Credit Card vs. Business Loan: Comparing Interest Rates


With the growth of marketplace financing platforms that offer an array of loan options like Quote 2 Fund, financial pundits have begun asking: Is using a credit card the most cost effective means to finance a business? In a recent  Forbes article entitled “Credit Card Companies At Risk From Alternative And P2P Business Lenders,” contributor Marc Prosser sets out to answer that question.

His assessment includes a comparison of credit card APR and other common financing programs:

Comparison of Credit Card APR and Other Financing Products

  • Bank loans: 5-15%
  • SBA loans: 6-9%
  • Credit Cards: Around 16%
  • Peer2Peer and Peer2 Business Loans: 5-30% but typically around 15-30% for all but the most creditworthy borrowers.
  • Non-Profit Lenders: 18-35%
  • Invoice Factoring: 28-60%
  • Alternative Online Lenders: 30-70%
  • Merchant Cash Advances: 80-130%