unsecured business loans online, over the phone or in person at a branch after making an appointment online. For Equipment Express loans, you can apply online or in in person at a branch after making an appointment online. Advancing Term Loan applications are taken over the phone. You can apply for SBA loans in person only.

To apply, the borrower should have the following handy:

  • Legal 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

Each owner with 25% or more interest must be listed as a guarantor and provide:

  • Percentage of ownership
  • Gross annual income
  • Personal checking and savings account number(s) and balance(s)

Other information needed during application process includes:

  • Credit experience and payment history
  • Cash flow and existing credit obligations
  • Current relationship with Wells Fargo

For SBA loans, at a minimum, you’ll need three years of business and personal tax returns, as well as updated financial statements.


Pros/cons

Pros Cons
 A variety of options for a range of business needs.  Website is opaque and confusing; fees may come as a surprise.
 Major bank with a large geographic footprint.  Will likely need to work with the company by phone to parse options.
 Reasonable rates for sizeable loan amounts.  Reputation has been damaged following a string of questionable lending and banking practices.

Who is the best fit?

Due to the numerous options at Wells Fargo, a variety of small businesses can find a good loan, from a small business needing to borrow $10,000 for a short-term need to a large company looking for $6 million to buy another company or erect a building. The company’s more stringent credit requirements likely won’t work for businesses with poor credit history.


Fine print

The collateral required for Wells Fargo small business loans varies:

  • An Unsecured Business Loan requires no specific collateral.
  • For an Equipment Express loan, collateral can be new or used vehicles, or equipment such as restaurant, food service, manufacturing, packaging or health care equipment.
  • An Advancing Term Loan is secured by non-real estate business assets such as accounts receivable, inventory, equipment or cash.
  • For an SBA 7(a) Loan, Wells Fargo will hold security interest in business assets and/or a mortgage on real estate.
  • For an SBA 504 Loan, Wells Fargo will hold the first mortgage on real estate and/or security interest in equipment and machinery. The SBA will hold a second mortgage on real estate, or secured interest in equipment and machinery.

The bottom line: How Wells Fargo stacks up

Wells Fargo’s offerings are wide-ranging and at reasonable rates, offering business growth resources to borrowers of all sizes. As a large bank, however, this lender is not particularly transparent online about its offerings, including eligibility requirements and fees. You can apply for some loans online, but others require contacting the lender to discuss your needs and options. Regardless of what loan you are considering, contact Wells Fargo before applying for any of their products to ensure you have a full understanding of the details. It’s also smart to comparison shop at other banks to find the best deal for you.

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