04.07.20166 min read

Using a Credit Card to Finance Your Business? 4 Times it Makes Sense

by Meredith Wood

As any veteran business owner can tell you, sometimes in business stuff just happens. Equipment breaks. Customers don’t pay on time. Or maybe the business is booming and has the expense of expansion. Whatever the scenario, money is necessity, and if a company is unable to cover these expenses out of pocket, they’re faced with the decision of taking out a loan.

But some may wonder, is a small business loan always the right answer? Not necessarily. Sometimes, in fact, opening a small business credit card could be just the solution an entrepreneur needs to finance their business. Here are three situations in which a credit card may be the right financing choice for your business.  

1. When you need funding fast

Let’s say you're in the T-shirt design business and you just received a large, unexpected order that requires more T-shirts than you currently have on hand. If you want to fulfill the order, you're going to need extra cash—and fast.

You could go through your local bank for a small business loan—but since it takes anywhere from several weeks to months to get approved, it’s likely you won’t get the money you need in time to complete your order.

Getting a business credit card is an incredibly quick process. If you need the funding fast, a credit card might be the best way to get it done.

2. When you can take advantage of zero percent introductory APR

If you’re interested in opening a business credit card, you may notice a few that are offering a zero percent APR on purchases or, maybe even on both purchases and balance transfers, for an extended period of time. 

The zero percent APR introductory offer would be a great financing option if you’re using the card to buy something that won’t increase your immediate cash flow (like replacing broken equipment, for example) and you’d be unable to repay the card’s balance, in full, by the end of the month. 

However, it’s important to remember the introductory period won’t last forever, and often the increased interest rate at the end of the introductory period can be extreme. Having zero percent APR can make it too easy to get carried away with overspending, so be careful not to accumulate so much debt that you won’t be able to pay if off before that higher interest rate kicks in.

3. When the credit card’s APR is less than your loan offer

Whenever you’re looking to borrow money, it’s important to weigh the pros and cons of your choices, and one of the best ways to do so is by calculating the APR of each. 

Whether you’re looking to get a loan through your local bank, an online lender, or you’re looking to open a business credit card—calculating the APR will help you determine your monthly payments, interest, and other fees, showing you the total cost of borrowing for each of your options. A bank loan will almost certainly be cheaper than a credit card, but if you get an online loan offer, the APR might be higher than your credit cards. If this is a case, it might be better to stick with a credit card to finance your business. 

4. When the credit card’s APR is irrelevant

Keep in mind that while it may seem obvious to always choose the lowest cost option, it only makes sense if it meets your business’s needs. 

Let’s take the T-shirt designer scenario as an example, and let’s say you’re planning to pay off your debt as soon as you get paid for the large order. If you used a credit card and completely pay off the balance by the end of the month, you won’t be charged any interest. That means the cost of borrowing would effectively be free.

On the other hand, if you went through an online lender for a loan, you may be subject to prepayment penalties, which would void any savings you could have incurred from early payment.

Of course, like any loan option, each business credit card comes with different terms. Some have a spending limit, while others do not (most likely a charge card), and many business credit cards come with rewards. If you do decide to use a credit card to finance your business, make sure the card you choose meets your personal and business needs.


Meredith Wood is the editor-in-chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Prior to Fundera, Meredith was the CCO at Funding Gates. She is a resident Finance Advisor on American Express OPEN Forum and an avid business writer. Her advice consistently appears on such sites as Yahoo!, Fox Business, Amex OPEN, AllBusiness, and many more. 

Was this post helpful?
Created with Sketch.
Infusionsoft cornerstone spinner
close button
Subscribe to our weekly newsletter!

5 Reasons to Subscribe:

1. Weekly tips to dominate sales and marketing

At our core, we're focused on helping you become a sales and marketing machine. We tap into the genius of the best salesfolks and marketers out there to give you daily tips to grow your leads, make more sales, and keep more customers.

2. Expert small business resources that cost you zero dollars

Want to go deep? We have you covered with free guides, webinars, and tools on a range of topics from marketing automation, CRM, and digital marketing to building sales and marketing strategies from the ground up. All for free. All for you.

3. We're focused 100 percent on small business success

We exist for one reason: helping small businesses succeed. We give you the ideas and insights you need to blow the competition out of the water. We serve business owners who are hungry to put in the hard work to grow their business and own the market.

4. We do the work for you

Running a small business is a 110 percent endeavor. You don't have time to surf Internet for the best small business insights and ideas out there. We'll do that for you with the best original content from our team and from industry experts and small business owners.

5. But wait, there's more!

Small business success means more than just sales and marketing, so we also hit on a range of topics to help your small business thrive, including personal and business growth, customer service, and business management.

6. Righteous GIFs

OK, we said five reasons, but we like to overdeliver...and GIFs. We really like GIFs. You're bound to see some righteous ones.

GIF of Ferris Bueler principal's assistant

P.S. We'll never give out your information. We'll only use it to send you awesome content and resources, if you're cool with that.