How you access the money
A business credit card works at checkout. You swipe it, tap it, or use a digital wallet, and the purchase posts against your credit limit instantly. You're spending against the card, not pulling cash out of it.
A line of credit works differently. You request a draw, and the lender sends actual cash straight into your business bank account. You can then use that cash for anything, payroll, rent, a supplier invoice, not just a purchase somewhere that accepts your card.
Loot's line of credit sends funds directly to your bank account, as fast as the same day once you're approved, using instant transfer rails like FedNow and RTP.
Fees: what each one actually costs
Credit card fees typically include:
- An annual fee, common on cards with stronger rewards, ranging from $0 to several hundred dollars
- Transaction fees, like a foreign transaction fee or a late payment fee
- A cash advance fee if you pull cash from the card, usually 3% to 5% of the amount
Line of credit fees typically include:
- A draw fee some lenders charge, often 1% to 4% of the amount you draw
- A maintenance or annual fee some lenders charge to keep the line open, whether or not you use it
- Interest on the amount you've drawn, which is the main ongoing cost
Loot doesn't charge a maintenance fee, so you're not paying anything just to keep the line open when you're not using it.
Interest and repayment: grace periods and payoff flexibility
Credit cards give you a grace period, typically 21 to 30 days between your statement closing and your payment due date. Pay your full balance within that window, and you pay no interest on those purchases.
That grace period disappears the moment you take a cash advance on a credit card. Interest starts accruing the day you pull the cash, usually at a higher rate than your regular purchase APR, plus a separate cash advance fee.
A line of credit runs on a different rhythm. A card is built for the everyday purchase you'll clear in a few weeks. A line of credit is built for the bigger draw you'll carry a bit longer, so interest starts when you draw instead of after a grace period. What you get in return is control over how you pay it back. And with Loot, if you pay it off early, you save up to 50% on what's left.
Line of credit vs. credit card: quick comparison
| Business credit card | Line of credit | |
|---|---|---|
| How you access funds | Swipe, tap, or digital wallet at checkout | Draw cash directly into your bank account |
| Grace period | 21 to 30 days on purchases, none on cash advances | None. Interest starts when you draw |
| What you pay for | Annual fee, transaction fees, interest if you carry a balance | Draw or maintenance fees (lender-dependent), interest on what you draw |
| Typical limits | $1,000 to $50,000 | $5,000 to $250,000+ |
| Rewards | Cash back or points on purchases | None |
| Best for | Everyday purchases and short-term float | Larger cash-flow gaps, inventory, payroll |
When each one fits
A credit card fits well for:
- Small, everyday purchases like office supplies or gas
- Building rewards or cash back on spend you'd have anyway
- Short-term float you can pay off before the grace period ends
A line of credit fits well for:
- Larger cash-flow gaps, like payroll or a big supplier order
- Restocking inventory ahead of a busy season
- Getting real cash into your account, not just spending power at checkout
Most businesses use both: a card for daily spend and the rewards that come with it, a line of credit for the bigger, less predictable stuff.
According to the Federal Reserve's 2026 Small Business Credit Survey, 86% of small businesses use financing on a regular basis, and credit cards are the single most common product they use.¹ For many, a line of credit is the next tool they add once a card alone can't cover a bigger cash-flow need.
Bottom line
A credit card and a line of credit solve different problems. A card is fast and rewarding for purchases you'll pay off quickly. A line of credit puts real cash into your account for the bigger, ongoing needs a card can't cover well, like payroll gaps or inventory pushes. Most businesses end up using both.
No minimum credit score, and checking your eligibility won't affect your credit score.
¹ Federal Reserve Banks, 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey, fedsmallbusiness.org
Blackbeard
Senior Content Strategist · Small Business Finance · Loot
Blackbeard writes about cash flow, lending, and financial planning for small business owners, drawing on eight years of covering SMB finance. Blackbeard holds a B.S. in Finance and has contributed to several small-business banking publications.
FAQ
It depends on how you pay it back. A credit card costs nothing extra if you pay the full balance within the grace period. A line of credit starts accruing interest the moment you draw, so it's built for cash you'll use for a while, not a purchase you'll pay off in a few weeks.
No, interest starts the day you draw. What you get instead is flexibility on repayment: with Loot, there's no maintenance fee, no penalty for paying it off early, and you save up to 50% on what's left if you do.
Yes. Many businesses use a card for everyday purchases and rewards, and a line of credit for larger or less predictable cash needs, side by side.
It varies by lender. Many require a minimum FICO score in the 600s; Loot sets no minimum score and underwrites based on your business's cash flow instead.
Not with Loot. Checking your eligibility is a soft pull, so it never affects your credit score, whether or not you move forward.
Once approved, Loot sends funds as fast as the same day. Getting approved itself takes as little as a few minutes, powered by an automated review.
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