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Line of Credit vs. Credit Cards: Best Options for Small Business


When deciding on the right loan options for your small business, it’s easy to get overwhelmed by terms and methods, at Lendified we want you to feel knowledgeable about lending transactions to find the best fit for you and your business. Here we look at the advantages and disadvantages of two borrowing options: Line of Credit and Credit Cards.

Line of Credit 

Line of Credit is a flexible way to borrow and spend a preset amount of money at your own will, permitted you pay back the amount you’ve spent.


Line of Credit is a flexible way to buy what you want, when you want it. Lines of Credit have much lower interest rates than credit cards, especially if you opt for a secured Line of Credit, which allows for lower interest rates, lower monthly payments and higher limits on what you can spend versus unsecured Lines of Credit. Lines of Credit are especially useful for situations in which there are repeated cash expenses, without knowing exactly how much each amount will be, such as remodeling projects.


Due to the flexible nature of a Line of Credit, it’s easy to get caught in a spiral of spending, without thought to the debt it will incur. Moreover, Lines of Credit do not offer grace periods or rewards like credit cards. Lines of Credit also must be approved by banks, which can take time without satisfactory results. The interest rates are also attached to the bank and vary depending on the bank’s prime rate, thus as interest rates rise and fall so does the amount you must repay.

Credit Card

Credit Cards are payment cards with a preset limit that allow you to make purchases easily with the promise of repayment.


Using a Credit Card is a highly convenient method of making quick purchases for what ever you need. Credit Cards often have reward programs and “extras” and allow for cash advances in a pinch. Credit Cards are also extremely prevalent and don’t require the same approval procedures as Lines of Credit.


Like Lines of Credit, the convenience of a Credit Card makes going into debt a slippery slope because it allows for easy impulse buying. Credit Cards often come with fees for cash advances, but more importantly, Credit Cards have very high interest rates that can grow even higher if the repayment is not made within the time period specified. Spending with Credit Cards means future income gets tied up in paying off today’s purchases and may result in losses if payments are not made in time.

Bottom Line

Lines of Credit are more prevalent amongst small business owners, while Credit Cards are used more often for personal purchases. However, both require commitment to the bank, with less freedom for the future. Small Business Loans, as offered through Lendified, provide a happy alternative for small businesses. The benefits of a Small Business Loan from Lendified means fast borrowing of a set amount that will not change or fluctuate, making the future of your business more secure in the long run.

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About the Author



Lendified is Canada's premier online lender for small businesses. The company was founded by former bank executives dedicated to provide businesses with fast, easy, and affordable financing. The Lendified team regularly produces blogs and guides to help small business owners succeed.

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