There are many online lenders offering small business loans these days, and for good reason – banks are notorious for their long underwriting process. If you want to get funding quickly, a bank typically isn’t your best option.
Getting a small business loan with Wells Fargo won’t take months, but it may take a little longer than an online lender.
It offers quite a few small business loans that are worth a look, especially its Fast Flex and Wells Fargo Business Loan Term Loan. The Term Loan is the most basic of its small business loans, and a good fit for any business looking to expand or get working capital.
You don’t have to have any accounts with Wells Fargo to apply for a Term Loan, but you will need to apply in person, so having a branch nearby is ideal.
A Fast Flex loan can get you instant approval, but you need a Wells Fargo checking account with deposits over $50,000 open at least 1 year.
Wells Fargo Small Business Loan Details
With a Wells Fargo small business loan, you can borrow $10,000 to $100,000 on 2, 3, 4, or 5 year terms. Fixed APRs start at 7.5% – and vary based on the length of the loan and your credit history.
There’s a monthly repayment plan with this loan and a $150 opening fee. No collateral is required.
Fast Flex Loan Details
A Fast Flex loan has a short, 1 year term, and ranges from $10,000 – $35,000. You can apply online, get funds as soon as the next business day, but there is a one time $195 opening fee.
Interest rates start at 13.99%, not including the impact of the $195 fee.
Use this loan if you need money quickly, but expect to pay a higher rate and the higher upfront fee as the cost of faster money. It will be more expensive than a standard Wells Fargo Small Business Loan if you pay it off in a year, but it will be less expensive than many alternatives that can get you the money the next business day.
The Pros and Cons of a Wells Fargo Small Business Loan
Pro: Unlike other bank loans, this is an unsecured loan, so Wells Fargo doesn’t require any collateral.
Con: Wells Fargo will send a check directly to you once you’ve been funded. Most online lenders will deposit the amount you’ve been funded for directly into your business bank account. While Wells Fargo claims to have a quick process, this could slow things down a bit.
Pro: Many lenders are only offering loans up to one or two years. Having a five-year term could make payments much easier to manage, as they’ll be lower. This is beneficial when paying once a month, as payments will be larger.
Con: If getting paid by check wasn’t inconvenient enough, to apply for a small business loan with Wells Fargo, you also need to apply in person. While there are plenty of branches located in the United States, you might not have time to set up an appointment and go. Online lenders make it easier to apply as you can upload all your documentation through their portals.
Pro: The APR range isn’t bad at all when compared with other lenders. Some are as high as 40%, and 4.25% is a very low starting point.
What Businesses Are Eligible For a Loan With Wells Fargo?
Wells Fargo says this loan is “ideal for established business owners who want credit for business expansion, leasehold improvements, and other business opportunities.”
It further expands on this in its lending principles document. Wells Fargo takes the following into consideration when deciding whether or not to loan to a business:
- Personal credit history of the primary business owner – timely payments and responsible use of credit are a must
- Your company should have decent cash flow, enough to support making payments
- Liquidity in the business – if you experience a slow season, Wells Fargo wants to make sure you have other means of repaying the loan
- You have the best chance of being approved if you’ve been in business for at least 3 years
- Your business credit should be clean. Wells Fargo won’t lend to businesses with judgments or liens in the past 10 years
- Your business should be showing a profit, at least in the last two years
- Ideally, you have five open lines of credit for a strong credit history
Even if you only meet most of these requirements, you still have a chance of being approved for a small business loan. Wells Fargo places a lot of emphasis on good, strong credit history as well as business cash flow. You need to be able to show that your business is capable of repaying the loan.
Application Process and Documents Needed
Wells Fargo offers a handy list of things you should have ready before applying on its website, but here are the most important things:
- Business bank account number and balance (bring statements if possible)
- Annual business revenue (having tax returns will help)
- Personal bank account number and balance (for the owner applying)
- Basic business and personal information
Wells Fargo states it takes around three business days to review your application and documents. Expect to hear back about an approval by then. Remember, you’ll get sent a check via express mail, so actually receiving the funds may take another day or so, and that’s if no additional documentation is needed.
If you’re not approved, it could take ten to fifteen days to hear back with an explanation of why you were denied.
The Fine Print
There are no prepayment penalties, annual fees, loan documentation fees, or closing fees associated with this loan.
However, there is an opening fee of $150. This can be waived if you choose to open a Wells Fargo Business Services Package, and include your loan as part of it. The additional benefit you get from opening an account with Wells Fargo is a 0.25% rate discount when you set up automatic payments.
Which Businesses Benefit the Most from a Loan With Wells Fargo?
Businesses with good cash flow and great business credit that also have owners with good personal credit will benefit the most. As stated, the business needs to show that it’s profitable. If you’re looking to expand because you’ve been experiencing rapid growth, now is a good time to apply for a loan.
If you’re struggling to pay off any debt you have, or worse, have liens or judgments against your business, you likely won’t qualify for a loan.
Additionally, business owners with a Wells Fargo branch nearby will benefit even more, as you must apply for a loan in person. The closer the branch, the more convenient it will be for you.
Other Alternative Small Business Lenders
Wells Fargo does things a bit differently than online lenders. If you’re not a fan of having to drive to an appointment to receive a business loan, or don’t want to wait for a check to arrive in the mail, take a look at these alternative lenders.
Funding Circle offers loans of $25,000 to $500,000 on terms of 1 to 5 years. Its interest rates range from 4.99% to 26.99%, and its origination fee ranges from 0.99% to 6.99%.
Your business must have over $150,000 in annual revenue and 2+ years of operating history. A profit must have been reported on one of the last two years’ tax returns. You must not have had any bankruptcies within the past 7 years, and no more than 5 tax liens in the past 10 years. A minimum credit score of 620 is needed to qualify.
Smartbiz SBA Loans offer financing on $30,000 to $350,000 with a term of 10 years. APRs range from 6.36% to 9.57%, and the origination fee is around 4%. You need at least two years in business (two years of tax returns must be filed), and positive cash flow. A minimum credit score of 600 is needed to qualify.
Each of these alternatives also has a monthly payment.
Shop Around – It’s Worth the Time
While applying for a business loan online is easier than applying in person, it still pays to shop around for the best rates and terms. Small business loan programs vary wildly between lenders, and based on the industry your business is in, you could receive better rates from other lenders that have experience working with your industry.
If you think Wells Fargo has exceptional terms for your business, then it could be worth setting up an appointment to apply. However, don’t stop there – as long as you apply for business loans within a 30-day window, your credit won’t be impacted as much. Credit bureaus expect that you’ll shop around to find the best loan for your business, so take advantage.