Why a Small Business Loan is Better Than Credit Card Debt

According to the US Small Business Administration, 65 percent of all small businesses rely on credit cards for many of their purchases.

A business credit card may be useful for covering daily expenses, but attempting to fund all of your business operations with credit can tie up important capital in a revolving cycle of debt payments. The next time your small business needs extra funds, consider the benefits of taking out a Working Capital business loan.

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More Options

When you get a business credit card, you’re limited to a handful of choices. Loans, on the other hand, can be obtained from a variety of lending institutions. You can go to a bank, a credit union, the Small Business Administration (SBA) or an alternative loan lender to get the money you need. The SBA offers multiple loan programs to help businesses with specific requirements. Options include microloans for small purchases, loans for rural businesses and help for women-owned businesses.

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It can take a while to obtain a loan through a bank, credit union or the SBA. If you need quick access to capital but you don’t want to expose yourself to the predatory practices of a merchant cash advance, consider a Working Capital loan from ARF Financial.


When you take out a business loan, you have two choices:

  • Term loans provide a lump sum up front that is then paid back with interest over a given period of time.
  • A line of credit gives you access to a set amount of money that you borrow and pay back as many times as you want.

Term loans are best when you need to make large purchases, and they allow you to take longer to pay the money back than you’d get when using a credit card. Lines of credit can be used like credit cards to support daily operations without worrying about unpredictable fees.

Greater Security

Credit cards are subject to compromise from data breaches at vendors and financial institutions. Your card may also be stolen by one of the many people going in and out of your offices every day. The money you get from a loan can’t be accessed by anyone but you, so you can be sure that the funds are always there when you need them. 

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Funding for Growth

Choosing a loan gives you freedom to grow your business because you’re not bogged down by constantly having to pay off credit card debt. Being able to fund the purchase of new equipment or large amounts of inventory provides the tools to create a constant stream of revenue that supports your business in the long term.

A small business loan gives you the money you need while freeing up more funds that can be invested back into the company. A better fee structure and more reliable financing lets you pay off your debt faster and continue operating without unnecessary expenses.