Any business owner has at least two alternatives when faced with an expense: business loans or credit cards. With that in mind, in today’s post, we go through the pros and cons of each alternative.
Business Loans vs Business Credit Cards
If you are wondering which is the best option between business loans and credit cards, the answer will depend on several factors like the amount of money you need, the type of expense you want to cover, and the type of guarantee you are able to offer.
When To Use Business Credit Cards
Credit cards are generally the best option for ongoing expenses such as utilities and supplies. Plus, in some cases credit cards may offer unique benefits such as bonuses or rewards for spending.
Another reason to use a business credit card for small expenses is that the requirements for a credit card tend to be less stringent compared to a business loan.
You don’t want to go through a potentially weeks-long process just to pay your utilities!
If you already have a business credit card, you’ve already done the hardest part. You can start using it without providing a collateral or any additional documents.
When To Use Business Loans
While credit cards make sense for amounts up to $50,000, once you cross that threshold, you are in business loan territory.
True, getting approval for a business loan may require more effort than using a business credit card, but the extra work is worth it, as business loans allow you to access greater amounts of capital.
Business loans are the go-to financing solution for major expenses such as:
- Extensive renovations
- Purchasing other businesses
In addition to providing you with large sums of cash, another key advantage of business loans is that they tend to offer lower interest rates compared to credit cards.
And while you may think that bank loans are the only type of loan available, the truth is that there are several types of business loans.
If you need more capital than a credit card can provide but don’t qualify for a traditional bank loan, you can take advantage of alternatives such as bridge loans, SBA loans, and revenue-based loans.
Gellyfish: Business Loans Made Easy
Looking for business loans that combine flexibility and certainty of execution? Gellyfish Commercial is the answer!Contact us today by email (firstname.lastname@example.org), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our financing solutions.