At some point, almost every firm will require short-term financing to meet expenses. Using short-term credit is one strategy to ensure a business works smoothly, whether it takes a year or a month to convert your product or service to cash. Business lines of credit and business credit cards are two of the most popular short-term financing solutions.
Let’s take a look at the differences between business lines of credit and business credit cards.
Business Line of Credit
A small business line of credit can be acquired from your local bank or an online provider. A business line of credit can be backed by a lien on your assets or another financial instrument such as a certificate of deposit. Once your line of credit is approved, you can use it by making a direct deposit into your current account or using a debit card connected to the account. Only interest costs will be included in your minimum monthly payment, calculated using your average daily balance. You may pay off your debt and borrow again as frequently as you like.
When is the ideal time to utilize a business line of credit?
When you need to pay suppliers that don’t take credit cards or charge extra costs for using credit cards, business lines of credit may be the best option. A company line of credit can also be utilized to settle existing invoices by cheque or cash or when your business credit card doesn’t have enough credit.
Business Credit Card
The business credit card functions similarly to a personal credit card. You may avoid interest costs by paying your statement amounts in full, allowing you up to 51 days of interest-free float on your charges, just as with your credit cards. You can earn points, miles, and cashback for your company spending, just like you do with your cards. In addition, a company credit card is more likely to award extra points for transactions made by companies, such as those made at office supply stores, telecommunications service providers, and advertising. Purchase protection and travel insurance are two additional perks that business credit cards would provide.
When should you use a business credit card?
A business credit card offers several benefits as compared to a business line of credit. To begin with, many entrepreneurs utilize their credit cards to gain significant travel rewards or cash back. These rewards are tax-free since they are considered as a refund on a purchase. Furthermore, business travelers can be covered by policies such as trip delay and cancellation insurance, as well as lost luggage insurance, if they purchase their tickets using a business credit card. And, if you pay off your whole statement debt in full each month, you can get the equivalent of an interest-free, short-term line of credit.
In today’s fast-paced world, managing your business finances smoothly can be challenging. founderscard, a business credit card, would be the intelligent solution to meet your specific business needs. With founderscard, get
- The best-in-class credit limit.
- Up to 51 days of interest free credit
- 3x reward points on spends
Schedule a call with us to know more.