If you’ve had trouble being approved for a merchant account at a bank or you’ve hit unexpected roadblocks with payment processing, you might be operating in what’s considered a high-risk industry.

That doesn’t mean your business is doing anything wrong. It only means there’s more complexity involved when it comes to issues like chargebacks, fraud prevention, or regulatory requirements.

Here’s what a high-risk merchant account is, why some companies are labeled as high-risk businesses, and what to expect if you’re looking to get approved.

Table of contents

What is a high-risk merchant account?

A high-risk merchant account is a special type of merchant account designed for businesses with a higher risk of issues like chargebacks for disputed transactions or fraud. If a business is deemed high risk, its bank or credit union may require it to open a high-risk merchant account. These often come with higher fees and stricter contract terms to make up for the risk involved and extra administrative expenses.

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What makes a business high risk?

A business may be considered high risk by a bank or payment processor if it operates in an industry that tends to see higher levels of returns, fraud, or regulatory scrutiny. Online gambling, cannabis sales, adult entertainment, and firearm distribution are some common examples of high-risk businesses. However, you don’t have to be in a controversial industry to be considered high risk. Many ecommerce businesses that operate within the rules can still find themselves navigating stricter payment requirements, higher fees, or more rigorous underwriting processes.

For example, businesses that typically handle large transactions face higher chargeback rates. Because a single dispute can represent a major loss, payment providers may see these businesses as financially riskier to support. On the flip side, very low-value transaction values, especially in high volumes or recurring charges, can also raise red flags due to fraud screening and customer disputes.

Service-based businesses—like those offering web design, bookkeeping, or search engine optimization services—can also be considered high risk. These services are sometimes viewed as subjective or difficult to fulfill to a customer’s satisfaction, which may lead to payment disputes. The same applies to dropshipping stores or merchants selling digital products (like ebooks, software, or online courses), where delayed delivery or confusion around what’s being sold can increase refund or fraud claims.

A business’s risk level is based on factors like:

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Chargeback rates
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Regulatory scrutiny
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Fraud potential
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Financial stability
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Industry reputation
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Typical transaction value
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Business credit history
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Age of the business
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Domestic vs. international sales
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Pros and cons of high-risk merchant accounts

High-risk merchant accounts come with trade-offs, but they let businesses accept credit card payments when a traditional bank or payment processor may turn them away. Here are some of the pros and cons of a high-risk merchant account:

Advantages

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Access to payment processing. If your business operates in a high-risk industry, these accounts make it possible to accept debit and credit card payments, as well as digital wallets. High-risk payment processing lets you reach more customers and grow faster.
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Support for global sales. Many high-risk providers are set up for international transactions, offering multicurrency support and tools to help you sell across borders.
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Stronger fraud protection. High-risk merchant accounts often come with advanced security features designed to spot suspicious activity and reduce chargebacks—helping you protect both your revenue and your reputation.
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More flexibility with sales volume. Businesses with high or fluctuating transaction volumes may find fewer limits or transaction caps with a high-risk merchant account, giving you more room to grow without hitting a trip wire that freezes the account.
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Higher chargeback threshold. Some high-risk merchant account providers are more forgiving of excessive chargebacks, which can be a game-changer if your industry tends to deal with more transaction disputes than average.
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Drawbacks

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Higher fees. These accounts come with extra risk and administrative expenses for providers, and your merchant service provider will pass on some of that cost to you. Expect to pay more in setup costs, monthly fees, and per-transaction charges.
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Reserves. Many high-risk accounts require you to keep a percentage of your sales in reserve, in case of high chargeback ratios. This feature can strain your cash flow, especially if you’re just starting out.
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Slower payouts. You might not get access to your funds as quickly as you would with standard merchant processing accounts. Settlements may take as long as three business days, making it harder to manage your cash flow.
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Stricter contracts. High-risk accounts often come with more complex terms, including longer commitments, early termination fees, or charges for rule violations.
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Perception issues. Being labeled “high risk” can carry a stigma. It may raise doubts among potential partners or lenders, even if you’re running a legitimate and well-managed business.
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How to find a high-risk merchant account

Choosing the right high-risk merchant account provider can make a big difference in how smoothly your business runs.

Rather than open one of these accounts at a bank or credit union, businesses operating in high-risk industries can use a third-party company like an ISO/MSP (independent sales organization/merchant services provider). Adyen, Authorize.net, Cybersource, PaymentCloud, and Trust Payments are just a few examples of these high-risk merchant account providers. Some high-risk merchant services providers integrate with popular ecommerce platforms like Shopify as well as some accounting software to process transactions.

Here are some key factors to consider for high-risk businesses:

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Clear, upfront pricing. A high-risk merchant account should offer a smooth application process and transparent pricing on setup, monthly charges, payment processing fees, and any other costs.
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Industry expertise. Check the merchant account provider’s website to find a list of high-risk industries they work with. A provider that understands your industry is better equipped to offer relevant solutions and help you navigate the challenges that come with your specific business model.
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Flexible contracts. Long-term contracts with steep cancellation fees can make it hard to pivot if your business needs to change. Merchant account providers with flexible terms are a better long-term partner.
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Proven track record. Check out reviews and testimonials, especially from other high-risk businesses like yours. A strong reputation signals that the provider can deliver payment processing solutions.
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Built-in security. High-risk businesses are more vulnerable to chargebacks and fraud. Make sure the provider offers strong security features and fraud prevention tools.
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Responsive support. Reliable customer support matters, especially when payments are on the line. Look for providers that offer 24/7 help across multiple channels.
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Platform compatibility. Ensure your provider’s payment solutions integrate smoothly with your ecommerce setup and other tools you use.
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International sales. If you sell globally, check whether the provider supports multiple currencies and understands the rules for cross-border transactions.
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Read the fine print. Before signing a contract, take time to understand the full agreement, including contract length, cancellation policies, and any clauses that could affect your operations.
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High-risk merchant account FAQ

What is a high-risk merchant account?

A high-risk merchant account lets you process credit card payments and other electronic transactions when you operate in a high-risk industry. These bank accounts are designed for high-risk businesses and may come with higher costs to make up for the increased risk and extra administration expenses of high-risk payment processors.

How much does a high-risk merchant account cost?

Pricing varies with each high-risk merchant account provider. Monthly subscription fees on high-risk merchant accounts can range from about $5 to $45, and per-transaction fees usually amount to 1.95% to 2.4% of the total sales amount. Generally, these costs will be higher than for traditional merchant accounts with low risk.

What are some examples of high-risk merchants?

Some examples of high-risk merchants include adult entertainment websites, cannabis dispensaries, businesses that provide subscription services, and travel agencies. These businesses have increased risk factors like a higher risk of fraudulent transactions and high chargeback ratios.

What makes a transaction high risk?

A transaction is considered high risk when there’s an increased chance of fraud, chargebacks, or legal issues.

","excerpt","High-risk merchant accounts offer services to businesses in riskier industries, where chargebacks and fraud are more likely.","excerptHtml","

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High-risk merchant accounts offer services to businesses in riskier industries, where chargebacks and fraud are more likely.

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Credit card processing fees are a cost of doing business in ecommerce—but they don’t have to cut deeply into your profits. Whether you’re looking to pass these fees on to your customers or find smarter ways to reduce their impact on your business, understanding how processing works can help you make more informed decisions. Here’s a look at what these fees are, how they affect your bottom line, and the most effective (and compliant) ways to manage them.

Table of contents

What are credit card fees?

Credit card processing fees are transaction fees you pay when accepting credit and debit card payments. Merchants spend an average of 1.7% to 3.5% of each transaction on these payment processing fees. The amount you pay can vary based on factors like the way the card is processed, the type of card, and the payment processor.

The fee is usually calculated as a small percentage of the total transaction plus a fixed dollar amount, such as 2.9% + 30¢. On a $100 card transaction, for example, the fee would equal $3.20. That amount is split up accordingly:

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Interchange fee: The interchange portion of the credit card processing fee goes to your customer’s issuing bank (e.g., Chase Bank or Capital One). It helps cover the costs associated with processing card transactions, such as fraud protection, risk management, and the overall infrastructure of the payment system.
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Assessment fee: This fee is paid to the card networks, like Discover, American Express, Mastercard, and Visa. It covers the costs of operating and maintaining the payment processing infrastructure.
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Payment processor fee: Your payment processor charges you this fee for handling the transaction. Some providers itemize these costs (interchange-plus pricing), while others roll them into a single rate (flat-rate pricing).
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How to pass on credit card fees to customers

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Adding a surcharge to credit card payments allows you to pass along the costs of the credit card processing fees to your customers. A surcharge differs from a convenience fee, which merchants can impose when accepting a payment method outside of their normal checkout flow.

Consult with an attorney first if you’re considering a surcharge policy. If you decide to proceed with a surcharge policy, you’ll need to follow a few basic guidelines:

Determine whether surcharges are legal in your state

Surcharging a customer’s credit card transaction could make sense for some merchants, but you’ll need to check laws in your state and, if you sell online, the states where your customers live. Three US states (Connecticut, Maine, and Massachusetts) currently ban surcharges. Other states restrict surcharging to a limited degree—and surcharge laws can always change due to court challenges.

You’ll need to comply with the surcharge laws of your state when selling in person. If you sell online and your state allows surcharges, you’ll need to follow the laws in the state or territory where the customer is located. Thus, the same store’s retail POS and online checkout might need to offer different surcharge options.

Follow regulations

The maximum you can charge is the actual cost of accepting credit card payments. Beyond this, credit card networks, federal law, and state laws may also place limits on what you can charge. Within those guidelines, merchants must follow the most restrictive limit that applies to their situation, which is typically the lowest applicable cap:

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Credit card networks: Visa caps surcharges at 3%, while Mastercard sets a higher limit of 4%.
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Federal law: Federal law limits surcharges to 4% of the transaction amount.
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State laws: Some states set a different maximum or outlaw surcharges altogether. Check your state law (and the state law where the customer lives) for details.
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Notify the credit card networks

Visa, Discover, and Mastercard require written notification at least 30 days before you start imposing a credit card surcharge. American Express doesn’t require advance notice.

Display notices

Merchants must disclose their surcharge policy or the fee itself in three places:

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At the customer’s point of entry, such as the front door of your physical store or the first page of your website
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At the point of sale, such as your shop’s payment terminal or your website’s checkout page
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As an itemized surcharge fee on the customer’s receipt
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Only surcharge credit card payments

All states prohibit surcharging on debit cards or prepaid debit cards. This applies even when the card is run as a signature-based transaction without the PIN.

Choose your surcharge type

Merchants can’t charge a fee for all credit cards and then an additional fee for card products with higher processing costs. You’ll need to choose between “brand-level” or “product-level” surcharge:

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Brand-level: You’ll impose the same surcharge amount for each brand of credit card—Visa, Mastercard, American Express, or Discover—regardless of issuer. The surcharge can’t exceed your average discount rate for a brand’s credit card transactions or 4%, whichever is less.
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Product-level: You’ll impose the same surcharge for each type of credit card—such as rewards cards, premium cards, business cards, etc.—regardless of the issuer. The surcharge can’t exceed either 4% or your average discount rate for credit card transactions of that particular product, within guidelines.
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Alternative strategies to reduce credit card fees

Surcharging allows you to pass along the costs of credit card processing fees to your customers, but it could impact your business. Customers may switch to a different payment method to avoid the fee—or they may take their business elsewhere if they feel the surcharge is unfair.

If your state outlaws surcharges or you don’t want to impose them on your customers, you still might want to reduce credit card fees where possible. Here are some options:

Set a minimum purchase amount

You can encourage customers to place larger orders by setting a minimum purchase amount for credit card payments. In the US, businesses are allowed to require a minimum of up to $10 for credit card transactions. While this approach is more common among brick-and-mortar retailers that sell low-cost items, some ecommerce merchants—especially those offering digital goods or inexpensive products—can use it to help offset processing fees.

To use this method, post a clearly visible sign that explains the rule, such as \"$10 minimum for credit card purchases,\" and decline card payments under that threshold. This reduces fees on low-dollar transactions where interchange costs eat into profit margins. This strategy may also help boost sales and lower credit card processing fees, especially for smaller merchants who can’t easily absorb these costs. But it may also frustrate customers, who may decide to shop elsewhere.

Offer a discount or dual pricing

Another option for lowering your card processing fees is offering a small discount to customers who use a cheaper payment method, such as cash or ACH payment. Some businesses use a dual pricing approach, where the regular price includes credit card fees and a discounted price is shown for alternative payment methods.

While this is more commonly seen in person—like at gas stations—some ecommerce merchants apply the same idea by offering a small discount at checkout for customers who pay with bank transfer, PayPal balance, or other low-fee options. With this strategy, merchants aren’t actually passing on credit card fees—they’re avoiding credit cards altogether. And in both cases, the customer can choose how to pay and see the cost difference upfront.

If you want to use the cash discounting or dual pricing methods, you’ll need to use clear signage and train staff to comply with card network rules and avoid confusing customers.

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Seek lower credit card processing rates

Instead of passing on credit card fees to customers, you could absorb the fees yourself and use different strategies to offset processing costs:

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Choose interchange-plus pricing if offered: This pricing model is more transparent and often cheaper than flat-rate models, especially as sales volume grows.
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Negotiate a lower rate: Some payment processors are willing to negotiate a reduced rate in agreement with credit card providers.
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Compare quotes from multiple processors: Review the fee structure for common processors to determine which best suits your business.
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Settle transactions promptly: Processing (batching) payments within 24 hours helps avoid downgraded interchange fees from Visa and Mastercard.
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Passing on credit card fees to customers FAQ

Can I pass on credit card fees to my customer?

Potentially, yes. You can pass credit card fees to customers in the form of credit card surcharges, as long as your state law (and state law where your customer lives, if selling online) allows it. You might decide against surcharging if your customers can easily get a similar product or service elsewhere, or if you typically handle large transactions.

How do I inform customers of credit card fees?

Visa has sample surcharge disclosure signage. You’ll need to post a sign at the customer’s point of entry, which could be at your physical store’s front door or your website’s welcome page. You’ll also need to include a note at the point of sale, such as your cash register, online payment page, or customer invoice. The surcharge must also be itemized separately on the customer’s receipt.

In what states is it illegal to charge credit card fees?

As of 2025, it’s illegal to impose surcharges on credit card transactions in Connecticut, Maine, and Massachusetts. A handful of other states—California, Colorado, Georgia, Kansas, Minnesota, New York, New Jersey, South Dakota, and Texas—allow surcharges but impose some restrictions.

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Passing on credit card fees to customers is legal in many states. To do so, follow regulations, notify the credit card networks, and display notices.

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Securing a business loan isn’t always straightforward, especially if you’re short on time, operate in a niche industry, or don’t know which lenders are most likely to say yes. That’s where a business loan broker can help.

These financial pros act as a bridge between you and potential lenders, helping you find financing that fits your needs and guiding you through the application process.

A broker can be convenient, but their services come at a cost, and not all brokers operate the same way. Here’s what to know before you decide whether to work with one.

Table of contents

What is a business loan broker?

A business loan broker, also known as a commercial loan broker, is a financial professional who helps businesses find and secure financing by matching them with suitable lenders.

These loan brokers work independently but leverage their contacts to help you get a business loan that best fits your situation on competitive terms. When you need commercial financing, business loan brokers will contact lenders, negotiate on your behalf, and guide you through the loan application requirements and process.

But a broker charges fees and commission for their services, and in some cases, they may encourage you to take out pricey loans, particularly if their compensation is tied to the loan amount or its terms.

Loan broker vs. loan marketplace

Loan brokers and loan marketplaces both provide small business owners with financing options, but they work in different ways.

A commercial loan broker is an individual with deep knowledge of the market for business loans and the lenders and banks that are seeking borrowers. Brokers guide clients through the procedure of determining financing needs, sorting through the various loan products, managing paperwork, and helping the company negotiate loan terms.

A loan marketplace typically refers to an online platform that serves as a digital matchmaker. You provide information about your business and what you’re looking for, and the platform presents automated offers from its partner lenders. The lenders contact you directly to finalize terms. Fundera, Lendio, and LendingTree are all examples of loan marketplaces.

Using an online loan platform could make sense if you:

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Want more control over the process
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Don’t operate in a high-risk industry, such as firearm or cannabis sales
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Have stable revenue
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Don’t want to pay a higher interest rate
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Hiring a commercial loan broker could be helpful if you:

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Don’t have a lot of time to dedicate to the process
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Operate in a niche or high-risk industry
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Need hands-on help with the loan application
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A loan marketplace can also refer to the vast market of different lenders and loan options you can shop yourself. This entails researching banks, credit unions, and online lenders individually, then contacting the lender and applying for the loan that best fits your financial needs.

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How to work with a loan broker

If you’re new to working with a business loan broker, here’s how it usually works:

1. Find a loan broker

You can search online for a small business loan broker in your area for a quick and direct approach. Or, someone at your local Small Business Administration Development Center can help you find a broker or brokerage firm. You can also ask another business owner or a colleague for a referral.

2. Have a two-way discussion

Once you contact a commercial loan broker, schedule a consultation to discuss your business financing needs. Let the broker know how you will use the loan proceeds and how much you want to borrow. They may ask questions about your business, such as your industry, years in operation, annual revenue or profit, and credit rating.

At the same time, ask the broker questions about their fee structure, credentials, and experience in your industry. If you’ll be responsible for paying their fee (rather than the lender paying it), make sure it fits with your budget.

3. Gather documents

The loan broker should give you a checklist of documents you need for the loan application. These may include:

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Personal and business tax returns
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Profit and loss statements
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Balance sheets
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Bank statements
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Business licenses and/or incorporation papers
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Contracts or invoices if the loan is tied to a specific project
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4. Review your broker’s proposal

The broker takes your loan application and contacts lenders in their network who are likely to approve your loan request. Then the broker will present offers with details, such as:

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Loan amount
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Interest rate
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Term length
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Fees
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Total repayment cost
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Your business loan broker should go through the main pros and cons of each option and answer questions about terms and obligations.

5. Negotiate with the lender

With several offers in hand, the business loan broker will negotiate on your behalf. They may try to get better rates and terms or lower fees. This step is more common for businesses that are borrowing a large amount or have strong credit and finances.

6. Select your lender and loan product

It’s time to choose the lender you want to work with and the loan product you want. Your broker will coordinate with the lender for final underwriting and closing requirements. You may need to provide additional documentation, answer questions, and sign loan agreements.

7. Receive funding and pay broker

Once the lender approves your business loan, it will transfer funds to your business bank account. The broker gets paid either by the lender, by you, or both, depending on your arrangement.

How to choose the right loan broker

Once you find a loan broker, consider the following before deciding to work with them.

Fees

A loan broker should be upfront about how they’re paid. Typically, brokers charge a fee that equals a small percentage of the total loan amount, typically 1% to 3%. Some brokers may also charge an upfront flat fee.

They should clearly explain whether their fee comes from you, the lender, or both, and whether the fee is a flat rate, a percentage of the loan, or built into the loan cost. Avoid brokers who dodge fee questions.

Certifications

Check if the broker is licensed or registered in your state. Some states require this. Membership in professional associations can also signal credibility, indicating that the broker has attended professional training programs. Look into:

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Small Business Finance Association Broker Council
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American Association of Commercial Finance Brokers
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Commercial Loan Broker Association
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Experience

Choose a broker who understands your industry and has a track record of matching similar businesses with the right lenders. An experienced broker can save you time, steer you away from unsuitable products, and help you avoid hidden costs.

Red flags

Be wary of brokers who:

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Push only one loan option without showing alternatives. This could mean they’re motivated by commissions, not your best interest.
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Promise loan approval—no broker can guarantee funding.
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Pressure you to act immediately without giving you time to compare terms.
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Request large upfront fees before doing any work; reputable and successful brokers are usually paid once you secure funding at closing.
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*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months based on sales.

Business loan broker FAQ

What do business loan brokers do?

A business loan broker facilitates the loan process between a borrower and a lender. They help your business find a lender, negotiate on your behalf, and help you submit the application.

What are the benefits of getting a loan through a broker?

Business loan brokers can potentially help you save time by handling most of the loan shopping and application legwork. They may also save you money if they negotiate better loan terms on your behalf.

Is it better to go directly with the lender or a broker?

It depends on your situation. Get quotes directly from a lender or use an online marketplace if you want more control over the process and you don’t want to pay a broker fee. But hiring a business loan broker could be beneficial if you’re pressed for time, operate in a high-risk industry, and want help throughout the application process.

","A business loan broker can help businesses obtain financing they may not be able to secure on their own, but working with a broker often entails a fee.","

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A business loan broker can help businesses obtain financing they may not be able to secure on their own, but working with a broker often entails a fee.

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A mobile credit card reader transforms your iPhone into a powerful point-of-sale (POS) terminal, enabling you to accept payments anywhere your business takes you. These compact devices attach to your phone and pair with mobile point-of-sale apps, allowing you to process customer payments online, in a store, or on the go.

Whether you’re running a food truck, setting up at a pop-up market, or managing a retail store, iPhone credit card readers offer the flexibility to accept multiple payment methods and never miss a sale. There are many types of iPhone credit card readers, all with different transaction fees, upfront costs, and features to compare before choosing the right one for your business.

Table of contents

When are credit card readers useful?

iPhone credit card readers are useful when you need to sell products away from a checkout counter. This includes businesses like food trucks, pop-up markets, craft fairs, or special events. Instead of limiting yourself to cash-only transactions or losing potential sales, these readers let you offer customers the payment flexibility they expect.

Many readers accept debit cards, credit cards, and contactless payments, ensuring you can serve every customer’s preferred payment method. Some established retailers—like the Apple Store and Sephora—even use mobile card readers in their physical locations. The ability to process payments anywhere on the retail floor, rather than requiring customers to wait in traditional checkout lines, helps streamline the customer experience.

Switching to handheld POS machines is relatively easy and affordable. The card reader itself usually costs less than $100, and it’s attached to equipment that you and your employees may already own. Many devices even offer offline mode, making it possible to process payments without an internet connection—perfect for outdoor markets or events with spotty WiFi.

What to look for in a credit card reader for iPhone

The best iPhone credit card readers offer the following features:

Integrated platforms

Today’s entrepreneurs need a central system to track everything in one place. This allows them to make better decisions based on comprehensive customer and inventory data, and prevents mistakes like selling inventory that’s out of stock.

Your credit card reader app should integrate with your existing POS software. This can help you sync inventory, orders, and customer information between retail channels—and potentially save money in the process. Small businesses that use Shopify’s unified commerce platform, for example, lower their operating costs by 22%.

Security features

POS security is crucial when accepting card payments from your mobile device. To ensure you’re protecting customer data and shielding your business from fraudulent chargebacks, look for readers that offer end-to-end encryption and EMV compliance.

Many top providers also include tokenization, which ensures card data is never stored on your device. Some readers offer extra layers like biometric login or transaction alerts. Choosing a PCI-compliant reader helps ensure your business stays aligned with industry security standards.

Understanding how security varies between card types helps you make informed decisions:

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Magstripe cards store static data that’s easy to copy, making them more vulnerable to fraud.
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EMV chip cards use dynamic encryption for each transaction, offering much stronger protection against counterfeits and data theft.
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NFC (near-field communications) payments (tap to pay) use technology similar to EMV chip cards to keep card details safe.
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If you can choose between accepting chip or NFC cards versus magstripe payments, opt for the former. These options are not only safer, but also allow your business to accept contactless payments, like Apple Pay, benefiting both you and your customers.

Clear pricing that fits your budget

Your credit card reader should come with transparent pricing that clearly explains upfront and ongoing costs. Some plans offer a free card reader, but don’t let the enticing role of a freebie overshadow the fine print—you’ll likely want additional readers as your business grows.

Mobile card readers typically involve these costs:

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Per-transaction fees calculated as a percentage of the total transaction plus a fixed dollar amount. In-person payments usually come with the lowest transaction fees, starting around 2.5% + 30¢, while online payments tend to cost a bit more. Manual card entry typically costs around 3.5% + 30¢.
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Monthly fees determined by the number of readers you have and where you plan to use them. This fee may start around $10 to $15 a month, but it varies with each provider, and you’ll pay more when adding features and staff accounts.
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Hardware costs, which usually ranges from $49 to $99. Optional accessories, like card reader docks, may be available for purchase as well.
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To determine whether a card reader fits your budget, consider which transaction types you expect to handle. If you typically accept in-person payments, for example, compare this type of fee across multiple providers. Also, consider whether you’ll pay a monthly fee or if your needs are basic enough for a free version.

Fast payouts

When comparing credit card readers, consider how quickly you’ll receive your funds after a sale. Most providers deposit funds within one to three business days, but some offer same-day or instant payouts for a fee. Choose options that match your cash flow needs—if you manage inventory or need to cover daily expenses, faster access to funds can be invaluable.

Some providers, including Shopify, offer accelerated payouts when you use their internal tools (like Shopify Balance). Always check the standard deposit time, fees associated with expedited transfers, and whether your bank supports faster payouts.

Best credit card readers for iPhone

Here are the best credit card readers on the market and what they offer:

Shopify

Shopify’s card reader integrates seamlessly into its broader ecommerce ecosystem, allowing merchants to unify in-person payments with online sales. As soon as the card reader processes a payment, Shopify automatically updates your inventory levels, customer data, and orders across all platforms. This integration makes Shopify’s card reader ideal when you operate both a physical retail business and an online store and need all the features working together.

Pricing:

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Monthly fee: Shopify’s Starter plan starts at $5
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Payment processing fees: In person: 2.6% + 10¢; online: 2.9% + 30¢
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Card reader: Starts at $49
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Square

Square’s reader offers a free plan for its POS system. The basic version offers one free card reader (specifically a magstripe reader), no monthly fees, and a clear per-transaction fee menu.

To accept contactless payments and chip credit cards (in addition to magstripe payments), you’ll need to incur the extra cost and upgrade to the $59 Square reader. Both readers come with features that allow you to track sales, accept payments offline, and more.

Pricing:

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Monthly fee: $0
\n
\n
Payment processing fees: In-person: 2.6% + 15¢; online: 2.9% + 30¢
\n
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Card reader: Free magstripe card reader with first order; $59 for a chip and tap-to-pay reader
\n

Vagaro

Vagaro is designed specifically for solo entrepreneurs in the beauty, wellness, and fitness industries. The software comes with a scheduling feature that allows customers to make appointments and earn loyalty points. Merchants that process payments above $4,000 monthly pay lower transaction fees but are responsible for a $10 monthly subscription and other fees. Smaller merchants pay a higher transaction fee but avoid monthly charges.

Note: Vagaro’s mobile reader does not support offline credit card processing.

Pricing:

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Monthly fee: $10 per month for larger merchants; $0 for smaller merchants
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Payment processing fees: Small merchants: 2.6% + 10¢ per transaction; large merchants: 2.2% + 19¢ per transaction
\n
\n
Card reader: $100
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Stripe M2

Stripe M2 offers integration with your existing ecommerce POS terminal. Whether you take payments in person or online, the M2 syncs your data across platforms and allows you to consolidate transactions in one place.

Pricing:

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Monthly fee: None
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Payment processing fees: In-person and online: 2.9% + 30¢ for domestic cards
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Card reader: $59
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Clover GO

Clover GO offers two plans: The free package includes basic reporting tools for tracking sales and transaction history, plus employee profile management. The reader costs $199. The upgrade, at $14.95 per month, offers advanced payment processing tools like detailed sales reports, tax reporting features, payments categorization, employee profiles management, and customer engagement features.

Pricing:

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Monthly fee: $0 for basic package or $14.95 per month for upgrade
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Payment processing fees: 2.6% + 10¢
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Card reader: $199
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Credit card reader for iPhone FAQ

Can an iPhone be used as a credit card reader?

Yes. You can accept credit card payments from your iPhone or other smartphone when you have a card reader and payment processing provider. For example, Shopify merchants can create orders on the Shopify point-of-sale mobile app, connecting it with their card reader to process mobile payments directly from their devices.

What’s the best credit card reader for iPhone?

The best credit card reader for iPhone depends on your specific business needs. Popular options include readers from Shopify, Square, Vagaro, Stripe M2, and Clover Go. Consider factors like your transaction volume, integration needs, pricing structure, and whether you operate both online and in-person sales channels.

Is there a card reader for iPhone?

Yes, several card readers are compatible with iPhone. Shopify POS, for example, is an omnichannel point-of-sale system that syncs information between your online and in-person sales. The reader supports major payment methods including Visa, Mastercard, American Express, and digital wallets for in-person contactless payments.

","A mobile credit card reader might fit in the palm of your hand, but it’s a mighty device that can turn any smartphone into a point-of-sale system.","

$\"Graphic$

A mobile credit card reader might fit in the palm of your hand, but it’s a mighty device that can turn any smartphone into a point-of-sale system.

",{"_2111":2128,"_1854":-5,"_1476":2189},"A mobile credit card reader might fit in the palm of your hand, but it’s a mighty device that can turn any smartphone into a point-of-sale system. ",{"_2111":2131,"_2132":2133,"_2134":2135,"_2136":1666},[-5,-5,-5,-5,-5,-5,-5,-5],"https://cdn.shopify.com/s/files/1/0070/7032/files/what_20are_20business_20credit_20cards.png?v=1690378087","Graphic representation of business credit cards stacked against a gradient background: credit card reader for iPhone","22 Jul 2025",{"_2111":2112,"_1752":2196,"_1829":2197,"_1854":2198,"_2116":2199,"_2118":-5,"_2119":2200,"_2015":2202,"_2123":2203,"_2125":2204,"_1932":2205,"_2129":2206,"_2137":2207,"_2139":2208,"_2141":2209,"_2143":-7,"_2144":-7,"_2145":-7,"_2146":2210,"_2148":2199},"gid://shopify/Article/562999754786","business-line-of-credit-vs-loan","Business Line of Credit vs. Loan: Key Differences","2025-05-13T19:07:59Z",[2201,2121],"author:kim-porter","

Whether you need to fund a project or cover business expenses, there are plenty of financing options out there. Many small business owners turn to business loans and business lines of credit, the two most popular funding options in the Federal Reserve’s Small Business Credit Survey.

But what’s the difference between a business line of credit and a loan? A line of credit allows you to borrow up to your credit limit anytime during the draw period—which is why business owners often use it for covering periodic or emergency expenses. A business loan gives you the money upfront and comes with predictable payments, which you might opt for if you need a large amount for a specific purpose, such as investing in the business’s growth.

These financing options have other key differences as well as similarities. Here’s a breakdown to help you figure out which is right for you.

Table of contents

What is a business line of credit?

A business line of credit (LOC) is a flexible funding option that provides business owners with working capital on demand. It works like a credit card (i.e., you borrow funds up to your credit limit and pay interest only on the funds you withdraw). You can then choose whether to pay off some or all of the balance and borrow again as needed.

Lines of credit often come with a lower borrowing limit compared to what you can get with a business loan, and you may need to pay an annual fee and other costs. These loans usually come with variable interest rates that can rise or fall over the repayment term. That’s why this funding option is typically used by businesses that want ongoing access to financing to even out their cash flow gaps or to tap for emergency expenses.

What is a business loan?

A business loan is more straightforward than a line of credit. You receive the entire loan amount as a lump sum upfront, then repay the balance through installment payments—usually over a few years. Interest rates tend to be fixed and won’t change as you pay off the balance. Unlike a line of credit, you’ll need to apply for more funding if you want to borrow more. Companies that need financing for a specific project, investment, or acquisition might opt for a business loan.

Business line of credit vs. loan: What’s the difference?

Both financing options can provide funds to cover business expenses, but they vary in a few key ways. Let’s dive into the similarities and differences between a business line of credit and a loan.

Amount borrowed

Lines of credit come with a trade-off: a lower borrowing limit (compared with term loans) in exchange for the ability to access your funds repeatedly over the draw period. Borrowing limits often come out to around $250,000 with a draw period of about three to five years.

Business term loans often provide up to $500,000, but some lenders extend much larger loans. For example, some loans backed by the Small Business Administration (SBA loans) reach $5 million.

Fees and interest

Borrowers pay interest, the main cost of borrowing money, on both financing options. Interest is usually expressed as an annual percentage rate, or APR, and acts as compensation for a lender taking on the risk to provide a loan. A higher interest rate results in higher borrowing costs and vice versa.

Lines of credit often come with variable interest rates, while term loans are typically fixed. In a 2024 Federal Reserve study, APRs were slightly lower on lines of credit compared to term loans. An additional benefit: You’ll only pay interest on the funds you draw with a line of credit.

Both loans and lines of credit may also charge fees, such as origination fees, prepayment penalties, and late fees. But lines of credit may come with additional charges, such as annual, inactivity, or per-draw fees.

Repayment terms

With a business loan, you’ll pay off the debt in set installments over the loan term with a fixed interest rate. Each payment usually includes a portion of the loan principal plus interest. This financing option usually comes with longer repayment terms compared to a line of credit.

A credit line is more nuanced. You can typically draw funds from the account repeatedly during a draw period, which can last up to several years, if it’s a revolving credit line. There are minimum monthly payments (which include interest) during this time frame, though you can choose to pay the minimum, pay the entire balance, or do something in between.

You won’t be able to withdraw funds once this period ends. Depending on the terms of your contract, the lender may either require a balloon payment or convert any remaining balance to a loan that’s payable over a brief set period.

Collateral

Business loans and lines of credit can either be secured, meaning they’re backed by business assets, or unsecured. With a secured loan or LOC, the lender can take the collateral and sell it to recoup its losses if you default on payments.

Whether the financing is secured or unsecured depends on a few factors, such as the borrowing purpose and the business owner’s creditworthiness. For instance, equipment financing and commercial real estate loans are often provided as secured loans. Some borrowers with poor credit must provide collateral to reduce the lender’s risk.

If you take out unsecured forms of debt, the lender bases your eligibility on your credit history instead of requiring collateral.

Personal guarantee

A personal guarantee is a statement that you (as the business owner) will step in and repay the debt if the business defaults on its loan terms. These are very common for business financing, whether you take out a business line of credit or a loan. But they differ from collateral, which is a specific asset a lender can take after a business defaults. Collateral doesn’t specifically require the owner to be personally liable.

Eligibility criteria

Before you can borrow money, whether it’s a loan or a line of credit, lenders check your ability to repay the funds. They’ll usually review your credit history, check your monthly revenue, and set a minimum “time in business” requirement. Lenders will also request your recent financial statements and may require that you have a business checking account and a strong credit score.

The qualification requirements vary with each type of lender and the specific institution. Traditional banks often set stricter criteria compared to online banks, credit unions, and CDFIs. Between loans and lines of credit, the latter often have easier qualification requirements.

Some business loans can be used only for specific purposes, such as equipment or real estate. Lines of credit are often more flexible and can be used for any business purpose. But as with any financing option, it depends on the terms of your contract, and lenders usually want you to state the purpose of the loan or LOC when applying for funding.

How to get a business line of credit or a loan

You can get a business line of credit or loan at many different financial institutions. Here’s a breakdown of how you can get the ball rolling with each option.

Credit unions

Credit unions are not-for-profit institutions that tend to offer lower interest rates than their bank counterparts. However, you’ll need to join the credit union before applying for a loan or line of credit. Additionally, credit unions may offer fewer business financing options compared to banks and online lenders. This type of lender is often a good fit for small businesses and startups, as credit unions may be more willing to work with them than traditional banks.

Banks

Large national banks tend to offer low interest rates, but they also set strict eligibility criteria. Approval usually requires a credit score of around 670 or higher, at least two years in business, and annual revenue of around $200,000 or more. If you’re having trouble qualifying with these traditional lenders, try a community bank. In the Fed’s survey, businesses were fully approved more often at small banks than at large banks.

Online lenders

Online lenders are financial institutions that operate entirely online. They often process applications more quickly and set looser eligibility criteria. In the Fed’s survey, small business owners with bad credit were more likely to be approved for financing at online lenders than at other sources. The trade-off is that you’ll typically pay a higher interest rate and more fees to offset the lender’s risk.

CDFIs

Community Development Financial Institutions, or CDFIs, are nonprofit lenders that serve low-income communities and individuals who can’t qualify for a traditional loan, typically due to a lack of credit history and/or collateral. These institutions often provide lower interest rates and longer repayment terms on business financing.

However, businesses usually need to meet strict eligibility criteria, which may explain why only 6% of respondents in the Fed’s survey borrowed from one of these lenders. You can search for CDFIs to see if one matches your needs.

Business line of credit vs. loan FAQ

Is a business line of credit or a loan better?

It depends on the loan’s purpose. A line of credit is best for covering smaller periodic or emergency expenses, while a loan is typically used when you need to borrow a significant amount for a specific purpose.

What credit score do you need for a business line of credit?

A business line of credit usually has lower credit score requirements. Depending on the lender and specific product, you may qualify with a credit score of around 600.

Can an LLC get a business line of credit?

Yes, some LLC business loans come in the form of a line of credit.

","A line of credit allows you to borrow up to a limit anytime during the draw period, whereas a loan gives you funds upfront and comes with predictable payments.","

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A line of credit allows you to borrow up to a limit anytime during the draw period, whereas a loan gives you funds upfront and comes with predictable payments.

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Think of your finances like a busy train station—your personal and business funds are two different lines running on separate tracks. Mixing them in one account is like sending every train to the same platform: confusing, inefficient, and risky.

A checking account is one of the key tools for managing your finances. But it’s important to keep your personal and business finances separate. You need a distinct account to take in your organization’s revenue and pay for business expenses. Having separate hubs for your personal and business funds may even be legally required for some business types.

Understanding the differences between business checking and personal checking accounts can help you better size up your options and know what to look for.

Table of contents

What is business checking?

A business checking account is where you can handle daily business transactions. For instance, you can deposit funds, process customer payments, handle payroll, or pay suppliers. You’ll typically get a debit card to use with the account, and you may also get access to a business line of credit if you’re eligible. The same goes for a business loan.

These accounts often come with banking tools tailored to the needs of business owners. Depending on the account, you may have access to bookkeeping integrations, cash flow monitoring, employee debit card access, and invoicing features. As a downside, basic business accounts may limit the number of transactions you make each month—although you can sometimes upgrade them for a fee to get over this hurdle. They also come with maintenance, cash deposit, and wire transfer fees, as well as other costs to keep the account open.

What is personal checking?

A personal checking account is where you can manage your day-to-day personal expenses and income. You might use this type of checking account to receive your direct deposit paychecks, pay household bills, deposit funds, withdraw cash, and send money to friends.

You typically get a debit card linked to the account and checks to make payments as needed. These accounts may come with simple budgeting features, but they’re usually not as robust as the tools that come with business checking accounts.

Some banks have rules against using a personal checking account for business purposes—and may close your account if you break those rules.

Business checking vs. personal checking: What’s the difference?

Business and personal checking are two types of accounts that help you manage transactions. They both offer deposit insurance and charge fees, but they’re geared toward different audiences and come with different features. Let’s explore the commonalities and differences.

Deposit insurance

Personal and business checking accounts both come with deposit protection, which reimburses you for the funds in your account if your bank or credit union fails. The Federal Deposit Insurance Corp. (FDIC) provides this type of insurance for federally insured banks, while the National Credit Union Administration (NCUA) provides coverage at federally insured credit unions.

Business and personal accounts both have the same standard insurance limit of $250,000. Each depositor receives at least this amount in coverage at each insured institution for each account type. Business accounts are insured separately from the individual accounts of the business owners, with the exception of a sole proprietorship.

Access

Both personal and business bank accounts provide several ways to transfer, withdraw, or otherwise use your money. Personal and business checking both usually let you withdraw cash at ATMs, set up wire transfers, and send money using peer-to-peer payment services. Both types of accounts may also provide access to the Automated Clearing House (ACH), where you can send and receive payments and transfer money between bank accounts. The bank or credit union will also provide a debit card and checks. To manage your money, you can usually log in to a mobile banking app or your online banking account.

All bank accounts come with high-level security features, such as multifactor authentication and fraud detection. But because business checking accounts handle higher transaction volumes and may carry higher liability risk, security is often more robust. For example, the accounts may come with dual control requirements (where two employees must approve certain transactions), more sophisticated fraud detection, IP address restrictions, token-gated login, and more.

User roles

Both business and personal checking accounts allow you to grant access to authorized users, but with a business account, you can be more nuanced with permissions. Business checking accounts often allow you to assign different permissions and features to employees. For example, a manager may be able to pay bills up to a certain limit using a debit card or setting up digital transfers.

Jointly held personal checking accounts usually don’t offer this type of controlled access. Each user has equal permissions to the account.

Business tools

Many business checking accounts provide access to a robust suite of business tools, which can help you run your business more efficiently.

For example, Found Bank’s business checking account helps you estimate your tax payments, categorize your transactions, and look for deductible expenses to reduce your tax bill. It also integrates with your accounting software. Bank of America’s business checking accounts also offer this feature and help you check your business credit score for free. These business specific features can help make tax reporting and finance tracking easier.

Personal checking accounts, on the other hand, typically offer fewer, less-advanced features. For example, Bank of America’s budgeting tool helps you track your income and expenses on the mobile app, while SoFi’s checking account allows you to earmark funds for different purposes.

Transaction limits

Business checking accounts typically have large deposit limits but may limit the number of free transactions you can make, such as 100 or 200 per month. You might pay a fee, such as 50¢, for each transaction beyond your agreed number.

Personal checking accounts often come with lower deposit limits but don’t restrict the number of transactions you can make.

Fees

You can often find free personal checking accounts that come with no monthly service fees, opening deposits, or minimum balance requirements. If you do open a checking account with maintenance fees, you can often avoid the fee by meeting criteria, such as exceeding a minimum deposit amount.

Business checking accounts often set minimum opening deposit or minimum monthly balance requirements in order to waive or lower their monthly fees. They may generally charge higher fees than personal accounts for monthly maintenance and services like cash deposits.

Financial institutions may offer savings accounts you can link to for overdraft protection, which can help you avoid some fees. This feature may be available with both business and personal checking.

Earning interest

Some business and personal checking accounts pay interest on your balance in the form of an annual percentage yield (APY). Depending on the account’s compounding schedule, interest may be calculated daily, monthly, or quarterly.

The bank or credit union may require you to meet certain requirements, such as receiving direct deposits each month or maintaining a certain balance, to earn the best APY.

Interest-bearing accounts are more likely to charge monthly maintenance fees, so you’ll need to do the math to determine whether the account benefits outweigh those fees.

Accepting credit card payments

Many business checking accounts offer merchant services, which let you accept customer payments via credit card, debit card, or mobile app. Personal checking accounts lack these features, though you can transfer money to friends and others using a person-to-person payment app.

How to open a business checking account

It takes just a few minutes to open a business checking account. Preparing in advance can help make the process easy.

1. Consider your needs. For example, are you looking for a bank or credit union that has branches and ATMs nearby? Very small businesses might need a simple account for their business related expenses, while larger businesses with more employees may need extra features and higher deposit limits.

2. Gather documentation. Banks typically ask for copies of your business’s formation documents, ownership agreements, and business license. You’ll also need an employer identification number (EIN), or a Social Security number (SSN) if you’re a sole proprietor. Check your bank’s specific requirements in advance because it may request additional documentation.

3. Review your options. Research business checking accounts at several banks, credit unions, and online institutions. Compare details like available business tools, fees, introductory offers, interest rates on deposits, minimum account balance, and opening deposit requirements.

4. Submit your application. Once you choose a financial institution and the best checking account for your situation, fill out the application, and submit copies of your documents. Most banks and credit unions let you do this online, but you may be able to complete the step in person.

5. Open the account. If your application is approved, you’ll sign your account documents and make the minimum opening deposit, if there is one. You can also typically set up account access online and in a mobile app.

Business checking vs. personal checking FAQ

Is it OK to use a personal checking account for business?

The Internal Revenue Service recommends opening a separate business account to make tax record-keeping easier. If you’re a sole proprietor, you can use a personal account or business account. However, this step is required if your business structure is a limited liability company (LLC), partnership, or corporation. That’s because your personal assets are shielded from creditors, and keeping your company’s finances separate from personal funds helps maintain that liability protection.

Separating your accounts also helps you accurately track income and expenses—for both your business and personal finances.\n

What are the disadvantages of a business bank account?

Business bank accounts may charge monthly maintenance fees that are difficult to waive. They may also come with monthly transaction limits and require you to maintain a minimum deposit balance.

Can I deposit a business check into my personal account?

You shouldn’t deposit a business check into your personal bank account. Doing so makes it difficult to track your business income and expenses. Plus, some banks may shut down your account if it finds out you used your personal checking for business activities.

","Business and personal checking accounts serve the same purpose, but often differ on security features, user permissions, transaction limits, and fees.","

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Business and personal checking accounts serve the same purpose, but often differ on security features, user permissions, transaction limits, and fees.

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Every startup needs a launchpad, a way to gain momentum and reach new heights. While traditional loans might be the rocket fuel for established companies, a business credit card can be the initial spark for entrepreneurs without a track record.

Whether you’re a sole proprietor or a new LLC with plans for expansion, a business credit card can be a great asset. Business cards let you separate your personal and work expenses, earn rewards, build business credit, and more. They’re also popular with startups, which often have trouble qualifying for term loans but are likely to qualify for a credit card.

Every card is different, so it’s important to research your options and pick the right one for your new business. Here are some of the best business credit cards for startups.

Table of contents

What is a business credit card?

A business credit card is a type of card a company can use for business expenses. They work a lot like personal credit cards: Your business gets access to a line of credit and can make purchases, acquire cash advances, and handle balance transfers as needed.

Repayment is also flexible. You can make minimum payments each month, pay the entire balance, or do something in between. The credit line replenishes as you make payments, allowing you to borrow again without submitting a new application. Many business credit cards also come with rewards programs and valuable perks, along with the ability to build business credit over time.

Credit cards for startups require more collateral upfront. You’ll likely need to provide a personal guarantee that you (the business owner) are personally liable for paying the card balance if your business defaults.

How to choose a business credit card

When comparing your options, here are a few areas to consider:

Consider business goals

Cards often have category-specific features that can help you meet your business’s goals. For example, if you want help managing cash flow, look for cards with detailed reporting features and individual spending limits on employee cards.

Looking to build savings? Find a card that provides cash back—you can add it to a business savings account.

Add up fees and APR

In general, credit cards tend to have higher annual percentage rates (APRs) than other types of debt—typically around 30%. But you’ll only pay interest if you carry a balance from one month to the next. If you think you’ll need to do this, choose a credit card with a low APR.

Review any fees and add those to your anticipated interest payments to figure out whether the benefits of using the card outweigh the costs.

Assess rewards programs

Many business credit cards offer rewards on different spending categories, whether it’s for travel, office supplies, or another expense. Startups might not have a spend history yet, but you can review your business budget and look for potential crossover with the cards you’re considering.

Some cards also offer welcome bonuses, where you earn points or cash after spending a certain amount within the first few months of account opening. This type of bonus could be a perfect fit for businesses with startup expenses.

Look for additional perks

Check out the other benefits the credit card offers, such as trip cancellation insurance, extra employee cards, or budget-tracking features. Many business credit cards come with these basic perks, while a few offer more luxurious benefits in exchange for high annual fees (e.g., airport lounge access, concierge services, or enhanced travel rewards and credits).

Check your credit

Since startups are brand new by nature, they usually haven’t established business credit or built a track record of profitability. For that reason, these card issuers often allow business owners to qualify based on their personal credit history.

Generally, having excellent personal credit and a strong payment history helps you qualify for cards with high credit limits, robust rewards programs, and benefits. There are also other business credit cards that cater to business owners with lower credit scores.

7 best business credit cards for startups

1. Shopify Credit

Shopify Credit doesn’t require a credit check or personal guarantors, making it a strong option for startups with no credit history. Ultimately, it’s designed to provide you with a credit line based on your sales rather than your credit score; this means that as your business’s performance improves, your credit limit will increase. It also offers flexibility in how you pay your balance, allowing you to use a percentage of daily sales to settle the remaining amount.

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APR: None.
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Annual fee: None.
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Reward program: Up to 3% cash back on up to $100,000 in eligible purchases per year, 1% back on everything else.
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Benefits: Tailored credit limits that grow with your business, access to credit right away via a virtual card on approval, option to pay your balance from a percentage of daily sales, extended purchase protection, free employee cards, auto collision and damage waiver, travel and emergency insurance, and Norton LifeLock ID Navigator.
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Welcome bonus: None.
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2. American Express Blue Business Cash Card

The American Express Blue Business Cash Card keeps costs low for startups, offering a 0% intro APR, no annual fee, and a $250 welcome bonus with a low spending requirement.

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APR: 0% for the first 12 months, then 17.49% to 25.49% afterward.
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Annual fee: None.
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Reward program: 2% cash back on up to $50,000 in purchases per year, then 1%.
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Benefits: Car rental loss and damage insurance, extended warranty on eligible purchases, access to special events, Global Assist hotline, and more.
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Welcome bonus: $250 after spending $3,000 within the first three months.
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3. Capital One Spark Classic for Business

The Capital One Spark Classic for Business credit card accepts a “fair” credit rating—typically a credit score between 580 and 669—making it a good fit for business owners with a limited credit history.

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APR: 29.74%.
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Annual fee: None.
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Reward program: Unlimited 1% cash back on every purchase, 5% on hotels and rental cars booked through Capital One Travel .
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Benefits: TSA PreCheck or Global Entry credit, no foreign transaction fee, budget-tracking features, and more.
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Welcome bonus: None.
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4. Ink Business Preferred credit card

The Ink Business Preferred credit card blends a generous package of rewards and benefits with a relatively low annual fee.

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APR: 20.24% to 26.24%.
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Annual fee: $95.
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Reward programs: Three points for each dollar you spend on shipping, advertising, internet, phone services, and travel. The rate applies to the first $150,000 in combined purchases in these categories each year. Unlimited one point per dollar spent on all other eligible purchases.
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Benefits: Higher value when you redeem points through Chase Travel, free employee cards, no foreign transaction fees, travel insurance, ability to build business credit, and more.
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Welcome bonus: 90,000 bonus points after spending $8,000 within three months of account opening. This bonus is worth $1,125 when you redeem for travel through the Chase Travel portal.
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5. Business Platinum Card from American Express

The Business Platinum Card from American Express has no preset spending limit and plenty of travel-related perks. This makes it a good option for companies planning major expenses and routine business trips.

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APR: 18.49% to 27.49%.
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Annual fee: $695.
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Reward programs: Five points per dollar spent on flights and prepaid hotels booked through AmexTravel.com, one and a half points per dollar spent on eligible business purchases, and one point per dollar spent on all other eligible purchases.
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Benefits: Statement credits, status upgrades, American Express Global Lounge Collection access, expense management tools, and more.
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Welcome bonus: 150,000 Membership Rewards points after spending $20,000 in eligible purchases within three months of account opening.
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6. US Bank Business Platinum Card

US Bank Business Platinum Card lacks a rewards program, but it’s a good fit for businesses that might carry a balance and want to limit overspending.

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APR:0% for 18 months, then 16.99% to 25.99%.
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Annual fee: None.
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Reward programs: None.
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Benefits: Employee card controls and extended payment plans.
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7. Business Advantage Unlimited Cash Rewards

The Business Advantage Unlimited Cash Rewards card is a secured credit card. Bank of America will periodically review your account and may move you from the secured card to a regular card after you show responsible use. This helps you establish business credit.

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APR: 27.49%.
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Annual fee: None.
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Reward programs: Unlimited 1.5% cash back on all purchases.
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Benefits: Travel insurance, free access to your business credit score and credit report, expense management tools.
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Welcome bonus: None.
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Best business credit cards for startups FAQ

What is the best business credit card for startups?

Not all credit cards work for every startup. The right card for you depends on your business goals, typical expenses, and whether you think you’ll carry a balance from month to month.

Can a new LLC get a business credit card?

Yes. If an LLC hasn’t built business credit yet, the business owner may qualify for a card account based on their personal credit.

Can I apply for a business credit card with no revenue?

Yes, but when you apply, the credit card issuer will likely ask about your personal income. When you build your business revenue, you can report it to the card issuer later and see if it will reevaluate your credit limit.

What credit score do you need for a business credit card?

Most card issuers do a hard credit check and generally prefer good credit or better (i.e., a FICO score of 670 or above). If you have less-than-ideal credit, you can apply for a secured card, where your deposit functions as your credit limit.

","A business credit card can help get your startup off the ground, if you use it wisely. Learn how to choose a business credit card that’s tailored to your needs.","

$\"Graphic$

A business credit card can help get your startup off the ground, if you use it wisely. Learn how to choose a business credit card that’s tailored to your needs.

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If you run a limited liability company (LLC), an LLC loan can help cover a wide range of business expenses, such as startup costs, working capital, expansion plans, and more.

An LLC loan works like almost any other small business loan. You apply through a lender and use the funds for any eligible purpose. The loan details include terms—such as interest rate, fees, and any loan restrictions—and the lender you use. Learn more about LLC loans and how they can help your business sustain or expand its operations.

Business loan calculator

Want to know how much it will cost to take out a loan? Use Shopify’s free business loan calculator to see your monthly payments and interest.

\nCalculate payment\n

Table of contents

What is an LLC business loan?

An LLC loan refers to any type of financing that provides funds to businesses organized as limited liability companies (LLCs). A term loan for an LLC typically operates the same as a term loan for other businesses: You borrow a set amount (the principal) and make repayments over a fixed period of time, typically several years. Your payments include part of the principal and interest, which is the cost of borrowing money expressed as a percentage of the loan amount. Lenders often also charge borrowers fees for issuing the loan.

LLC loans also encompass other financing methods, such as business lines of credit and merchant cash advances. Each type of financing comes with its own set of rules, as well as pros and cons.

One important note to keep in mind: Your company’s limited liability structure may not extend to an LLC loan. Lenders often require a personal guarantee, which is a clause in your business loan contract that says you will personally repay the loan if your business fails or defaults. Consider whether you’re comfortable putting your personal assets at risk before taking out an LLC loan.

Best LLC business loan options

LLCs have many financing options. The best loan for your business depends on factors like how you plan to use the funds and whether you’ll need money on an ongoing basis. Here’s an overview of the most popular types of LLC loans:

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Type of loan	Benefits	Drawbacks	Best for
SBA loan	Lower interest rates, high loan limits, and long repayment terms	Strict borrowing requirements and a lengthy application process	Businesses that don’t need immediate funding
Business line of credit	Flexibility and potential cost savings	Borrowing limit may be lower than some term loans	Businesses that need flexibility and may need to borrow repeatedly
Term loan	Predictability, especially when the loan comes with set payments and a fixed interest rate	Must go through the underwriting process to borrow again	Companies that want set monthly payments
Equipment financing	Typically lower interest rates because the loan is secured by the equipment	Lender can seize the asset if you default on the loan	Companies that are purchasing physical assets and can afford the down payment
Merchant cash advance	Offers fast funding and doesn’t require strong credit	Won’t help you build business credit or personal credit to help with other borrowing	Businesses with consistent credit card sales or recurring revenue
Invoice factoring	Offers fast funding and doesn’t require strong credit	Fees can add up, and it’s not a good fit for companies that sell directly to customers since they don’t usually issue invoices	B2B companies that use invoices

1. SBA loan

Best for: Businesses that don’t need immediate funding

You can apply for SBA loans through approved private lenders, which may include traditional banks, credit unions, alternative lenders, intermediary lenders, and more. Your LLC gets the funds from the lender while the Small Business Administration (SBA) guarantees the loan.

Because a federal agency backs the loan, lenders take on less risk and can offer lower interest rates, higher loan limits, and longer repayment terms. You can even choose from six different types of SBA-guaranteed loans depending on your needs. But with all SBA loan options, you can expect strict borrowing requirements and a protracted application process.

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2. Business lines of credit

Best for: Businesses that need flexibility and may need to borrow repeatedly

A business line of credit lets your LLC borrow up to a preset limit and then repay your balance through weekly or monthly payments. You can usually pay down some or all of the balance and borrow again without submitting a new application. This type of financing offers flexibility and potential cost savings because you only pay interest on the funds you borrow.

Lines of credit are a popular funding source among small business owners. In the Federal Reserve’s 2024 Report on Employer Firms, 43% of the businesses surveyed used this funding option.

3. Term loan

Best for: Companies that prefer predictable monthly payments

With a term loan, your LLC borrows a lump sum of money and typically repays the balance over several years. The longer repayment term makes these loans a good option for large expenditures like expansions or equipment upgrades.

Unlike a line of credit, you’ll have to reapply from scratch if you need to borrow additional funds.

This means you’ll need to submit a new application and repeat the underwriting process—which usually involves submitting an application, undergoing a credit check, and waiting for an answer. On the plus side, term loans usually come with a fixed interest rate and monthly installment payment; this predictability can help you budget and make a repayment plan.

4. Equipment financing

Best for: Companies that are purchasing physical assets and can afford the down payment

Equipment loans let you pay for tangible assets such as computers, furniture, machinery, appliances, vehicles—anything other than real estate. Your LLC typically makes a down payment that’s equal to a percentage of the value of the equipment. Then you finance the remaining amount. Repayment terms usually stretch over several years and come with fixed installments.

These loans may offer lower interest rates than term loans because they’re secured by the equipment you’re purchasing. But that also means your lender has the right to seize the asset if you default on the loan.

5. Merchant cash advance

Best for: Businesses with consistent credit card sales or recurring revenue

A merchant cash advance is an alternative type of business financing where your LLC receives an advance on its future credit and debit card sales. You receive a lump sum of cash that you can spend on anything—like salaries, rent, or inventory costs. You then repay the borrowed funds based on a percentage of your sales, plus a small fee.

Merchant cash advances may be a good option if you need funds immediately, your business tends to have seasonal highs and lows, and you haven’t built good credit yet. Shopify Capital, for example, doesn’t require credit approval and allows for quick funding and early renewals.

6. Invoice factoring

Best for: B2B companies that use invoicing

Invoice factoring involves selling your LLC’s unpaid invoices, or accounts receivable, to a special lender, known as a factoring company, in exchange for immediate cash.

The factoring company then collects the money from your customers and charges your company a fee, often between 1% and 5% of the invoice amount. This type of financing option could be a good fit for companies that sell goods or services to other businesses and are more likely to receive payments via invoices.

How to get an LLC business loan

The process of getting an LLC loan can vary, depending on the type of financing you choose and the lender, but these are the general steps you’ll take:

1. Consider your needs

Taking out an LLC loan involves paying interest and fees, not to mention taking on the financial liability. So consider how much you need to borrow, what you can afford to pay each month, and the type of financing that works for you. Creating or reviewing your business budget can help with this step.

2. Check your credit

Lenders often check a company’s business credit scores along with the owner’s personal credit score at one of the credit rating businesses, such as Dun & Bradstreet, Experian, or Equifax. Having strong credit improves your chances of loan qualification and helps you get favorable terms, though some lenders do offer financing options for bad credit.

3. Compare LLC business loans

Get quotes from several lenders and compare interest rates, repayment terms, origination fees, and monthly payments. Knowing your credit score beforehand gives you an idea of which loans you might qualify for as you research. Using a business loan calculator can help you calculate your borrowing costs.

4. Submit the loan application

Once you’ve decided on the best loan option, fill out the application. You will typically need to provide names of all business owners, the company’s employer identification number (EIN), and details about your business.

5. Provide loan documents

Lenders will check your LLC’s finances to determine if you can pay back the loan. The requirements may vary by lender and loan type, but you usually need to include a business plan, business license, financial statements, tax returns, and information about your business’s other debts and obligations.

6. Provide collateral or a personal guarantee

Your company’s limited liability structure may not extend to an LLC loan. So depending on the type of financing you get, you may need to provide collateral or offer a personal guarantee, meaning you promise to repay the loan personally if your business fails or defaults.

7. Proceed through underwriting

Once your lender has the application and documents, it initiates a formal check on your credit, performs a final review of the materials, and makes a lending decision. Online lenders often process applications quickly—within a day or two—while brick-and-mortar banks or SBA lenders may take longer.

8. Receive your loan funds

If approved, you’ll receive the loan funds in your bank account. You can speed up the process by borrowing from the bank where you already have your LLC’s accounts.

LLC business loan FAQ

Is it easier to get a business loan with an LLC?

Your business structure doesn’t typically affect your financing options. But if you don’t meet LLC loan requirements, you can look at other types of business financing. Business grants, a personal loan, or a business credit card can fund anything from startup costs to business expansion and other types of business expenses. Some of these options require good personal credit.

Does an LLC have its own credit score?

Yes, your LLC may have its own credit history and credit score. Business credit scores usually range from 0 to 100, with 100 being the best score. You can take steps to build business credit, such as making prompt debt payments, and check your scores through companies like Dun & Bradstreet, Equifax, and Experian.

What kind of bank account is best for an LLC?

The right bank account depends on your needs, but LLCs usually open a checking and savings account, along with a merchant account to accept customer payments. Opening a business bank account for your LLC is crucial so you can keep your personal and business finances separate. Failing to do so is a sure way to lose the limited liability protection of your LLC. This separation may be a legal requirement, depending on where you live and form your business.

How long do I have to have my LLC before I can get a loan?

Business loan requirements vary by lender. Most lenders require you to have been in business for at least three months, though some traditional lenders set the bar at 12 months or longer. Established businesses may qualify for larger loan amounts and better terms because they have a track record of profitability.

","You can choose from a variety of small business loans for your LLC, including SBA loans, term loans, equipment loans, and lines of credit. Learn how.","

$\"money$

You can choose from a variety of small business loans for your LLC, including SBA loans, term loans, equipment loans, and lines of credit. Learn how.

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