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

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If you have a business, then you will need loans to grow and managing these loans is one of the main parts of running a successful business. A small business owner may need credit at any time, whether to take advantage of a new growth opportunity or to exit the business from a financial crisis, but it is important that the owner clearly understands the differences between the different types of loans typically offered for small businesses.

Today, we will discuss the main differences between a business line of credit and a credit card for businesses, so that you can determine for yourself what is best for your business. business now and in the future.

Secure Vs Unsecured Loans

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

Credit Line

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

Interest Rates

Credit cards are infamous for their high interest rates on the balance, while those who offer corporate lines of credit charge relatively lower interest rates.

Withdrawal of money

It's one thing to use them directly, but if you use credit cards to withdraw money, the bank will charge you even higher interest rates than you would. 39; habit! On the other hand, the withdrawal of cash is actively facilitated when you have a business credit with which to work.

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However, the most important benefit that business lines of credit have on credit cards in terms of cash advances is the fact that they will allow you to withdraw the total amount (100% of the business credit awarded) in cash if you need to. On the other hand, credit cards will not even give half of the credit allocated in cash. This is exactly the reason why businessmen always prefer credit to business rather than to professional credit cards.

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<h2> Flexibility </h2>
<p> Credit cards have a fairly strict repayment system that you can not change without incurring additional interest, penalties and fines. The money borrowed from a business line of credit can be repaid under a much more flexible plan. </p>
<h2> Awards </h2>
<p> This is where credit cards usually have an advantage because business lines of credit do not come with rewards or special offers, but credit cards do. However, as a business man, rewards programs may not be your priority anyway. </p>
<h2> Conclusion </h2>
<p> As you can see, although they look similar from the outside, there are significant differences between credit cards and lines of credit. There is no denying that modern business credit cards usually have excellent reward programs and offer better cash advances than their predecessors, but even then, opting for a line of credit is almost always a best option for a businessman. They offer flexible repayment plans, a higher line of credit and the entire line of credit is available in advance; how can a credit card beat that? </p>
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