Business Line of Credit vs. Business Credit Card

Revolving credit to boost your business

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Business line of credit vs. business credit card.

A small business line of credit and a business credit card are both types of revolving credit that can help you finance your business. While they are similar, a business line of credit may be used in place of cash to fund expenses such as payroll. A business credit card, on the other hand, is more often used as a convenient way to make smaller day-to-day purchases on credit.

Other differences between a small business line of credit and credit card might include the credit limit, interest rate, fees, rewards and term length. Specific differences will depend on the particular terms and conditions of the individual line of credit and credit card.

What are some differences between a business credit card and line of credit?

There are a few big differences between a business line of credit and a credit card. A business line of credit provides you with cash that can be used to make purchases and pay expenses that a credit card can’t be used for. For example, you can’t charge payroll or property leases to a credit card and certain vendors don’t accept them either.

However, credit cards are convenient for day-to-day business needs and often offer more sophisticated reporting and expense tracking, the ability to issue multiple cards to employees on the same account, and more flexible monthly payment options.

Some other notable differences include:

  • Credit limits. You’ll typically receive a much higher credit limit with a business line of credit.
  • Interest rates. A line of credit may come with a higher interest rate than a credit card, although it can vary widely.
  • Fees. Many credit cards come with annual fees, while a line of credit may have an origination fee or maintenance fee attached.
  • Rewards. Many credit cards come with rewards like cash back. But you probably won’t find many lines of credit that offer rewards.

A business line of credit and credit card can be more powerful together.

Revolving credit offers flexibility and freedom in borrowing. And it’s good for keeping funds on hand. Revolving credit can help you take advantage of new opportunities, manage cash flow and fund business growth. When used in combination, these two forms of credit can complement each other and business owners can receive the benefits of both.

A small business credit card provides flexible business financing and is convenient for everyday business expenses. But if there’s a big opportunity, project or emergency, your business credit card may not be enough. Plus, you probably need your credit card to help manage your business cash flow, so you don’t want to max it out. A line of credit can help you cover major expenses when they arise, whether it’s an emergency or an opportunity for growth. The high credit limits on lines of credit will allow you to keep cash on hand and help you be prepared for anything.

An OnDeck Line of Credit provides revolving credit to boost your business.

If you need access to working capital for your business, OnDeck can help. We offer an unsecured line of credit and a business term loan. They can both be used alongside a business credit card to boost your business growth. When you apply, our team of dedicated loan advisors can help determine which is right for you.

OnDeck Line of Credit

A revolving credit line you can draw from 24/7 to receive funds within seconds.*

  • Credit limits from $6K - $100K
  • Flexible repayment terms of 12, 18 or 24 months
  • Great for keeping funds on hand

OnDeck Term Loan

A one-time lump sum of cash with an eventual option to apply for more.

  • Loan amounts from $5K - $250K
  • Repayment terms up to 24 months
  • Great for larger investments in your business

Learn more about business lines of credit and business credit cards.

A business line of credit is a form of revolving credit. When you apply and are approved, you’ll be given access to funds that you can borrow whenever you need. A credit limit will be set and you can borrow up to that amount to help cover anything from day-to-day operations, cash flow, inventory, equipment, payroll and growth opportunities.

With a line of credit, you only pay for what you borrow. You can access all or a part of the credit line at any given time up to the fixed limit. When the bill comes, you’ll only pay interest on the amount that you drew over that time period. As you repay, those funds will become available for you to draw again.

A business credit card works much like a personal credit card. You and other authorized users will be issued cards that can be used to charge to the account. You’ll receive a credit limit that is typically much higher than a personal credit card.

Using a business credit card instead of a personal credit card to finance your business can also help protect your personal finances. Many business credit card issuers don’t report to the consumer credit bureaus, so your business’ credit activity won’t impact your personal credit score. However, some issuers do report to the consumer credit bureaus — especially if a business account has gone seriously delinquent. Be sure to check with your issuer so you know what to expect.

Different lenders will have different requirements. Banks and other traditional lenders may have very strict requirements that may be difficult for small business owners to meet — no matter if it’s a line of credit or a traditional business loan. However, other financial institutions, like online lenders, may be a little more lenient.

Online lenders like OnDeck often look at a business’ health as a whole. This allows us to see beyond the numbers and lend to healthy and thriving businesses that may not qualify for financing elsewhere.

Like many lines of credit, OnDeck offers a weekly payment schedule. When you draw from your line of credit, a weekly payment is debited from your business checking account via an ACH withdrawal. Your principal balance is credited as soon as the payment clears (usually within 24 hours). If you were to pay back the entire balance, the full amount of your credit line would be available to draw from again.

Once you close all the paperwork with OnDeck, you have the choice of instant funding* or ACH. With instant funding, your funds will land in your bank account within seconds.* In comparison, standard ACH transfers from a bank can take up to three business days.

Yes! We report your repayment history to the major business credit bureaus. This can help you build your business’s credit score if you make your payments on time.

A good business credit score can help you secure financing more easily and at better rates. It can even increase the value of your company because it’s a transferable asset.