Both a line of credit and a business credit card are examples of short-term credit solutions, and both may be of tremendous value to your small business. While they are similar in many ways, there are also some significant differences between the two, so you’ll need to read below to find out which would be more beneficial for your business situation.

Line of Credit 

When you have a business line of credit, you will have a revolving credit line, which means that you can access funds on an ongoing basis. You only have to pay interest on the money which you use from the line of credit, and you can keep re-using the money available in your account as long as you continue to make consistent payments.

It’s very useful to have a line of credit available to you so that you can handle such short-term needs as office supplies, inventory, payroll needs, staff hires, or any other unexpected expenses which arise. A line of credit can be essential for covering cash flow gaps, when there is no incoming revenue, but you still have expenses and costs which need to be covered on a daily basis.

Business Credit Card

When you have a business credit card, you will have a specific credit amount available to you each month, and the average credit card limit for businesses is approximately $50,000. Like a line of credit, the amount of your available balance will depend on how much you spend each month and how much you pay back.

In order to keep your business credit card in good standing, you will be required to make at least a minimum payment each month, although this is not the best way to go about it. When you only pay the minimum monthly payment, you’ll find that you are quickly consuming your available balance, and that your debt is piling up. You’re much better off paying down on any outstanding debt you have, so that you have a greater balance available whenever you need it.

Does Your Business Need a Business Credit Card? 

A business credit card is one of the most flexible financial tools you can possibly have, and it can literally be used for any purpose. If you’re interested in acquiring a business credit card, contact us at Jasema Capital, so we can review the requirements with you.