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Wells Fargo Small Business Loan Review

Jason Smith

Jason Smith

Senior Author

Jason Smith

Senior Author

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When your goal is to grow a small business, getting the needed funds won't always be an easy task to complete. You will find many lenders that offer small business loans, but many people turn to Wells Fargo when they need a finance company that won't let them down. But not all lenders are right for every business owner, so you will always want to take a look at the terms before you make a final decision. You are about to learn what you can expect when you choose Wells Fargo, and you will then be able to move forward with confidence.

But not all lenders are right for every business owner, so you should always want to take a look at the terms before you make a final decision. We’ll take a look at all aspects of Wells Fargo Small Business Loans. This includes the requirements you need to meet in order to qualify for a small business loan from Wells Fargo, the different terms and conditions attached to Wells Fargo small business loans, how fast you’ll get your money, and other things you should consider when taking out a small business loan with Wells Fargo.

RequirementsWells Fargo Small Business Loan Review

If your mission is to decide whether or not Wells Fargo is the right lender for your business, determining if you meet the requirements is a good first step. To have any hope of getting accepted, you will need to have a nearly flawless credit report, and the bank will expect you to prove that you can make your payments on time. If you are just getting started, then this option won’t work well because you need to have a consistent stream of revenue coming in each month. The income requirements for a Wells Fargo small business loan aren’t stable, but you’ll have to demonstrate that the bank won’t be at risk of a loss when lending money to your small business.

You can help make this process faster by preparing for the application process ahead of time. This includes preparing tax returns, accounting information, your business plan, how you plan to use the money, and before and after projects that offer different views with and without the loan. Moreover, you should have “worst-case scenarios” planned.

In addition to already being profitable, Wells Fargo will expect you to have liquidity so that you will still be able to make your payments if you have a slow quarter. Also, any liens or judgments against your business will automatically disqualify you from consideration.

Different Wells Fargo loans have different terms and requirements, so make sure you check their website or talk with someone at your local branch to get a better idea of what you need to get together to be prepared for the application process to receive a Wells Fargo small business loan.

No Collateral Required

With all of the other strict lending standards, business owners often expect Wells Fargo to require collateral before extending a loan, but this is not the case. Using collateral to secure a loan can present an additional risk that you might want to avoid. For example, inability to keep up with your payments could result in losing your business and other valuable assets. But getting an unsecured loan from Wells Fargo is an excellent way to avoid that problem, allowing small business owners to put their minds at ease. Learn more about how to get a loan to start a business.

One thing that business owners should consider is that unsecured business loans, that is, loans without collateral, will be more expensive in terms of interest rates and fees than a loan secured by collateral assets. Different businesses will benefit more from different types of loans, and a loan officer at Wells Fargo can help you get a better idea of what kinds of loans might be best for your business. You can also talk to a qualified business accountant or financial consultant to get a better idea of whether you would benefit most from a secured or unsecured loan. This decision has to be made for a particular company, as the different factors involved make it impossible to give a broad guideline.

Loan Duration

When it comes to providing small business loans, many finance companies only offer terms of one to two years, which can result in large monthly payments that can be difficult to manage. If you want to opt for more flexible terms, Wells Fargo could be the answer for which you have been looking. With terms of up to five years, you won’t need to worry about large monthly payments. When you have even more time to repay your loan, you can invest a greater percentage of your profitability back into your business each month, allowing you to grow it faster than you once thought possible.

Wells Fargo offers other terms as well, so if you prefer a shorter term loan then you can still likely find the product you are looking for with them. Make sure you closely analyze the different interest rates on the different loan offers you get from them so you can take out the loan that maximizes the utility of your money. If paying back the loan faster will save you more money in the long term, than a shorter term loan might be in your best interest.

Speed of implementation

Depending on your current situation, you might want to get your money as quickly as possible. With some lenders, you can get your funds within 24 hours of your approval, but you might need to wait if you get your loan through Wells Fargo. Although many lenders will allow you to apply online, Wells Fargo requires you to submit your application in person.

One benefit of this is that it adds a human touch to the loan application process. Automated processes that online lenders use to deliver money at the speed they do leave out a human element which can make some small business owners or operators feel alienated. The in person requirement for a Wells Fargo small business loan means that a lack of humanity in the loan application process won’t be a concern.

Depending on your location, you might not have a branch nearby, so you will need to drive out of your way to start the paperwork. Also, those who use this lending option will need to wait until the check comes in the mail. These setbacks turn a lot of people away, but Wells Fargo could still be a good fit if you are not in a rush to get your funds.

Lines of Credit

In addition to term loans, Wells Fargo also offers small business lines of credit. These lines of credit range from $5k to $100k. Wells Fargo only posts the best rate they offer for these products, and that’s prime + 1%. However, unless you have an outstanding credit score and credit history, you should expect to pay more than that. The line of credit comes in the form of a MasterCard that you can earn reward points on.

Wells Fargo offers two different line of credit products, secured lines of credit and unsecured lines of credit. The unsecured lines of credit have a higher interest rate, starting at prime + 1.75%, but they don’t require any collateral. A secured line of credit uses assets as collateral against the risk of default, making them less risk for the bank. Thus, they get a better interest rate than unsecured lines of credit.

Equipment Express Loan

In addition to its term loan products for small businesses, Wells Fargo also offers loan products designed specifically for equipment financing. These loans range from $10k to $100k, and have terms from 2-6 years. Loans for vehicles can get an interest rate as low as 5.75%, and equipment loans start at 6.25%.

One nice thing about Wells Fargo’s Equipment Express loan is that they’ll finance 100% of the vehicle’s cost. This stands in stark contrast to other lenders who will only finance a portion of the vehicle or equipment costs, and demand the borrower have a certain percentage of the equipment’s price on hand.

Fine Print

People often sign on the dotted line without taking the time to read the fine print, which is a costly error that you will want to avoid. In the fine print, you will often find hidden fees and service charges that you did not expect to encounter, increasing the overall cost of your loan. Therefore, it’s important to understand how much money your loan will actually cost you so you can plan your budget appropriately and ensure you know how much money you’ll actually be getting. For example, some companies charge an origination fee of up to 3% for your loan. This means that if you requested a loan of $100k, you’ll only actually get $97k.

With Wells Fargo, you will not need to pay any annual fees or closing costs. You will, however, need to pay a $150 opening fee when you create your account. However, compared to other lenders, this is an incredibly generous fee structure. If you’re looking for a straightforward loan with easy to understand terms and fees, then Wells Fargo might be a good option for you.

Final Thoughts

No lender is right for every small business. Some lenders work better with certain businesses than others, and for some businesses the terms on loans from certain lenders don’t make financial sense.

Wells Fargo has some fairly stringent requirements for its term loans, and comparable requirements for its small business lines of credit. You have a better chance of receiving favorable treatment if you’ve been a Wells Fargo customer for a decent amount of time. Wells Fargo can be an excellent choice for many small businesses, and if you can meet their requirements, its likely that you’ll get a better interest rate with Wells Fargo than you would get with another larger bank as your small business lender.

The flexibility that Wells Fargo offers with their small business products also makes them an appealing choice. It can be hard to find a good small business line of credit, and the in person application requirements mean that you can get advice about what options are best for your business’s needs before you go through any kind of application process.

With the strict requirements, a small business loan from Wells Fargo is not for everyone. For example it may not be a good option for start up funding. But if your business is already experiencing a healthy profit and if you have a worthy credit score, you can enjoy the many benefits that this lender has to offer.

Jason Smith

Jason is a Senior Author for SBL. He has been working with small business owners like you for the past ten years. He graduated with an MBA and began a career as an independent financial consultant for small businesses in his state. 

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