Watch the video above to see a brief comparison of the different lending products and features, to help you understand how credit options can support every stage of your business journey.

 

Video transcript:

 

[Visual title: Borrowing options for small businesses]

 

Most small businesses use credit—like a loan or a credit card—at some point.

 

[Visual of a small business owner accepting a delivery of soil and seeds]

 

Let’s take a quick look at some borrowing options that can help you cover anything

 

[Visual of a flower truck expanding into a larger truck]

 

from the day-to-day to a big expansion.

 

[Visual showing Business credit card, Grace period and Next billing cycle]

 

If you haven’t established your business’s credit yet, getting a business credit card could be a good place to start. It’s great for everyday purchases, and business cards may come with a grace period—where you won’t be charged interest on your purchases until the next billing cycle.

 

[Visual of Cash back and Travel rewards cards]

 

And many credit cards have rewards programs—like cash back or travel rewards.

 

[Visual title: Unsecured lines of credit]

 

Now, an unsecured line of credit works like a credit card, but it gives you a lot more flexibility. The main difference is that you can use your entire credit line as cash—

 

[Visual of a hand looking over Invoices and Payroll]

 

which means you can use it for any of your business's operational expenses.

 

[Visual showing higher credit line and lower interest rate on unsecured line of credit vs. a credit card]

In addition, the amount you can borrow using an unsecured line of credit is often more than you can with a credit card. And the interest rates on an unsecured line of credit are often lower than those on a credit card.

 

Like a credit card, the interest rate is variable, and your minimum monthly payments are based on how much you’ve borrowed. However, there's no grace period—meaning interest will start to accrue on what you borrow as soon as you borrow it.

 

But, because of the lower interest rate, an unsecured line of credit can be a cost-effective way of covering the gaps between your payables and receivables—if you need the access to credit.

 

[Visual title: Secured term loan]

 

Now, you might choose a secured term loan if you're looking to cover a large expense like new equipment or a renovation.

 

The loan is secured by the item you're purchasing. This works like an auto loan, where you offer the asset you're purchasing, your car, as collateral.

 

[Visual of types of secured term loans: Equipment loan, Commercial vehicle loan, Real estate loan]

 

Unlike a line of credit, secured term loans are more structured: you’ll receive the money for your purchase all at once, and you'll make fixed monthly payments over a predetermined amount of time. For example, you might get a 5-year loan. That means your loan should be paid off within 5 years.

 

There are different types of secured loans that serve different purposes.

Some have specific lending requirements. But these loans generally have lower interest rates than you'd get from an unsecured line of credit,

 

[Visual of a flower truck transforming into a flower storefront]

 

which may help if you're planning on a major upgrade for your business that you'll need a few years to pay off.

 

Different borrowing options will have different pros and cons for you and your business.

 

[Visual weighing hypothetical pros and cons of a Business credit card, Lines of credit and a Secured term loan]

 

Get in touch with your small business specialist to learn more about your options and how Bank of America can help your business grow.

 

[Visual: Bank of America logo]

 

Banking products and services provided by Bank of America, N.A. Credit cards issued and administered by Bank of America, N.A. Credit cards, credit lines and loans are subject to credit approval and creditworthiness. Some restrictions may apply. Bank of America is a trademark of Bank of America Corporation. Bank of America, N.A. Member FDIC © 2019 Bank of America Corporation.

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