Compare business credit cards vs. business loans

Learn the differences between a business credit card and a business loan so you can make the right choice for your company.

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Both business credit cards and business loans are popular financing options for many companies, but there are several key differences between the two. To find the better option for your business’s needs it helps to compare the two side by side and examine how these differences apply to your company.

Business credit cards are a lot like personal credit cards. They put a revolving line of credit in your pocket for ongoing access to funds.

Business loans are sometimes tailored for a specific need, such as buying essential equipment. They’re usually paid to you as a single lump sum and come with fixed monthly repayments. There are many different types of business loans available.

Read further to get into the details of business loans versus credit cards and compare your options.

Our top pick: National Business Capital Business Loans

  • Min. Loan Amount: $10,000
  • Max. Loan Amount: $5,000,000
  • Requirements: Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
  • Approvals within 24 hours
  • No industry restrictions

Our top pick: National Business Capital Business Loans

Get a large business loan to cover your financing needs, no matter what the purpose is.

  • Min. Loan Amount: $10,000
  • Max. Loan Amount: $5,000,000
  • Requirements: Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.

The defining features of business loans vs. credit cards

Business credit cardBusiness term loan
Funding amountA specified limit, as high as $250,000, with flexible, ongoing access to funds.Business financing up to $5 million provided in one lump sum.
RepaymentLow minimum monthly repaymentsA set repayment schedule with monthly payments and a payoff date
EligibilityLess requirements than a business loan, but typically requires good personal creditGenerally you must be in business for at least a year and have annual revenue of $100,000+, but good personal credit isn’t usually required
Starting APRCan be as low as 11.99%, some cards offer 0% APR intro periods for up to 12 monthsCan be as low as 5.85%
FeesAnnual fees, late repayment fees and more may applyApplication fees, origination fees, late repayment fees and more may apply
Other featuresSign-up bonuses, rewards points, cash back, complimentary insuranceAbility to sync to your online accounting software
AdvantagesFlexible funding, continuously available money and bonus featuresMany different loan options, can be closely tailored to your borrowing needs
DisadvantagesLower funding amount, higher APRLess additional perks, stricter requirements

Compare top online business lenders

Updated January 23rd, 2020
Name Product Filter Values Min. Amount Max. Amount Requirements
LoanBuilder, A PayPal Service Business Loans
Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
Customizable loans with no origination fee for business owners in a hurry.
National Business Capital Business Loans
Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
Get a large business loan to cover your financing needs, no matter what the purpose is.
OnDeck Small Business Loans
600+ personal credit score, 1+ years in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
First Union Lending Unsecured Long-Term Business Loan
450+ credit score, 3+ months in business, $15,000+ monthly revenue, no open bankruptcies
Unsecured funding and more for all credit types.
Sheer Funding Business Loans
6+ months in business, 550+ credit score, $150,000+ annual revenue, eligible industry
Multiple financing options available for business owners with less-than-perfect credit scores.
Efundex long-term business loans
2+ years in business, 620+ credit score, not a sole proprietorship or nonprofit, strong financial history
Financing for high-risk industries with transparent rates and terms.
Kabbage Small Business Line of Credit
1+ years in business, $50,000+ annual revenue or $4,200+ monthly revenue over last 3 months
A simple, convenient online application could securely get the funds you need to grow your business.
LendingTree Business Loans
Varies by lender and type of financing
Varies by lender and type of financing
Varies by lender, but many require good personal credit, minimum annual revenue and minimum time in business
Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
Lendio Business Loan Marketplace
Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.

Compare up to 4 providers

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 utilizing these features often answers the question of whether or not a business credit card is worth it for you.

Business credit cards often come with the following bonus features:

  • Track your business spending more easily by seeing all expenses in one place.
  • Access various account management and financial analysis tools.
  • Give business credit cards to employees and manage the cards through one account.
  • Enjoy rewards like frequent flyer points and complimentary insurance.
  • Get access to perks such as free delivery or express shipments.
  • Build your company credit score by using the card wisely.

There are also downsides to consider:

  • APRs can be high, with some over 20%.
  • The cost of missing multiple repayments can rapidly escalate. An extended period of poor cash flow might saddle you with rapidly growing debt because of the high interest rate.
  • Some business credit cards charge an annual fee, which you’ll have to pay each year you keep the card account open.
  • If you depend on this credit to pay for business operations, then you might become abruptly stuck when you reach the credit limit.

Want ongoing access to funds but don’t want a credit card? Learn about business lines of credit

Should you get a business loan or business credit card?

A business credit card can be a good choice if you’re looking for an all-round business tool with built-in borrowing functionality. Business credit cards can help fund ongoing purchases and expenses, as long as you’re able to repay what you use each month. Taking full advantage of the extra features and benefits, as well as using the card for quick financing needs, is an effective way to use a business credit card.

If your number one priority is getting financing for large expenses like opening a new location or purchasing new equipment, then a business loan might be better suited for you because of the higher funding amount. You can borrow only the amount you need without locking yourself into a potentially expensive account as well as tailor your repayment plan.

Be sure to consider your business’s current financing needs as well as what your business might need in the future when deciding on a business loan or credit card.

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