Business Credit Card or Small Business Loan?
October 25, 2018 by OSYB Staff

Bankrate.com shares that “According to the Small Business Administration, a third of American businesses get started with less than $10,000 in capital.” Is that a feasible financial situation for most businesses? If not, what do most business owners do? Some finance their businesses from personal savings accounts or personal credit cards. A more appropriate option would be to get a business credit card or apply for a small business loan . Both can be designated for small businesses to cover operating expenses, manage cash flow fluctuations, and plan for future growth. So which is the better option for you?
Benefits of a business credit card:
- an opportunity to build your business credit
- covers during low cash flow periods and business credit card interest is tax-deductible though it is suggested as good practice to pay off balances when possible
- take advantage of 0% or very low credit card introductory rates to spread out the payments of high-priced purchases but work to payoff within the introductory period otherwise the interest rate could skyrocket
- earn rewards with your business expenses
Benefits of a small business loan:
- access to funds, anywhere from $50,000 on up
- a loan larger than a credit card limit can help you expand your business opportunities
- “small business loans generally come with lower interest rates than business credit cards — and any interest you pay is tax-deductible. Small business owners can either take out a business loan from a bank or apply for a Small Business Administration loan”
Depending on what your business needs are figure out what works for your unique small business. A business credit card is needed to build your businesses credit history and helps to get small business loans. Use the business credit card for day-to-day expenses or to help your business handle cash flow fluctuations.
If you need more than a few thousand dollars to fund a business plan to grow your business, then think about applying for a small business loan. Before you incur any debt, be sure to consult your financial professionals.
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Business Credit Card or a Small Business Loan: How to know what’s right for you?
Image Credit: Deposit Photos
Category: Small Business