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July 19, 2022

SBA 7(a) Loan or Credit Card: Decide the Best Way to Finance Your Small Business

Are you looking for ways to fund your small business? If yes, you should consider applying for a 7(a) Loan or credit card. These two financing options can provide you with the capital your business needs.  

There are pros and cons to both Small Business Administration (SBA) 7(a) and credit cards. They each offer unique benefits and drawbacks. To decide which option is better, you’ll need to weigh the pros and cons of each.

What is an SBA 7(a) Loan?

An SBA 7(a) loan is a government-backed, long-term loan explicitly designed for small business owners. 

The Small Business Administration (SBA) was created in 1953 to provide loans to small businesses that would otherwise go unserved due to a lack of capital. Since then, the program has grown into a significant source of financing for small businesses across the country. SBA 7(a) loans have a maximum loan amount of up to $5,000,000 and can be used for a wide range of business uses.

Pros of an SBA 7(a) loan


With amounts up to $5,000,000, you can fund multiple projects with a single loan, from commercial real estate to working capital to closing costs. 

Here are some ways you can use an SBA 7(a) loan: 

  • Buying commercial real estate your business will occupy
  • Expanding your business 
  • Purchasing furniture, equipment, and supplies
  • Buying out a partner, refinancing existing business debt 
  • Buying an existing business

Lower down payments

SBA 7(a) loan down payments are usually lower than commercial loans.

Non-bank lenders

You like your bank, but they can’t help you secure an SBA 7(a) loan. No worries. Consider working with a non-bank lender, like Fund-Ex Solutions Group, and keep your business banking relationship.

Long-term loan

You can repay an SBA 7(a) loan over a longer time than a business credit card or commercial loan – up to 10 years on equipment, inventory, and working capital and 25 years fully amortized for commercial real estate.

Cons of a SBA 7(a) Loan

The minimum loan amount may be more than you need, and a down payment and collateral are typically required. Collateral can be anything from cash assets to equipment, inventory, or even real estate. But unlike other commercial loans, SBA 7(a) loans follow strict requirements, protecting you against excessive fees. At Fund-Ex Solutions Group, we’re cash-flow lenders. That means if you own or are looking to buy a business with solid, historical cash flow or, in some cases, projected cash flow, we may be able to help you get the funds you need without depending on physical assets as loan collateral.

What is a Business Credit Card?

A business credit card is designed with business owners in mind. Several cards can be linked to one account so that you and your employees can make business purchases seamlessly. There are usually rewards tailored to the needs of businesses.

Pros of a Business Credit Card

Using a business credit card saves time. It’s like having a revolving line of credit that you can use over and over without needing to reapply. Getting approved for one is significantly easier than applying for a loan. Unlike a business loan, a credit card won’t require collateral and can be interest-free if you pay your balance off monthly. Business credit cards also make it easy to track purchases and offer rewards programs like cash back. Our friends at BHG Money offer cards with multiple employee accounts, assigned spending levels, and individual billing statements, helping you stay on top of each transaction. Plus, with a BHG Money credit card, you can earn up to 3% cash back on purchases, depending on the selected product and spend categories.1,2

Cons of a Business Credit Card

While having a business credit card can solve many problems for your business, it can’t do everything. Occasionally, your business credit card isn’t the best option, like purchasing vehicles or buying commercial real estate. That’s not all. Sometimes, these cards have variable interest rates, complicating your cash flow. It’s also wise to remember that not staying on top of your payments or carrying a high balance can adversely affect your credit score, which can be problematic for your business.

When to Choose an SBA 7(a) Loan

  • You need a large amount of money ($350K – $5M)
  • You need to make a significant investment/purchase expensive equipment etc.
  • You need years to pay off the loan
  • You want to refinance old debt 
  • You’d like to make a large business investment: Buy a building, acquire a business
  • Your return on your investment is beneficial 

When to Choose a Business Credit Card

  • You need short-term financing
  • You will utilize credit card benefits 
  • You have ongoing expenses
  • You only want to pay interest on what you have borrowed 
  • You want the ability to build credit for your business 
  • You keep your business and personal spending separate 
  • You are eligible for promotional rates


All businesses are different, so there’s no one-size-fits-all solution to run them. If you decide that a small business loan best fits your needs, Fund-Ex Solutions Group has a fast, streamlined process and is happy to help. We’re a preferred SBA Lender and one of only 14 non-bank lending companies licensed by the SBA to offer 7(a) loans. Our team has decades of experience to help you get the funding your business needs to succeed. 


1 We group similar merchant category codes into Purchase Categories that are used to calculate the stated rewards. We make every effort to include all relevant merchant category codes in the listed Purchase Categories. However, even though a merchant or the items that it sells may appear to fit within a Purchase Category, the merchant may not provide us with the merchant code that will fall within that Purchase Category. Because of this, we cannot guarantee that a purchase will qualify for more than the standard 1 point per dollar spent as any purchase where a merchant uses a category code outside of the eligible Purchase Category does not qualify for additional rewards cash back.

2 Rewards options are subject to change without notice.