Just last week Wells Fargo announced the launch of its newest small business lending product, FastFlex.
FastFlex is a short-term loan product available to existing Wells Fargo small business customers with strong cash flow. Businesses with an existing Wells Fargo account that has been open for at least one year will be considered for a FastFlex loan, which can be funded as soon as the next business day. FastFlex will be added to Wells Fargo’s existing suite of small business lending products, which already includes business lines of credit and longer term loans.
Applicants will be evaluated based on the strength of their cash flow and repayment history, and rates will be determined by the business’s business creditworthiness. “There will be a very clear a way for business owners to input information to see what the total cost of their loan will be,” says Jim Seitz, communications manager of the Wells Fargo Small Business team.
Here’s a snapshot of the loan details.
|Amount||$10,000 – $35,0000|
|Payment schedule||Weekly payments, auto-deducted from the borrower’s business bank account. The borrower chooses the payment date.|
|Turnaround time||As fast as one business day|
|Requirements to qualify||Strong business creditworthiness and cash flow. Must be a Wells Fargo Customer for one year.|
|Uses of the loan||Fast funding to take advantage of inventory deals, contract bids, quick growth opportunities, etc.|
Although 22.99% may seem steep for a small business loan, the FastFlex business loan rates are well under those of comparable products on the market today. If you take a look at other business financing options, you’ll see that short-term loan options available to business owners — such as merchant cash advances and cash flow loans — that have a quick turnaround time are in the realm of 15% to 150% APR. Wells Fargo’s FastFlex rates are closer to those of online term loans, which have higher loan amounts and longer repayment terms, but usually take a week or more to fund.
In recent years, we’ve seen a wave of banks teaming up with online lenders to provide loans, including OnDeck’s partnership with JPMorgan Chase, and Lending Club’s affiliation with Union Bank and a number of small banks. Wells Fargo instead chose to devote resources to creating its own product. “Our number one priority is our customers, so we want to make sure our products serve them,” says Seitz. “Through the process of researching other options, we decided that developing our own product would be the best experience for our customer.”
Wells Fargo piloted FastFlex with some of its customers starting in August 2015. These pilot customers included a wide range of businesses, from auto repair shops, to interior designers, to apparel retailers. “We’ve worked with businesses that had a situation where they won a bid for a quick contract and needed funding, or businesses who had a chance to get a great deal on an inventory purchase, and more,” says Seitz.
This launch comes at an opportune time — online lending giant Lending Club has moved into the limelight because of questionable business practices, which created a watchful eye over the whole alternative lending space.
Wells Fargo’s FastFlex loans are set to launch later this month. If you fit the bill above and decide to take on a FastFlex loan to take advantage of a great opportunity for your business, Nav would love to hear about your experience.