American Express® Business Line of Credit vs. Wells Fargo: Which small business lender is the best fit for you?
The main points
The American Express Business Line and Wells Fargo both offer lines of credit to companies with strong credit.
Choose the American Express® Business line of credit for reasonable eligibility requirements.
Choose Wells Fargo for SBA loans and larger loan amounts.
American Express and Wells Fargo are two popular lenders that provide business loans. Wells Fargo provides many loan choices for company owners with good to exceptional credit, whereas American Express concentrates on a business line of credit for applicants with fair to excellent credit.
Depending on your needs, any of the lenders could be a good choice. A careful comparison of the key details offered by each lender can help you choose the right business lender for your needs.
American Express Business Line of Credit vs. Wells Fargo at a glance
American Express and Wells Fargo are known for offering excellent business lines of credit. While American Express only has one type, Wells Fargo has multiple lines of credit as well as SBA loans, making it the best small business lender to consider if you want flexibility.
American Express Business Line of Credit
The American Express Business Line of Credit offers only one type of financing - a business line of credit. Every business is unique and must be approved and reviewed.
The maximum loan amount is $250,000, which is much higher than many online lenders who only offer business lines of credit with a maximum loan amount of $100,000.
The American Express business line of credit is more accessible in several respects than many other business lines of credit. If you can meet a minimum credit score of 660, you can qualify after only one year of operation and with an average monthly income of $3,000. These requirements are much lower than lenders who typically require two years in business and an average monthly income of $10,000 or more.
But there are minimum withdrawal amounts that can make this business line of credit less attractive than other business loans:
For three and six month loan terms: If your available loan amount is more than $500, the minimum withdrawal amount is $500. But the loan amount is less than or equal to $500, and the minimum withdrawal is $100.
For 12- and 18-month payment terms: The minimum withdrawal amount is $10,000.
Each withdrawal is treated as a separate loan. Instead of using an interest rate, American Express charges a monthly fee. This fee is a percentage of your remaining balance, and is based on the time it takes you to pay off the loan:
- For six months loans: 3.00% to 9.00%
- For 12-month loans: 6.00% to 18.00%
- For 18-month loans: 9.00% to 27.00%
Pros
Simple online application
Fair income requirement
No set-up or pre-payment fees.
Cons
Borrowing costs can be high.
It's hard to compare rates to other lines of credit.
A personal guarantee and business assets are required.
Business loan from Wells Fargo
Wells Fargo is a major commercial lender and one of the largest banks in the United States. It offers business bank accounts, including checking accounts, savings accounts, CDs, payroll services, and other critical business services.
Like American Express, Wells Fargo places a heavy emphasis on lines of credit, offering three different options. There are two types of unsecured business lines of credit: one is for existing companies with a two-year operating history, and the other is for new companies and is offered through a partnership with the SBA. A third line of credit is intended for large companies with annual revenues of more than $2 million.
Wells Fargo is also an SBA preferred lender, offering SBA 7(a) and 504 loans, allowing companies to borrow up to $6.5 million with terms of up to 25 years.
Pros
Several lines of credit are offered.
Rewards program
Low interest rate
Cons
High credit score required
Annual fee
Personal guarantee required.
How to Select Between American Express and Wells Fargo
Wells Fargo and American Express both specialize in credit lines, making it tough to choose between the two.
If you have fair credit, choose an American Express business line of credit
American Express focuses on newer companies that are less established and requires a low credit score of 660 to qualify. This can make it a better option if you don't have enough credit or operating history to qualify for a Wells Fargo line of credit.
If you have good or excellent credit, choose Wells Fargo
If you have strong credit and a long operating history, you may qualify for a Wells Fargo small business loan, which can come at a much lower cost than an American Express line of credit. Wells Fargo's interest rates presently start at 8.75% APR, depending on the credit line you pick, and maximum rates are significantly lower than American Express's maximum charge rates.
Choose American Express for business credit cards
American Express Business credit cards are known for their premium features, including the chance to earn rewards on purchases.
Amex Business Cards has plenty of options, including cash back cards and travel rewards.
For example, the American Express Blue Business Cash™ Card offers a flat rate on all eligible purchases of up to $50,000 annually, then one percent. It also offers an introductory APR on new purchases and additional benefits like shopping and travel protection.
Wells Fargo does not currently accept applications for business credit cards, but says it will soon introduce new business credit cards.
Choose Wells Fargo for SBA loans
American Express only offers a line of credit. If you want to get an SBA loan, Wells Fargo is one of the best SBA lenders in the country, making it a good choice of lender. It primarily offers 7(a) loans, which can meet any business needs, including working capital. Wells Fargo also provides SBA 504 loans, which are often utilized for business development, real estate and equipment purchases, and other large-scale financing requirements.
Alternatives
Wells Fargo and American Express offer lines of credit, but they are just two of the many commercial lenders on the market. They might not be the best option in every scenario.
For example, if you're running a completely new business, you might want to consider an alternative like Kiva. Kiva offers startups microloans, allowing them to borrow up to $15,000 without fees or interest.
If you have poor credit, an alternative like Fundible may be attractive thanks to its minimum credit score requirement of just 450.
Another traditional lender for companies with good credit scores is Bank of America. If you deal with this lender, you can get discounts and other incentives for your business loans.
SBA loans
Although Wells Fargo offers an SBA line of credit in addition to SBA 7(a) and 504 loans, there are different types of SBA loans you can consider.
The SBA CAPLline program provides a way for companies to access larger lines of credit. You can take out up to $5 million in credit and use it to help cover working capital or seasonal expenses.
An SBA Community Advantage Loan is an option when it comes to term loans. SBA 7(a) private loans are designed to help businesses in underserved communities. With loan limits of up to $350,000, these loans are ideal for the purchase of equipment, land, or for use as working capital.
SBA microloans are also an option for startups and small businesses, allowing them to borrow up to $50,000. Microloans typically focus on disadvantaged communities such as minority-owned businesses and are often used as working capital loans.
Bottom Line
Both American Express and Wells Fargo provide commercial lines of credit, but they serve different customers. American Express is more focused on new companies with lower revenues, while Wells Fargo's lines of business are for established companies with good to excellent credit. Wells Fargo also has the advantage of offering SBA loans, which American Express does not.
Before applying for a loan from any lender, shop around and compare offers from other lenders. Taking the time to consider all of your options can help you find an affordable loan.
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