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Compare business credit cards vs. business loans
Do you need funding for regular expenses, a one-time project — or both?
A business credit card and business loan generally serve two different purposes. One is designed to help you cover small costs as they come up, like ordering new coffee filters for the office. The other is meant to cover a large one-time expense. But both can be viable options in more unique situations, like when you can repay your debt in a year.
At a glance: Business loans vs. credit cards
A specified limit, as high as $250,000, with flexible, ongoing access to funds
Business financing up to $5 million provided in one lump sum
Low minimum monthly repayments
A set repayment schedule with monthly payments and a payoff date
Less requirements than a business loan, but typically requires good personal credit
Generally, you must be in business for at least a year and have annual revenue of $100,000 or more, good personal credit
Can be as low as 11.99%, some cards offer 0% APR promotional periods for up to 12 months
Can be as low as 6%
Annual fees, late repayment fees and more may apply
Application fees, origination fees, late repayment fees and more may apply
Travel insurance, employee spending controls and monitoring, integration with accounting software
Ability to sync to your online accounting software
You can earn cash back on office supply purchases, shipping, advertising, gas and more, or you can earn travel miles
You can get access to airport lounges, free checked bags, priority boarding, companion certificate and more
May help you qualify for larger loan amounts with the same lender in the future
Credit card approval is often instant
It depends on the lender and the amount you borrow, often between one and 90 days
Flexible funding, continuously available money and bonus features
Many different loan options, can be closely tailored to your borrowing needs
Lower funding amount, higher APR
Less additional perks, stricter requirements
Should I get a business loan or credit card?
It depends on what you need to finance. Business loans are designed to cover a large one-time expense, while credit cards are designed to cover smaller expenses that are hard to predict, over a long period of time.
It also depends on your cash flow. If you have the cash flow to pay off your credit card balance each month, you won’t have to pay any interest. Some credit cards come with a 0% APR promotional period, which can last as long as 12 months. If you can pay off the balance before the period is up, you also won’t have to pay interest.
Want something in between? Consider a line of credit
A line of credit falls somewhere in between a loan and a credit card. It gives your business access to funds that you can withdraw from as needed, like a credit card. But your withdrawals are in cash, which you can use to cover ongoing expenses that credit cards can’t — like utilities or rent.
They also tend to have higher credit limits than credit cards, making them suitable for a large project with costs that are difficult to predict. Some business lines of credit come with minimum monthly payments, while others turn each draw into a short-term loan.
Compare business financing products
Is a business credit card worth it?
Business credit cards offer a number of advantages in comparison to typical business loans, mostly in the form of extra features. How extensively you plan on using these features often answers the question of if a business credit card is worth it for you.
- Track your business spending
- Access various account management and financial analysis tools
- Manage employee credit cards through one account
- Earn a signup bonus and rewards on your purchases
- You may get a 0% intro APR period on purchases, balance transfers or both
- Build the company credit score
- Potentially high APR
- Some business credit cards charge an annual fee
- Credit limit may not be enough for your needs
- Most small business credit cards require a personal guarantee
- Some card providers will report your business card activity to personal credit
Which is right for my business?
- The first corporate card for startups
- No personal liability or security deposit needed – your personal credit score won't be affected
- Minimum of $100,000 of funds in corporate bank account and US EIN required
- Earn 7x points on rideshares, 4x points on travel booked through Brex Travel, 3x points at restaurants, 2x points on software subscriptions and 1x points on all other purchases
- Get a credit limit 10 to 20 times higher than traditional business cards
- No foreign transaction fees
- Build business credit – Brex partners with Experian to report your on-time payments
Compare business loans to more financing options
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