Business Credit Card & Business Line of Credit: The Differences

Business Line of Credit

A business credit card and a business line of credit are very similar; in fact, a business credit card is technically a type of business line of credit. Still, the two terms are not exactly synonymous, since there are different types of business lines of credit that do not involve a credit card.

In the case of both a business credit card and a business line of credit, what is basically being described is an amount of money being made available to a business for a variety of purposes, from purchasing equipment to paying for business travel. This amount of money could be borrowed, paid back (in whole or in part) and then borrowed again. In both cases, there is an interest charge.

A business credit card is technically an example of an unsecured line of credit, meaning that there is no collateral put up to back the loan. Typically, to qualify for an unsecured line of credit or business credit card, a business would need to have a good credit history and sound finances. An example of an unsecured line of credit that would be different from a credit card would be line of credit with a particular store or supplier. In this case, obviously the credit would be limited to just purchases in that store and there would be an invoice sent after the purchase rather than a monthly statement, in most cases.

A secured line of credit would require collateral, often a piece of business property, to secure the loan. The major advantage of a secured business line of credit is also a major difference from a secured credit card – the interest rate is often considerably lower, since there is a reduced risk to the lender. This is often the only type of line of credit a small business or business just starting out can get.

Business credit cards and lines of credit have more similarities than differences, but they are not exactly the same. A business needs to put some thought into which one is right for their particular situation.

For more information, go to Business Line of Credit at http://www.unsecuredbizloan.com/business-line-of-credit

Business Credit Card & Business Line of Credit: The Differences was last modified: February 16th, 2012 by Amit Kraidman
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