Wells Fargo Small-Business Loans Review 2022: Low Rates—And One Big Catch

Wells Fargo may be the third-largest American bank,¹ but is this big bank a good option for your business financing?

That really depends on your needs and your qualifications. Wells Fargo offers super-competitive interest rates, long repayment terms, and a nice variety of financing options―all of which make it an appealing option. But its high borrower requirements, bad customer reviews, and in-person applications keep us from recommending it to most business owners.

We’ll dig more into those pros and cons in this review, and we’ll tell you about all the different types of Wells Fargo small-business loans.

Let’s start by talking about what kinds of business financing you can get from Wells Fargo.

You’ve got several different options: business lines of credit, commercial real estate loans, practice financing, and SBA loans.

You can see some of the details on these products in the table below, and we’ll explain what makes each one unique and why you might want it.

But first, a note: if you haven’t been a Wells Fargo customer for at least a year, you’ll have to go to a Wells Fargo location in-person to apply for these financing options. In fact, you’ll have to apply for some in-person regardless of how long you’ve been a customer.

Now, let's get into all of the loan details.

Wells Fargo offers two versions of its BusinessLine line of credit: an unsecured line and a secured line. The secured line obviously requires collateral, but it also gives you access to lower rates. The unsecured line requires a personal guarantee, but no collateral.

Both versions work as a revolving form of credit, so you can repeatedly draw and repay funds. This means you get continual access to capital (provided you don’t max out your credit limit), making these lines of credit a good way to deal with surprise expenses or simply improve your cash flow with more working capital.

Unlike the BusinessLine line of credit, the Small Business Advantage LOC comes backed by the US Small Business Administration (SBA). So while it functions in pretty much the same way, you’ll have to meet SBA requirements to qualify for this line.

Specifically, the SBA requires that your household have less than $200,000 in personal liquid assets. Also, this line is exclusive to for-profit businesses. And while you’ll get similar rates to the BusinessLine LOC, the Small Business Advantage LOC has a much lower credit limit of just $50,000.

Businesses with $2 to $5 million in yearly sales can qualify for a Prime LOC. This credit line comes with a much higher credit limit than Wells Fargo’s other small-business lines of credit (except the ones secured by real estate).

While this line of credit comes with just a one-year term, you can renew it on an annual basis. And take note, you’ll have to secure this credit line with non-real estate collateral―like equipment or inventory.

Wells Fargo offers a variety of real estate financing. You can get loans for buying real estate or refinancing your existing real estate loan. Plus, you can get either a term loan or line of credit that borrows against your real estate equity.

All Wells Fargo’s commercial real estate loans come with large maximum amounts (typical of real estate loans). And while Wells Fargo doesn’t list interest rates on its real estate loans, we suspect they’re quite low and competitive. (Most commercial real estate loans have very low interest rates.)    

Dentists, optometrists, physicians, and veterinarians can also qualify for practice financing through Wells Fargo. Its medical practice loans can be used to buy, start, expand, and relocate your health care practice―and to cover real estate and equipment costs associated with doing so.

Wells Fargo practice financing is pretty individualized. You might, for example, get a term loan for real estate and a line of credit for cash flow. So to get all the details, you’ll definitely need to speak with Wells Fargo directly.

Finally, Wells Fargo offers two types of SBA business loans: SBA 7(a) loans and SBA 504 loans. SBA 7(a) loans can be used for working capital, real estate, debt refinancing, and more. SBA 504 loans, on the other hand, are designed primarily for equipment and commercial real estate needs.

In either case, Wells Fargo SBA loans will get you competitive interest rates and very long repayment terms.

Now you’ve seen what Wells Fargo small-business loans can offer you. But what makes it better than other lender options out there?

Well, as a traditional lender (aka a bank or credit union), Wells Fargo offers loans and other financing at better rates than many online lenders. Much better, sometimes. Consider, for example, that an APR of 20% would be very high for Wells Fargo, but very low for Kabbage.

Plus, Wells Fargo offers lengthy terms—think years as opposed to the months or weeks you find with many alternative lenders.

So not only do you get to pay a lower interest rate on your loan, but you get to make many smaller payments over a period of years, rather than a few larger weekly payments over a period of months.

And then there’s the reputation factor. Some small-business owners will prefer to borrow from Wells Fargo because it’s a name they know and feel they can trust. Wells Fargo has been around for quite a while, after all; you don’t need to worry about it going out of business.

(This admittedly goes both ways—some people would rather not deal with a bank that was a key player in the subprime mortgage process and that got in trouble just a couple years ago for opening fake accounts.)

We’ve touched on some of the ways Wells Fargo compares to the competition, but let’s dig a little deeper.

Because Wells Fargo and Capital One are both traditional financial institutions, they both offer low interest rates and long terms. In fact, their offerings look pretty similar: Capital One also has lines of credit, commercial real estate loans, and SBA loans. And as with Wells Fargo, you have to apply in-person for Capital One small-business loans.

As for differences, Capital One has looser lending requirements; you only need to have been in business for two years, for example. But honestly, the biggest difference comes from their reputations: customers like Capital One better than Wells Fargo. How much better? One customer survey gave Capital One a 79.9 rating, ranking it sixth among US banks.² Wells Fargo, on the other hand, got a 63.4, putting it in 40th place. Out of 40.

Yet another traditional bank, Chase also offers similar small-business financing to Wells Fargo. Again, you’ll find term loans, lines of credit, credit cards, and SBA loans.

Like Capital One, Chase has a better reputation than Wells Fargo, though by a much smaller margin: Chase got a 76.5, placing it in 24th place.²

We’ve already touched on this, but let’s review: Wells Fargo offers lower rates and longer terms than most alternative lenders. That makes it more attractive for many small-business owners, because you make low, monthly payments rather than higher, weekly payments.

However, Wells Fargo has those really strict application requirements. Online lenders, on the other hand, have much laxer qualifications. So if you have a younger business, worse credit, a higher debt ratio, or less annual revenue, you’ll likely be better off going with an alternative lender.

By now, you know a couple downsides to Wells Fargo―like the fact that it requires in-person applications for a lot of its financing, or how it has a negative reputation thanks to scandals past.

But for many businesses, the biggest drawback will be Wells Fargo’s high borrower requirements. 

Wells Fargo asks a lot of small-business loan applicants. How much, you ask? Well, here’s just a few things Wells Fargo looks for in a loan application:

• At least three years in business
• No bankruptcies in the prior 10 years (business or personal)
• At least five other current sources of credit
• Profitability for at least the two most recent years
• $1.50 in revenue for each $1.00 you want to borrow

So while Wells Fargo doesn’t ask for a specific personal credit score, its other demands disqualify many young, less-established, or newly-profitable businesses.

Put bluntly, if you want a line of credit so you can pay your bills on time next month, you need to look elsewhere. Wells Fargo doesn’t want to help you with your cash flow problems (no really, Wells Fargo’s FAQ gets pretty explicit about this).

If, on the other hand, you want a line of credit so you can continue building business credit while having access to working capital that will let you expand your business and achieve financial success, you might be the ideal Wells Fargo customer.

Another reason you might want to consider Wells Fargo for your small-business financing needs? It can also help with your other small-business needs.

As you likely already know, Wells Fargo offers business banking—including business checking accounts and savings accounts for small businesses.

But that’s just the tip of the iceberg. Wells Fargo also can help small-business owners with everything from merchant services (like facilitating credit card transactions) to payroll services.

Plus, in addition to the small-business loans we discussed above, Wells Fargo offers small-business credit cards, perfect for building business credit. It even has a few commercial real estate loans.

That said, we need to say that we don’t recommend using Wells Fargo for your business banking. Yes, you can get additional discounts by doing both your banking and financing with Wells Fargo. But Wells Fargo has such a bad reputation that we recommend staying away from its banking products and services.

You can learn more in our Wells Fargo business banking review.

As one of the largest financial institutions out there, Wells Fargo offers ultracompetitive rates and terms on its small-business loans and lines of credit. If you can qualify for its financing, you’ll likely get a good deal—but many young or less-profitable businesses simply can’t qualify.

So while Wells Fargo has some of the best rates you can get, we don’t recommend it widely. Most small business owners will have more success applying with alternative lenders or smaller banks.

Not sure about Wells Fargo? Find some other great, low-cost loans on our rankings of the best low-interest small-business loans.

We found every detail we could―from interest rates to fees to requirements―about each of Wells Fargo’s business financing products. We assigned scores to each factor based on our financing rubric, and then used those scores to get Wells Fargo’s overall financing score and to compare it to dozens of other business lenders.

Now that you know what’s what with Wells Fargo, let’s address some other common questions about its small-business financing.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.