Both are revolving credit. Here is where they split
A business credit card and a business line of credit work on the same idea: a limit you can use, pay down and use again. NerdWallet describes a business card as a revolving line of credit that lets you make purchases within a limit and repeat the cycle [1].
The differences are in what you can do with the money and what it costs to hold a balance. A card pays merchants who accept cards. A line of credit moves cash into your bank account, so it can cover payroll, rent, taxes or a supplier who only takes a check. The SBA puts the appeal of a line simply: interest is only charged when the loan is in use [4].
Limits differ by an order of magnitude. Business cards typically run up to $50,000 or more [1]. Lines of credit at most lenders go up to $500,000, and SBA lines up to $5 million [2].
The cost of carrying $20,000 for a year on each
The fair test is the same balance, paid off the same way. Here is $20,000 repaid in 12 equal monthly payments at the ends of each published range, with no fees added.
| Product and APR | Monthly payment | Total interest |
|---|---|---|
| Line of credit at 10% [2] | $1,758.32 | $1,099.81 |
| Credit card at 16% [1] | $1,814.62 | $1,775.41 |
| Line of credit at 25% | $1,900.88 | $2,810.61 |
| Credit card at 34% [1] | $1,989.30 | $3,871.65 |
| Line of credit at 99% [2] | $2,688.38 | $12,260.54 |
A strong borrower on a bank line pays less than any card. A borrower who only qualifies for the top of the online line range pays three times the worst card. So the honest answer to which is cheaper is: price both for your own credit before you decide.
Fees change the picture too. Lines can carry origination, draw and maintenance fees [2]. Card agreements list their own fees as well. Ask for every fee on either product in writing.
Federal protections: neither product gets consumer rules
Many owners assume a business card comes with the same protections as a personal one. It does not. NerdWallet notes that the Credit Card Act of 2009 limits rate changes and fees on personal cards, but those protections do not apply to business credit cards [1].
The reason sits in federal law. Regulation Z, which carries the Truth in Lending rules, exempts an extension of credit primarily for a business, commercial or agricultural purpose [3]. That covers business cards and business lines of credit alike, so read the rate change and fee terms in either agreement closely.
Watch your personal credit on a business card
Not all business card issuers report to the personal credit bureaus, but most of those that do report only negative information [1]. A missed payment on a business card can still hit your personal score.
Qualifying: a card leans on you, a line leans on the business
Card issuers decide mostly on your personal credit. NerdWallet says new businesses with no revenue can still qualify for a card, and decisions often come within minutes [1]. That makes a card the easier first step for a young business.
A line of credit asks about the business too. NerdWallet's general floor is a 600 score, six months in business and $50,000 in annual revenue, and banks typically want a score close to 700 [2]. See line of credit requirements for the full checklist.
| Requirement | Business line of credit | Business credit card |
|---|---|---|
| Personal credit | About 600 and up online; near 700 at banks [2] | Good to excellent for most cards [1] |
| Time in business | Six months or more is typical [2] | None required for many cards [1] |
| Revenue | Around $50,000 a year [2] | None required for many cards [1] |
| Paperwork | Bank statements; more for bank and SBA lines | Usually none beyond the application [1] |
A third option: SBA lines of credit, with capped rates
If you qualify and can wait, an SBA-backed line can undercut both a card and an online line, because the SBA caps what the lender may charge. On the SBA's 7(a) Working Capital Pilot lines, the rate cannot exceed the base rate plus 6.5% on lines of $50,000 or less, and the base rate plus 3.0% above $350,000 [4].
| Program | Maximum size | How long it can revolve |
|---|---|---|
| SBA Express | $500,000 | Up to 10 years |
| CAPLines | Up to $5 million, the general 7(a) maximum | Up to 10 years (Builders CAPLine is shorter) |
| Working Capital Pilot | $5,000,000 | Up to 60 months |
The trade-off is paperwork and time. A Working Capital Pilot line, for example, needs 12 full months of operating history and regular financial statements, receivable and payable agings and inventory reports [4]. A card can be approved in minutes; an SBA line takes weeks. See SBA loans for how the program works.
Using both: the setup many owners land on
You do not have to pick one forever. NerdWallet notes that cards and other financing often complement each other, with a card for day-to-day expenses and larger credit later as the business grows [1]. A common pattern:
- Put recurring card-friendly costs on a business card and pay it in full each month.
- Keep a line of credit open for cash needs a card cannot pay, like payroll or a large supplier invoice.
- Pay a line draw down as soon as the cash comes back in, so you only pay for the weeks you used it.
- Never use one to pay the other. Moving a card balance to a line only makes sense if the line's APR is clearly lower.
If you are deciding whether a line is worth opening, our quiz shows the products your numbers fit and what each costs in dollars. Business Funders does not issue cards.