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According to the Small Business Administration, a third of American businesses get started with less than $10,000 in capital. That doesn’t give small-business owners a lot of runway, much less a way to cover unexpected expenses. How do these small businesses make up the difference?

Some small-business owners fund their businesses from their personal bank accounts or put operating expenses on their personal credit cards. However, that doesn’t have to be your only option. Business credit cards and small business loans are designed to help small businesses cover operating expenses, manage cash flow fluctuations, and plan for future growth.

If you’re considering a business credit card or a small business loan, you need to understand the benefits each funding source offers, the differences between credit cards and loans, and how to know which one is right for you.

What are the benefits of a business credit card?

There are numerous benefits in applying for a business credit card — so many, in fact, that we recommend that all small-business owners, sole proprietors, and freelancers add a business credit card to their wallets. Here are the three biggest advantages of a business credit card:

To build your businesses credit

The biggest benefit to having a business credit card is the ability to build your business’s credit. Although credit card companies look at your credit history during the initial business credit card application, once your business has its own credit card it begins to develop its own credit history — and you’re going to need that business credit history if you plan on applying for a small business loan.

To cover expenses during periods of low cash flow

The second benefit of having a business credit card is the ability to cover expenses during periods of low cash flow. If you’re a small business owner, you know that some months bring in more revenue than others, and a business credit card can help you cover costs during months when you don’t have a lot of cash in the bank account. You’ll want to pay off your credit card as soon as cash flow picks up, but if you have to carry a balance, know that your business credit card interest is tax-deductible.

To spread the cost of a large purchase

There are some great business credit cards offering 0% interest for an introductory period which can be as short as 6 months and as long as 18. Zero percent APR offers can help you to finance a large purchase by paying it off in installments while not incurring interest on those payments. For example, the Bank of America® Business Advantage Cash Rewards Mastercard® credit card offers 0% interest on purchases for the first nine billing cycles (after this introductory period the APR rate is 12.99% – 22.99% variable).  A word of caution: Plan to cover the cost of the purchase during the introductory period as the APR rate that comes into effect at the end of the welcome offer is often high.

To earn rewards for business expenses

The third big benefit of having a business credit card is the ability to earn rewards on business expenses. Some business credit cards offer cash back rewards; others offer points that can be used towards business travel. Some cards give flat-rate rewards, others earn higher rewards on business-related purchases such as office supplies. Take a look at our list of the best business credit cards to learn more about the types of rewards you can earn.

What are the benefits of a small business loan?

Small business loans come in many forms. The requirements differ from lender-to-lender and you will most likely be required to show things like a business plan, past financial statements, and business or personal credit histories. Small business loans can offer several benefits that a business credit card does not.

Access to funds

The biggest benefit of a small business loan is access to a large amount of money. A business credit card may give you a $10,000 line of credit; a small business loan might get you $100,000 or more. (The Small Business Administration considers any loan under $50,000 a “microloan,” and million-dollar loans are not uncommon.)

Help to grow your business

This means a small business loan can help you grow your business in a way a business credit card cannot. A business credit card helps you fund day-to-day business expenses, whereas a small business loan could help you expand your business into a second location.

Low-interest rates and tax-deductible interest

Small business loans generally come with lower interest rates than business credit cards — and any interest you pay is tax-deductible.

Small business owners can either take out a business loan from a bank or apply for a Small Business Administration loan. Check out our article on the pros and cons of bank loans vs. SBA loans to learn more.

How can you decide between a business credit card and a business loan?

If you don’t have a business credit card, start there. As mentioned above, you need a business credit card to establish your business’s credit history, and your business needs a solid credit history if you plan to apply for a loan.

If you need a line of credit to cover day-to-day expenses or help your business handle cash flow fluctuations, apply for a business credit card.

If you need money to fund a large project that will grow your business, consider a small business loan — but if that project will only cost you a few thousand dollars, you might be able to fund it with a business credit card.

What are some of the best business credit cards?

There are a lot of great business credit cards out there, so take a look at our list of the best business credit cards of 2018 for a complete overview. Here are our top picks:

Capital One® Spark® Cash for Business

The Capital One® Spark® Cash for Business card gets you an unlimited 2% cash back on all purchases, as well as a $500 cash bonus if you spend $4,500 in the first three months. The $95 annual fee is waived for the first year of card ownership, and you can get employee cards at no additional cost. Tax season should also be a breeze because you can download your credit card records easily and securely to multiple different formats including Quickbooks™ and Excel.

Capital One® Spark® Miles Select for Business

The Capital One® Spark® Miles Select for Business is a top travel business card, offering 1.5 miles per dollar on every purchase, plus a 20,000-mile bonus if you spend $3,000 in the first three months. Use your miles to book travel through Capital One Rewards, or turn your miles into a “Purchase Eraser” for travel you book on your own. There’s no annual fee, and you’ll pay 0% APR on purchases for the first nine months; then a variable APR of 14.74% – 22.74% will apply.

Bank of America® Business Advantage Cash Rewards Mastercard® credit card

The Bank of America Business Advantage Cash Rewards Mastercard has a $200 statement credit sign-up bonus after you spend $500 in the first 60 days of opening your account. If your business has you or your employees on the road then this card’s 3% cash back on gas station purchases (up to $250,000 each year, 1% after that) could deliver tremendous cash back rewards. You also receive 2% on restaurant spending and 1% on everything else. Amazingly, this is a no annual fee card, which will help you to keep your business expenses low.

No matter which business credit card you choose, know that you’re using it to help your business build its credit — so make sure you practice good credit habits, such as avoiding late payments. When it’s time to apply for your first small business loan, you’ll be glad you did.

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including card rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the bank’s website for the most current information.