A business credit card suits small purchases you can pay off quickly, and a business loan suits larger purchases you will repay over time. Cards revolve and have limits that are often modest, while a loan gives a defined amount with a fixed schedule. Compare the total cost and how each affects the credit you may need for day-to-day costs.
Key facts
| Financing type | Business Financing |
|---|---|
| Typical amounts | Term loans $25K–$2M; equipment financing $10K–$500K |
| Decision time | As fast as 24 hours |
| Credit | All credit profiles considered; soft credit pull to start |
| Cost to apply | Zero cost to apply |
| Who we are | A business financing broker. We compare offers from our lender network; we are not a direct lender. |
In detail
Everyday costs, small equipment and purchases you will pay off within the billing cycle suit a card, especially if it earns rewards. Approval and use are fast, and the credit revolves as you pay it down.
In detail
A large purchase, a project or a need that will take months or years to repay suits a loan. You receive a defined amount, repay it on a fixed schedule and keep other credit available. Equipment financing uses the equipment as collateral and spreads the cost over its useful life.
In detail
Look at the interest rate or fee on each, any annual or origination fee, and how long you will carry the balance. A card balance carried for months can cost more than a loan. A loan with a large fee can cost more than a card you repay quickly.
In detail
Carrying a high card balance raises your credit utilization, which can lower scores and make later financing harder. A loan does not use up a card limit, but a missed payment on either hurts your credit.
Preparation checklist
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Product paths
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How equipment financing works
Business loan vs. line of credit
Business line of credit
Business loan fees
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Do I qualify?
Most business owners who research this topic are eligible to begin a review. Here is what usually qualifies and what owners should not worry about.
Who qualifies
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A card is better for small purchases you repay quickly. A loan is better for larger purchases repaid over time. The deciding factors are the amount, how long you will carry the balance and the total cost.
For a large equipment purchase it usually is, because the equipment secures the financing, the cost is spread over a fixed term and your card limit stays available. A card can suit a small purchase you pay off quickly.
For a small, short gap, yes. For a larger or longer one, working capital or a line of credit is usually more suitable, because a balance carried on a card can get expensive.
Both are reported. A high card balance raises utilization, and a missed payment on either lowers credit. A loan does not use up a card limit.
Written by lendfloCapital Editorial Team · Last updated
lendfloCapital is a business financing broker, not a lender. This page is general information, not financial, legal or tax advice. Rates, amounts and terms depend on the lender and your business.
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