There’s no secret about it, businesses of any kind need capital to survive, in order to expand, try different selling strategies, or any other need that may arise on the way. One may think that the natural course to follow is to apply for a business credit card but you may have been offered, or perhaps you have explored this possibility your self, a line of credit. Both of these options are viable and interesting ways to fund your business but one of them may be tailored made for the kind of needs at your disposal.
The first thing to learn about both of them is that they fall into the same category of credit, namely the credit known as revolving loans”. This means that you can either spend your whole credit or nothing at all and that you can have those assets at your disposal as soon as you have to pay them back. Here’s a list of pros and cons you may want to take a look at before choosing between these 2 options.
- Pros and cons of the application process: the main difference between both is that, with a credit card the providing institution will take a look at your credit records. Credit lines on the other hand focus on things like sales projections, bank account records, sales reports and even social engagement. The latter may come in handier if you’re looking for a bad credit loan or a small business loan.
- The period of grace: A credit card will allow you to pay a minimum fee on your debt every month, giving you the chance to pay it in full at your own pace. However, bear in mind that the longer you take to repay, the larger your interest fees will be. With a credit line, you can have a fixed schedule that can help you plan your expenses, which may be convenient if you’re a start up business and you need to keep track of everything you spend and the way you’re doing it.
- What you can do with your credit: credit lines will allow you to have access to your money in whichever way you want, i.e. you can write checks, you can use your card or you can even have access to cash. With credit cards, access to cash may be a little more complicated and you may even get charged with a commission for each withdrawal.