In the business line of credit vs credit card choice, both give you a revolving limit, but they suit different jobs. A business credit card is built for purchases you pay off when the statement comes, and most cards charge no interest on purchases paid in full by the due date. A business line of credit sends cash to your bank account when you draw, is repaid weekly or monthly on what you drew, and covers costs a card cannot, such as payroll, rent or a supplier that only takes a bank transfer. Card cost is quoted as an annual interest rate, while a line's cost is set by its program as interest or fees on the drawn balance, shown in dollars on the offer. Through Today Capital Group, lines of credit go up to $2,000,000, with offers often within a day.
Line of credit vs credit card at a glance
The table compares the two on the questions owners ask most.
| Business line of credit | Business credit card | |
|---|---|---|
| How you use it | Draw an amount into your business bank account and spend it like any other cash | Pay merchants that accept cards, and get cash only through a cash advance |
| How it is repaid | Weekly or monthly payments on what you drew, and repaid room can be drawn again | A monthly statement with a minimum payment, and any balance left over carries to the next month |
| How cost is quoted | Set by the program as interest on the drawn balance or a fee per draw, shown in dollars on the offer | An annual interest rate on balances you carry, with separate fees and a higher rate for cash advances |
| Interest-free window | None as a rule, though some programs discount paying a draw off early | A grace period on purchases on most cards, if the full balance is paid by the due date |
| Limits | Up to $2,000,000 through us, sized mainly on the revenue in your bank statements | Set by the issuer on the business's and the guarantor's credit, with a lower limit for cash |
| Credit check | Most funders prequalify from bank statements and a soft credit pull | A personal credit check when you apply |
| Best for | Larger or irregular cash needs such as stock, payroll, repairs and slow-paying customers | Everyday spending you clear every month, such as fuel, travel and subscriptions |
How each one works
Business credit cards
A business card gives you a spending limit, each purchase adds to the balance, and each billing cycle ends with a statement, a due date and a minimum payment. The Federal Reserve's report to Congress on small business credit cards found that business cards work much like personal ones, with similar fees, pricing and grace periods, and often higher limits.
The CFPB defines the grace period as the time between the end of a billing cycle and the due date, during which you may not be charged interest if you pay the balance in full. Card companies are not required to offer one, but most cards give a grace period on purchases. Pay only part of the balance and you lose it, so interest runs on the unpaid part and new purchases charge interest from the day you make them.
Business lines of credit
A line of credit starts with an approved limit and no money moving. When a cost comes up, you draw what you need into your business bank account and repay it weekly or monthly, and the room you repay can be drawn again without a new application. Some lines in our network are built around revenue, with weekly rather than daily repayment and a discount for paying a draw off early. Our post on how a business line of credit works and how to qualify covers renewals and requirements.
How the cost is quoted
Card cost is an annual interest rate on the balance you carry. The Federal Reserve's G.19 consumer credit release of March 2026 puts the 2025 average rate on credit card plans at commercial banks at 21.22% across all accounts and 22.32% on accounts that were charged interest. These are personal card figures, since G.19 covers credit to individuals, but the Fed's small business card report found business card pricing similar.
The same Fed report notes that cards issued to small businesses are generally not covered by the Truth in Lending Act, and that few issuers had chosen to apply the Credit CARD Act's limits on raising rates to business cards. Read the cardholder agreement for how your rate can change.
A line's cost is set by its program and charged only on what you draw. Some programs charge interest on the outstanding balance, so repaying sooner lowers the cost, and others charge a set fee on each draw, which some discount for early payoff. The offer shows the cost of a draw in dollars. The undrawn part of the limit usually costs nothing to keep open, though some programs charge a maintenance or annual fee, so ask. Our guide to a line of credit vs term loan shows why paying only on the drawn balance matters when money is out for a short time.
How much you can get on each
The Fed's report describes card issuers sizing limits and setting rates on a risk assessment of the business and the card's guarantor, with the most creditworthy businesses offered the largest lines. Cash is capped separately, and the CFPB notes that many cards set a lower limit for cash advances than for purchases.
Through Today Capital Group, business lines of credit go up to $2,000,000. Funders size the limit mainly on the deposits in your business bank statements, because your revenue has to carry the payments on a fully drawn line.
Getting cash: a card cash advance vs a draw
Payroll, rent, taxes and suppliers who want a transfer or a check all need cash in the account. A card produces cash through a cash advance, and the CFPB's page on credit card cash advances sets out the price. The card company may charge a flat fee or a percentage of the amount, ATM fees can apply on top, the rate is usually higher than the purchase rate, and interest starts the moment you withdraw because cash advances get no grace period.
A draw on a line arrives in your business account as cash, priced like any other draw. To size a cash gap before you borrow, see our guide to working capital loans.
A worked example: $40,000 of inventory for 3 months
Take a retailer that buys $40,000 of stock ahead of a busy season and expects to sell through it in about 3 months. Every figure below is an example, not a quote.
Option 1: put it on a business card and carry it
Say the supplier takes cards, the card's limit is above $40,000, its example annual interest rate is 22%, and the owner pays the balance down in three monthly amounts of $13,333 plus interest. At 22% ÷ 12 on the balance still owed, interest is about $733 in month 1 on $40,000, $489 in month 2 on $26,667 and $244 in month 3 on $13,333, about $1,467 in all. The card's daily method moves that a little, and while the balance is carried, other purchases also charge interest from the day they are made.
If the owner can pay the full $40,000 by the first due date instead, the grace period applies and the purchase costs nothing in interest, and nothing else on this list beats that.
Option 2: the supplier wants a bank transfer, so it becomes a cash advance
If the supplier will not take a card for this order, the owner needs cash. Say the cash advance fee is an example 5% and the cash advance rate is an example 28% a year. The fee is $2,000 on day one, and interest on the same three-month paydown comes to about $1,867, so the cash costs about $3,867, and it only works if the card's cash advance limit reaches $40,000.
Option 3: draw $40,000 on a line of credit
The owner draws $40,000, it lands in the business account, and the supplier is paid by transfer. Say the draw is repaid weekly over 12 weeks at about $3,333 a week plus the program's charges, and the program prices this draw at $1,500 in total. That is an example figure, since every program sets its own and the offer states it in dollars before you draw. Paying the draw off early costs less on programs that charge interest on the balance or discount early payoff.
Here, carrying the card and drawing on the line cost about the same, at about $1,467 and $1,500, and the line costs well under the cash advance while keeping the card free for everyday spending. The card wins whenever the balance can be cleared within the grace period, and the line wins when the cost needs cash or is larger than the card's limit.
Personal guarantees and your credit report
The Fed's report found that small business cards carry a personal guarantee, so both the business and the owner or officer who signs are liable for the balance, and issuers review the guarantor's personal credit. Experian explains that applying for a business card usually means a hard inquiry on your personal report, and that card activity appears on your personal report when the issuer reports to the consumer bureaus. Some issuers report only to the commercial bureaus or only report certain information. Where the card does report, a large balance counts toward your personal credit use the same way a personal card does, and missed payments count against your score.
A line through our network starts with a lighter check. Most funders prequalify from bank statements and a soft credit pull, which does not affect your score, and a funder may run a hard pull in final underwriting after telling you first. Ask each funder whether the line needs a personal guarantee and whether it reports to the personal or business bureaus, since programs differ. Our post on whether a merchant cash advance affects your credit explains what funders report.
What a line asks for
A line through us needs a short application and four months of business bank statements, uploaded or shared through a read-only bank connection. Funders weigh revenue first, and credit counts more for a line than for a revenue-based advance. Every funder sets its own thresholds, and the funders we work with generally look for about a year in business and about $20,000 a month in deposits. If you're not there yet, apply anyway. Some funders work with newer or smaller businesses, and we'll tell you what's realistic.
When each one fits, and when to use both
In the business credit card vs line of credit decision, a card fits spending you clear every month, such as fuel, travel and small supplier orders. Paying the full balance by the due date keeps the cost at zero interest, and employee cards with their own spending limits let staff buy what they need.
A line fits larger needs and anything paid in cash. A contractor buying materials before a job pays out, a restaurant covering payroll in a slow month or a distributor whose customers pay on 30 to 60 day terms can draw for the gap and repay when the money comes in.
In the Federal Reserve Banks' 2025 Small Business Credit Survey report on employer firms, 58% of employer firms used a credit card regularly and 34% used a line of credit, and firms could name more than one. A card can carry everyday spending, paid in full each month, while a line covers stock, payroll and larger bills. If a big card balance would otherwise sit for months, compare the dollar cost of carrying it with the dollar cost of a draw that pays it off.
Where revenue-based financing fits instead
For one lump sum rather than a revolving limit, revenue-based financing, also called a merchant cash advance, is a purchase of part of your future sales, paid up front, sized on your usual revenue and repaid with a set daily or weekly payment. Through us it runs from $5,000 to $2,000,000, is typically funded within one to two business days of choosing an offer, and has a factor rate that fixes the total payback in dollars before you sign.
How to compare a line and a card through us
If your largest bills go on a card you clear every month, keep doing that. If they need cash, or the card balance keeps carrying over, a line is worth pricing. The application is a short form plus four months of business bank statements, there is nothing to pay to apply or to see offers, and offers come back side by side with the dollar cost of a draw. You can apply online in a few minutes or call us at (818) 351-0225 to talk it through first.
Business line of credit vs credit card questions
Is a business line of credit better than a business credit card?
Each is better at a different job. A business credit card is the cheaper tool for purchases you can pay in full by the due date, because most cards charge no interest on purchases within the grace period. A business line of credit fits larger needs, costs that must be paid in cash, and balances you expect to carry for weeks or months, because the money lands in your bank account and you pay only on what you drew. You can also keep a card for everyday spending and a line for the rest.
Can I use a business line of credit like a credit card?
In part, since both are revolving and the limit refills as you repay, but a line works through your bank account rather than a card terminal. You draw an amount, it arrives in your business account, and you spend it by transfer, check or debit card. Each draw is repaid weekly or monthly on the schedule in your offer, and the cost is shown in dollars.
Does a business line of credit affect personal credit?
It depends on the funder and the program. Through our network, most funders prequalify from bank statements and a soft credit pull, which does not change your score, and a funder may run a hard pull in final underwriting after telling you first. Whether draws and payments appear on your personal report depends on whether the funder reports to the consumer bureaus and whether you signed a personal guarantee, so ask before you sign.
How much can I get on a business line of credit?
Through Today Capital Group, business lines of credit go up to $2,000,000. The funder sizes the limit mainly on the revenue in your recent business bank statements, along with credit and time in business, and offers often come back within a day.
Can I use a line of credit to pay off a business credit card?
Yes, a draw lands in your bank account and can be sent to the card like any other payment. It makes sense when the dollar cost of the draw is lower than the interest the card balance would build over the months you expect to carry it.
