Capital One vs. Wells Fargo: Which Small Business Lender is Right for You?

Capital One and Wells Fargo are main banks with enterprise financial institution accounts and restricted mortgage merchandise. Each banks additionally provide bodily branches with in-person assist, although Wells Fargo has hundreds of extra places.

To decide on between the 2 lenders, it’s important to dig into the specifics about their mortgage choices and determine which one fits your wants greatest. Wells Fargo supplies three enterprise strains of credit score, together with one accessible to startups. It’s additionally a high SBA lender, servicing hundreds of SBA 7(a) loans every year.

Capital One is the best way to go for industrial actual property loans or for those who’re in search of an SBA Categorical mortgage or line of credit score. SBA Categorical loans provide faster approvals and decrease mortgage quantities than regular SBA loans. Let’s take a look at each Capital One and Wells Fargo enterprise loans to check every in depth.

Capital One vs. Wells Fargo at a look

Each Capital One and Wells Fargo have the facility to grant small and high-dollar enterprise loans, together with SBA loans. However they supply barely completely different mortgage choices.

Capital One makes a speciality of a number of industrial actual property and SBA loans, but additionally gives high-limit enterprise strains of credit score. Wells Fargo’s enterprise loans give attention to a number of enterprise strains of credit score and SBA loans. It’s additionally among the best conventional banks for enterprise loans that you’ll find.

Capital One enterprise loans

Capital One enterprise loans embrace revolving and non-revolving enterprise strains of credit score, 4 SBA loans and several other forms of industrial actual property loans. You possibly can entry as much as $5 million in funding with most loans, together with enterprise strains of credit score which is an unusually excessive credit score restrict.

It additionally gives extra SBA mortgage choices than most lenders, and in keeping with a spokesperson, you don’t want to fulfill a set time in enterprise to qualify. Most SBA lenders require a minimum of two years in enterprise.

Capital One additionally supplies direct lending assist by connecting you with a enterprise banker in individual from begin to end. So that you’ll have to stay close to one among its over 750 branches to use. You’ll additionally have to have or open a Capital One enterprise checking account to be eligible for the enterprise mortgage.

Professionals

• Number of enterprise loans
• Excessive mortgage quantities
• Relaxed SBA mortgage standards

Cons

• Capital One account required
• Should apply in individual
• Undisclosed mortgage particulars

Wells Fargo enterprise loans

Wells Fargo gives three enterprise strains of credit score in addition to SBA 7(a) and 504 loans. And as a prolific SBA most popular lender, Wells Fargo can doubtlessly course of SBA loans quicker than most SBA loans get accredited.

Wells Fargo’s enterprise strains of credit score provide tiered lending standards:

• Wells Fargo BusinessLine® line of credit score is out there for those who’ve been in enterprise two or extra years
• Wells Fargo Small Enterprise Benefit® line of credit score for those who’ve been in enterprise lower than two years
• Wells Fargo Prime Line of Credit score is an choice for companies that usually make $2 to $10 million per 12 months in gross sales.

Wells Fargo has additionally opened up hundreds of branches and serves small companies throughout all 50 U.S. states, making it extensively obtainable. You may also count on low enterprise mortgage rates of interest, beginning at 8.75 p.c. Low-interest loans are typical for a financial institution lender, however you’ll want sturdy credit score to attain them. Most loans require a minimal private credit score rating of 680.

Professionals

• Low beginning charges
• Prime SBA lender
• A number of enterprise strains of credit score

Cons

• Fees annual charges
• Few typical loans
• Requires private assure

How to decide on between Capital One and Wells Fargo

Capital One works effectively for small companies prepared to maintain their enterprise checking with the model, and for companies that even have a Capital One department close by. Small enterprise house owners might want to chat with a enterprise mortgage specialist in individual to debate mortgage choices. Until you’re vying for an SBA mortgage, you’ll want a minimum of two years in enterprise to be thought of for its different loans.

Wells Fargo could also be one of the best match for small companies needing a enterprise line of credit score. Its three line of credit score choices cater to everybody from startups to high-value companies. Wells Fargo can also be the higher alternative if having a large financial institution community is necessary to you, both as you journey for enterprise or for availability in your space.

Let’s take a look at every lender’s high advantages that can assist you select one of the best financial institution lender for you.

Select Capital One for a number of mortgage choices

Of the 2 lenders, Capital One supplies probably the most enterprise mortgage choices which embrace a number of enterprise strains of credit score, actual property loans or SBA loans.

For enterprise strains of credit score, you may select a revolving or non-revolving line as much as $5 million, one of many highest limits obtainable. Revolving strains of credit score are most typical, letting you draw from it as you want new funds. However non-revolving strains allow you to prequalify for a mortgage quantity that you should use for a particular buy. For actual property, you may select from normal industrial actual property loans, investor loans or widespread curiosity realty affiliation loans.

Or for those who’re out there for an SBA mortgage, Capital One gives extra SBA loans than most lenders, together with Wells Fargo.

Select Wells Fargo for greatest enterprise strains of credit score

Wells Fargo is likely one of the few lenders to maintain three enterprise strains of credit score in its lending suite. Startup companies can apply for the SBA-guaranteed Small Enterprise Benefit line of credit score with credit score limits as much as $50,000. In keeping with a consultant, there’s additionally no annual income thought of, a rarity for an SBA mortgage. Small companies with a minimum of two years’ expertise can go for its unsecured BusinessLine line of credit score, providing limits as much as $150,000.

If you’re accredited with both of those, your online business shall be mechanically enrolled within the Wells Fargo Enterprise Rewards program. You’ll obtain a Mastercard letting you make card purchases instantly from the credit score line, and also you’ll earn rewards with qualifying purchases.

Extremely worthwhile companies can entry Wells Fargo’s secured Prime Line of Credit score with limits as much as $1 million. Your corporation will want a minimum of $2 million in annual income to qualify. As is the case with most banks, you’ll need sturdy credit score irrespective of which line of credit score you select. Wells Fargo requires a private credit score rating of a minimum of 680.

Select Capital One for SBA Categorical Loans

Capital One is likely one of the few lenders to supply SBA Categorical loans and features of credit score. You should utilize these loans for comparable functions because the SBA 7(a) loans, for working capital, shopping for gear or increasing your online business. You may also use the mortgage to refinance previous money owed, a wise transfer for those who’re profiting from decrease enterprise mortgage rates of interest.

Categorical loans can fund as much as $500,000 and gives lengthy reimbursement phrases as much as 10 years for loans and 7 years for strains of credit score. As soon as Categorical loans get to the stage of needing SBA approval, the Small Enterprise Administration can grant that approval inside 36 hours. Wells Fargo doesn’t present SBA Categorical loans in any respect.

Select Wells Fargo for SBA 7(a) loans

Wells Fargo could also be your go-to alternative for those who want an SBA 7(a) mortgage particularly. Wells Fargo is a constant chief of originating 7(a) loans, rating because the fifth largest SBA lender in 2023. It’s accredited almost 2,000 SBA 7(a) loans so far, in keeping with the SBA 7(a) and 504 Lender Report.

Wells Fargo can also be a most popular SBA lender, giving it the authority to course of loans effectively with out direct SBA approval in some circumstances. Its standing might result in quicker SBA mortgage approvals than the norm. SBA loans are likely to take anyplace from 30 to 90 days to finalize and obtain funds.

Capital One can also be an SBA most popular lender that provides extra SBA mortgage varieties. However in observe, Capital One doesn’t service as many SBA loans as Wells Fargo. In 2023, Capital One has accredited about 60 SBA 7(a) loans based mostly on knowledge from the SBA’s weekly lending report.

Alternate options

In case you’re in search of a financial institution lender with extra typical enterprise mortgage choices, you may go along with Financial institution of America. It supplies typical time period loans, gear financing, industrial actual property and three enterprise strains of credit score. Like Wells Fargo, its line of credit score choices can serve companies in various levels from startups to established companies needing excessive credit score limits.

But these conventional financial institution lenders aren’t recognized for fast enterprise financing. As an alternative, you may go for a web-based mortgage market like Lendio, which gives quite a lot of enterprise loans by means of its large 75 lending companions. Its lending companions can approve loans in as little as 24 hours. You possibly can even apply for very bad credit enterprise loans, like a service provider money advance with no credit score rating requirement.

Enterprise bank cards

One other different is to go along with a enterprise bank card, providing you with the pliability to reuse the credit score as wanted much like a enterprise line of credit score. Whilst you usually want sturdy credit score to use, enterprise bank card issuers don’t set income requirements or require you to kind a authorized enterprise entity. And so they provide the added advantage of incomes rewards for purchases, usually redeemable for money again or journey.

SBA loans

SBA loans are supreme enterprise mortgage choices for companies that won’t qualify for conventional enterprise loans, however want lengthy reimbursement phrases and favorable rates of interest. Each Capital One and Wells Fargo are SBA lenders, however they don’t provide all SBA mortgage applications. You may take into account different lenders for one among these loans:

• SBA CAPlines: The SBA’s model of strains of credit score geared for particular work contracts, initiatives or seasonal bills
• SBA microloans: Small loans supplied by means of nonprofit lenders as much as $50,000, usually geared for underserved communities, akin to minority enterprise house owners
• SBA Group Benefit loans: A sort of seven(a) mortgage supplied by means of nontraditional lenders like Group Improvement Facilities (CDCs), granting loans as much as $350,000

Backside line

Capital One and Wells Fargo are each conventional lenders providing a number of mortgage choices and in-person lending assist. Selecting between these lenders comes right down to the precise enterprise mortgage you’re in search of. Capital One supplies excessive mortgage limits and 4 SBA mortgage choices, together with Categorical loans and features of credit score which are uncommon to search out elsewhere.

However Wells Fargo works greatest for those who want a enterprise line of credit score with accessible mortgage standards or an SBA 7(a) mortgage from a extremely skilled SBA lender. It’s additionally smart to check different small enterprise loans to see how these lenders measure as much as opponents.

Steadily requested questions