Compare business lines of credit and credit cards to choose the right revolving credit option for your business.
Business line of credit vs credit card: Business line of credit offers lower rates (8-25% APR), higher limits ($25k-$500k+), flexible draw options (ACH, check), and better for larger expenses. Business credit card offers rewards/cash back, easier approval, convenience (use anywhere), and better for daily expenses. Best for line of credit: Larger purchases, cash flow management, lower cost needs. Best for credit card: Daily expenses, earning rewards, smaller purchases, convenience. Many businesses use both for different purposes.
| Factor | Business Line of Credit | Business Credit Card |
|---|---|---|
| Interest Rates | 8-25% APR (lower) | 15-30% APR (higher) |
| Credit Limits | $25k-$500k+ (higher) | $5k-$100k (lower) |
| Access to Funds | ACH, check, online transfer | Card swipe, online, mobile |
| Rewards | None | Cash back, points, miles |
| Approval | Moderate (600+ credit) | Easier (600+ credit) |
| Best For | Large purchases, cash flow | Daily expenses, convenience |
| Minimum Payments | Interest + principal | Minimum % of balance |
Revolving credit facility allowing you to draw funds up to approved limit. Pay interest only on what you use. Can draw via ACH, check, or online transfer.
Learn how business lines of credit work and explore line of credit programs.
Revolving credit accessed via physical or virtual card. Can use anywhere cards accepted. Earn rewards on purchases. Pay minimum or full balance monthly.
Yes! Many businesses use both for different purposes:
Strategy: Use credit card for daily expenses (pay in full), line of credit for larger needs or when carrying balance.
Scenario: Borrow $20,000 for 12 months
Note: Line of credit saves ~$1,116 in this example. If paying credit card balance in full monthly, no interest charged.
Both help build credit. Credit cards may report more frequently, but both show payment history. Use both responsibly to build strong credit profile. Learn how to build business credit.
Yes, lines of credit allow cash withdrawals via ACH transfer or check. Credit cards allow cash advances but at higher rates (25-30%+) and fees.
Credit cards typically easier to approve (lower limits, higher rates). Lines of credit require stronger credit and financials but offer better terms.
Can be smart if line of credit rate is lower. Saves on interest. But only if you don't run up credit card again. Use as debt consolidation strategy.
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