Business credit card versus line of credit

Rewards

For business travelers, many cards offer travel-focused perks like points or miles on purchases related to flights, hotels and car rentals. These rewards could help you save more over time, especially if you travel for business regularly.

Beyond travel, many cards offer higher reward multipliers on common business-related categories such as office supplies, internet and utilities. Some business credit cards also offer cash back as an option, which gives you direct savings on purchases.

Choosing a card with rewards tailored to your spending habits may enhance the overall value of each dollar you spend.

Convenience

Business credit cards often provide fast, easy access to funds, which could be crucial for everyday purchases. They're widely accepted and allow for seamless transactions, whether you're buying coffee for a client meeting or paying for a last-minute hotel room.

Unlike other financing options, credit cards allow you to cover recurring expenses without a lengthy application process or waiting period. This convenience makes them particularly useful for frequent, low-cost purchases where speed is essential.

Expense tracking

Many business credit cards have advanced expense-tracking tools that simplify financial management. For businesses with multiple cardholders, this feature allows you to track and categorize spending by employee, department or project, giving you detailed insights into purchasing habits and trends.

Some providers, like Visa, offer services such as Visa Spend Clarity, which makes it easier for you to monitor spending patterns and identify areas for cost-saving. These tools are especially beneficial if you need to separate expenses across projects or manage spending for tax reporting purposes, saving you both time and effort in record-keeping.

Other benefits

Many cards offer travel insurance, which may include protection for trip cancellations, lost luggage and rental car coverage. Some business credit cards also give you access to airport lounges, providing a comfortable space for business travelers. Purchase protection is another common feature, covering items bought with the card against theft or damage for a limited time.

However, it's important to keep in mind that most business credit cards come with a high interest rate on balances, usually around 20%. While some, like the CIBC bizline® Visa* Card, offer lower interest rates comparable to a business line of credit, these rates vary and may be tied to the Bank of Canada's prime rate or offered at a fixed, competitive level.

Lower interest rates and higher limits

Business lines of credit generally offer lower interest rates than business credit cards, making them a solution for larger expenses. This may be especially helpful for significant investments like startup costs, equipment or payroll, where high-interest credit card charges would add up quickly.

Business lines of credit also typically come with higher credit limits, often exceeding $100,000, which can allow businesses to access larger amounts of capital as needed. These higher limits may make lines of credit ideal for businesses that need substantial funding for growth opportunities or to bridge seasonal cash flow gaps.

Flexible fees

Though most business credit cards charge an annual fee, there are some business lines of credit that don’t charge monthly maintenance fees. This may give you more flexibility in finding a funding option that fits your budget.

However, you could also consider a low-rate business credit card like the CIBC bizline Visa Card, which comes with no annual fee. This may be a more affordable option for small businesses.

Comparing fees between business lines of credit and business credit cards could help you make the right choice for your business.

Application process

Securing a business line of credit typically requires a more detailed application process, as lenders need to review your business's financial history before they can approve your application. This may include reviewing your business assets, cash flow and creditworthiness.

Business lines of credit are usually considered a business liability, so they won’t impact the business owner's personal credit. In contrast, business credit cards may be based either on the business's financials or the owner's personal credit history, making the application process generally faster and simpler. Most credit card applications can be completed online, which can be a bonus for small businesses or startups that may lack an extensive business credit history.