Small business credit cards and lines of credit are both viable options for financing a small business in its early stages, but they each have their pros and cons. It’s important to know what this can mean before you make any decisions about financing your small business.

The Application Process

One of the key differences between a credit card and a business line of credit is the application process. An organization who issues a business credit card looks closely at your business’s credit, while a lender extending a line of credit looks at other factors such as sales numbers and bank account records before approving a business for credit. This makes it easier to be approved for a line of credit, which can come in handy for those with spotty credit histories.


Another factor to consider when deciding whether to apply for a credit card or a line of credit is funding time. In most cases, it takes a few weeks for someone to receive a credit card, mostly because the card itself has to be printed and mailed to the recipient. Meanwhile, it only takes a day or two for a business to have access to funds through a line of credit.

Interest and Fees

Small business credit cards tend to have higher interest rates than lines of credit, with an average APR of 21 percent. On the other hand, lines of credit usually have interest rates of less than 12 percent. This varies from one lender to the next, so you will want to look closely at the fine print when applying for a line of credit or a credit card.
The one major drawback of using a line of credit or a credit card to fund your business is that it can lead to irresponsible spending. It’s easy to get used to having these funds available, but many businesses end up getting locked into debt through irresponsible spending. Whether you want to use a line of credit or a small business credit card to get your business started, make sure that you use your funds responsibly and pay off what you borrow each month.
For more information about lines of credit or other forms of business financing, contact Express Capital Financing today.