Business Credit Card vs. Business Loan: Which is right for your business?

Business Credit Card vs. Business Loan: Which is right for your business?

According to a survey by Wasp Barcode Technologies, 42 percent of companies with 11 to 50 employees have cash flow problems, causing many to consider alternative options to receive the cash they need. Often, businesses turn to a business credit card or business loan to receive the funds they need, however, depending your specific needs, only one may be the right option for your business.

Business Credit Cards
Business credit cards are great because they allow you to cover costs while building your business’s credit history. Business credit cards are fairly easy to get and use a simple application process. Usually, a business credit card has higher spending limits when compared to personal credit cards and offer special introductory offers like 0% interest for a set period of time. However, business cards can also come with hefty late payment fees and high APRs, as high as 29.9%.

Business Loans
A business loan may be more appropriate for some businesses—whether going with a traditional lender or an alternative loan. Typically, larger establishments require a business to make over 6 figures annually and be in operation for longer than two years for a loan approval. Also, many require a positive business credit history to get a good interest rate. When going with a traditional lender, it may be harder to get a loan than if you were to go with an alternative lender.

Many alternative lenders, like Business Loans Direct, will work with you if you don’t meet the criteria for a traditional loan or even a business credit card. Plus, alternative lenders often have lower APRs and offer various loan amounts.

If your business only needs $5,000, it’s often better to go with a business credit card or an alternative lender. However, it your business needs a loan in the 6-figure amount, a traditional loan may be the smarter option.

Prior to making your decision, evaluate all of your options. Contact Business Loans Direct to help understand the various paths you can take to get the funds you need. We’ll work with you to find an option that meets your exact needs.


Alyssa Ast

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