Business Credit Cards vs. Lines of Credit – Which is Best for Your Small Business?

Whether you’re a startup or an established company, you may find yourself in need of short-term funds sooner or later to cover a variety of business expenses. Whether you need extra working capital for bridging cash flow gaps or covering day-to-day expenses, utilizing short-term small business financing is a great option to e https://remontibudowa.com/
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The two most sought-after ways to get capital to meet your short-term financial needs are small business credit cards and lines of credit. But which is best for your type of small business? When do you use which? And how to qualify and apply for each of these financing options? These are some of the many important questions we’ll touch on in this article.

Business Lines of Credit

Business lines of credit are an example of . Unlike traditional bank loans, you have the flexibility to borrow a fixed limit of funds that you can use whenever you need it. The best thing about a line of credit that you’ve to pay interest on the amount only you’ve used. And once you repay the used credit plus interest, the total amount will be available again.

These loans can be secured or unsecured by a lien on your assets or other business assets such as real estate, inventory, and more. Both traditional banks and alternative lenders provide lines of credit to small businesses. Though you must have strong revenue and an established business credit profile to become eligible for the mid or long-term lines of credit, while lenders are willing to offer short-term lines to even startups and businesses lacking collateral and good credit score.

 

Features of Business Lines of Credit

  • Loan Amount – $10K – 1M
  • Loan Term – 3 Months – 18 Monhts
  • Interest Rate – 7%-25%
  • Time to Fund – 24-48 Hours
  • Fees – Opening fee, annual renewal fee, and monthly maintenance fee