27 Aug 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%