Comparing Business Credit Cards vs. Business Loans for Event Planners

Event planners often have to juggle a lot of unpredictable expenses when putting on parties, corporate events, and all kinds of other events. The event planning business can be a chaotic one, requiring flexibility from entrepreneurs and their business funding solutions. In many cases, you have to make significant upfront investments before receiving full payment from clients, which can create cash flow challenges.

While a loan for event companies can be useful for long-term investment and expansion of your company, the event industry often demands faster, more flexible financing. Business credit cards (or business lines of credit) may offer faster funding, but with limited upside and higher interest rates. So, which is right for your business?

In this article:

• Understanding what you need to know about loans for event companies and business credit cards.
• Comparing scenarios in which small business loan financing or credit cards may make more sense.
• Exploring some alternative loans to help small businesses in the event industry.

How Do Business Credit Cards Work?

A business credit card works just like a personal one. You’re approved for a maximum credit limit that you can draw upon as needed, repay, and then reuse. For many event planners, a business credit card can be a great way to cover day-to-day operational costs and unexpected expenses.

There are both advantages and disadvantages to a credit card, compared to a loan for event companies. One of the most significant factors to consider with business credit cards is their interest rates. Generally, business credit cards carry higher Annual Percentage Rates (APRs) compared to traditional business loans. Depending on your creditworthiness, you may have an interest rate of greater than 20%.

Many cards, however, offer introductory 0% APR periods on purchases for a set period of time after opening the card. That’s an advantage you won’t find on a loan for event companies. Opening a credit card is relatively easy, so it can function as a short-term loan to make large purchases for an upcoming event and pay them off before the interest kicks in. (Just remember to pay it back before the 0% APR period ends if you want to avoid interest payments.)

Business credit cards offer substantial repayment flexibility. Usually, you have to make a minimum monthly payment, which is a percentage of your outstanding balance. That can help manage cash flow in lean periods between events, but only paying the minimum could lead to a prolonged repayment period and accrue significant interest charges.

Use Cases for Business Credit Cards

Business credit cards are ideally suited for:

• New businesses: Business credit cards are significantly easier to qualify for than a loan for event companies.
• Day-to-day expenses: Covering smaller, recurring costs like office supplies, software subscriptions, marketing materials, and minor vendor payments.
• Managing cash flow gaps: Bridging the gap between paying vendors and receiving client payments. An event often requires significant upfront investment, and a credit card can act as a short-term buffer.
• Emergency funds: Handling unexpected issues like a sudden equipment rental need, last-minute décor changes, or unforeseen logistical challenges.
• Building business credit: Responsible use of a business credit card, including timely payments and maintaining low credit utilization, can positively impact your business credit score, making it easier to secure larger financing options in the future.
• Earning rewards: Many business credit cards offer rewards programs, such as cashback, travel points, or discounts on business-related purchases. For an event planner who incurs substantial expenses, these rewards can translate into significant savings on travel for site visits or future event supplies.

How Do Business Loans for Event Companies Work?

There are several types of business loans for event companies. Generally, however, a traditional business term loan involves receiving a lump sum of money from a lender that you repay over a period of time based on an interest rate. Terms may vary depending on the loan program and lender, as businesses can often explore traditional term loans, SBA loans backed by the U.S. Small Business Administration, business lines of credit, and more.

In general, business loans tend to have lower interest rates compared to business credit cards, especially if you qualify for traditional bank loans or SBA-backed financing. Rates will depend on your creditworthiness, the loan type, and the lender. Well-established event companies with strong financial histories may find it easier to obtain a loan for event companies with a competitive interest rate than new businesses.

Traditional business loans tend to have less flexible repayment options than business credit cards. You’ll typically have a fixed monthly payment schedule, and missing penalties can negatively impact your credit. However, that predictable schedule may also help your long-term budgeting and financial planning.

Traditional lenders tend to offer more favorable interest rates than online lenders, although they have a more rigorous loan application process and longer approval times.

Use Cases for Business Loans:

Getting a loan for the business may be better for:

• Large investments: Purchasing significant equipment, acquiring a new office space or warehouse, or investing in vehicle fleets. A loan for event companies is better for funding major acquisitions than credit cards.
• Business expansion: Funding growth, such as opening new branches, expanding into new markets, or significantly increasing staffing.
• Refinancing debt: Consolidating higher-interest debt from multiple sources into a single, lower-interest business loan can improve cash flow and reduce overall interest payments.
• Working capital for major events: While credit cards can cover cash flow gaps, a short-term loan for event companies may provide more substantial working capital for a large event with a major ramp-up.

Business Credit Cards vs. Business Loans for Event Companies

It may be easier to make a decision when you can see the key differences side by side. Here’s what to consider:

Interest Rates:

• Business credit cards: Generally higher APRs, but often with introductory 0% APR periods. If you can pay off the balance quickly, you can avoid interest charges.
• Business loans: Generally lower interest rates, especially for traditional or SBA loans, making them better for large loan amounts and longer repayment terms. A loan for event companies can offer more competitive rates for bigger investments.

Repayment Flexibility:

• Business credit cards: Highly flexible, with minimum payments and the ability to pay in full to avoid interest. However, carrying a balance incurs high interest.
• Business loans: Fixed monthly payments and a set repayment schedule, offering predictability but less day-to-day flexibility.

Loan Amount & Approval:

• Business credit cards: Typically offer smaller credit limits, but fast and straightforward approval process.
• Business loans: Can provide much larger sums, but approval processes are generally more rigorous, requiring detailed financial statements, business plans, and often a higher credit score. Securing a significant loan for event companies may require a stronger financial history, making it more difficult to access for new businesses.

Impact on Credit (If the lender reports to credit bureaus) :

• Business credit cards: Responsible use builds business credit.
• Business loans: Timely repayment boosts your business credit profile.

What Type of Loan for Event Companies Should I Use?

Ultimately, deciding between a business credit card and a business loan depends on your specific financial needs and strategic goals. You must consider a business credit card if:

• You need quick access to funds for immediate, smaller expenses.

• You can reliably pay off the balance in full each month or within an introductory 0% APR period.
• You want to manage day-to-day cash flow and bridge short-term gaps.
• You prioritize earning rewards on business spending.
• You are a new business owner.
• You are looking to build or improve your business credit history.

You might consider a business loan if:

• You need a major investment, such as new equipment, office expansion, or an extensive marketing campaign.
• You prefer predictable, fixed monthly payments for long-term financial planning.
• You have a strong business plan and financial history to qualify for lower interest rates.
• You are a more established small business owner.
• Your goal is significant growth or a substantial one-time infusion of capital. This is often the case when an event company is ready to scale up.

Many successful event planners use both a strategic loan for event companies and a business credit card together. Each offers different advantages and can help you manage different financial goals. You might also consider equipment financing for purchasing specific pieces of equipment or a business line of credit for more flexible loans to help small businesses.

Final Thoughts

The business financing option for your business depends on many factors. Your business needs, credit history, revenue, and tolerance for debt will all influence a decision between a business credit card and a business loan for event companies. In many cases, you might want to leverage both to address a wider variety of day-to-day and long-term expenses.

FAQs About Loans for Event Companies

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

The actual minimum requirements vary between lenders and credit card issuers. Generally speaking, you’ll likely need a higher credit score to qualify for a business loan than for a credit card. Better scores typically lead to better terms in either case.

Can I get a business credit card or a loan for a new event company?

Startup loans tend to be more challenging due to limited operating history and revenue. A business credit card might be more accessible since it relies more heavily on the business owner’s personal credit score. If you’re looking for a loan for event companies, online lenders may be more accessible than traditional lenders, like banks and credit unions.

Do business credit card rewards benefit event planners?

Depending on the card, event planners may earn significant rewards on everything from travel and dining to venue rentals and supplier payments. These rewards could support future business travel, office supplies, or even statement credits.

Is a personal guarantee always required for a business loan or credit card?

A personal guarantee is often required for many small business loans, especially for newer businesses or those without substantial assets. This means you are personally responsible for the debt if your business defaults. Business credit cards often also require a personal guarantee, linking your personal credit to the business card.

How quickly can an event planner get access to funds with each option?

Business credit cards generally offer the fastest access to funds. Business loans for event companies typically have a longer application and approval process, ranging from a few days for some online lenders to several weeks or even months for traditional bank or SBA loans.

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