Differences Between a Business Credit Card and Business Line of Credit: Choosing the Right Option

Differences Between a Business Credit Card and Business Line of Credit: Choosing the Right Option

If you have a business, then you will need loans to grow and managing those loans is one of the major parts of running a successful business. A small business owner may need credit at any time, be it to avail a new growth opportunity or to get the business out of a financial crunch, but it is important that the owner clearly understands the existing differences between the various types of loans that are usually on offer for small businesses.

Today, we are going to discuss the major differences between a business line of credit and a credit card for business, so that you can determine for yourself, which one is right for your business now and in the future.

Business credit cards

Secured Vs. Unsecured Loans

Credit cards are generally unsecured loans, while a business line of credit can be both secured and unsecured, depending on the particular situation.

Credit Line

A business line of credit almost always has a higher limit than general unsecured credit cards.

Interest Rates

Credit cards are infamous for their high rates of interest on the balance, while those that offer business lines of credit charge interest at a comparatively lower rate.

Cash Withdrawal

It’s one thing to use them directly, but if you use credit cards to withdraw cash, the bank is going to charge you even higher interest rates than usual! On the other hand, cash withdrawal is actively facilitated when you have business credit to work with.

However, the most significant advantage that business lines of credit have over credit cards in terms of cash advances is the fact that they will allow you to take out the entire (100% of allotted business credit) amount in cash if you need to. Credit cards on the other hand, will not advance even half the allotted credit in cash. This is exactly why businessmen always prefer business credit over typical business credit cards.

small business credit card


Credit cards have a pretty strict payback scheme which you cannot change without incurring additional interests, penalties and fines. Money borrowed from a business line of credit can be paid back under a much more flexible plan.


This is where credit cards usually have an advantage because business credit lines do not come with any rewards or special associate offers, but credit cards do. However, as a businessman, reward programs may not be your priority anyway.


As you can see, although they sound similar from the outside, there are some major differences in between credit cards and business lines of credit. It cannot be denied that modern business credit cards usually have some excellent reward programs and offer better cash advances than their predecessors, but even then, opting for a business line of credit is almost always a better option for a businessman. They offer flexible payback plans, a higher line of credit and the entire credit line is available for advance; how can any credit card beat that?

Ivan Widjaya

Ivan Widjaya is the Owner/Editor of Noobpreneur.com, as well as several other blogs. He is a business blogger, web publisher and content marketer for SMEs.