Capital on Tap Loans: credit cards vs small business loans

Capital on Tap offers business credit cards that provide quick and flexible funding solutions tailored for small businesses. Capital on Tap does not currently provide loans, but credit cards and loans do have some overlap in how businesses can use them. 

With perks such as cashback rewards, no foreign transaction fees, and high credit limits, Capital on Tap’s credit cards have been a popular option for many businesses seeking to manage cash flow and access credit on an ongoing basis. However, depending on your needs, a small business loan might be a more suitable option.

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What is Capital on Tap?

Capital on Tap offers a business credit card designed to provide small businesses with easy access to credit. Some of the key features include:

• Credit limits up to £250,000: These high credit limits allow businesses to cover significant expenses, such as inventory or marketing campaigns​.
• 1% cashback: On all spending, which can be redeemed for cash, gift cards, or used to pay down the balance​.
• No fees: Including no annual fees, foreign exchange fees, or ATM fees, which makes it an attractive choice for businesses making international transactions​.

While these features offer great flexibility, Capital on Tap is still fundamentally a credit card product, which may not suit all businesses—especially those looking for larger lump sums or needing long-term financing.

Comparing Capital on Tap credit cards vs business loans

1. How much can I borrow?

• Capital on Tap: Typically, credit limits start small but can grow over time as your business proves its creditworthiness. However, the initial limits might be insufficient for businesses looking to make significant investments.
• Business loans: Business loans, such as those offered by iwoca, allow businesses to access larger lump sums upfront, which are ideal for big purchases or expansions. With iwoca, you can borrow up to £1,000,000, giving you the flexibility to fund larger projects.

2. How do I repay?

• Capital on Tap: With a credit card, repayments are flexible, as you only need to pay a minimum amount each month. However, if you carry a balance, interest will accrue, making it expensive if not managed carefully​.
• Business loans: Loans usually come with structured repayment schedules over a set term, providing more predictability. iwoca offers flexible repayments that align with your business cash flow, and there are no penalties for early repayments.

3. What are the interest rates for a credit card vs a small business loan?

• Capital on Tap: Interest rates on Capital on Tap’s credit cards can go up to 15.22% APR (variable)​. 
• Business loans: Interest rates for business loans tend to be lower than those for credit cards. With many lenders, the exact rate will depend on your business’s particular circumstances and the amount you wish to borrow.

4. What are the fees and additional costs?

• Capital on Tap: While there are no annual fees, businesses could still face costs like late payment fees or charges for exceeding credit limits​.
• Business loans: With iwoca, the loan fees are clear from the outset, so there are no surprises. You won’t be penalised for early repayment, making the cost of borrowing more predictable and enabling you to control the amount of time you accrue interest.

Why fund your business with an iwoca loan

If you’re looking for a more flexible financing option that gives you a lump sum with simple repayments, iwoca offers several advantages for businesses over credit cards like Capital on Tap:

1. Fast access to funds: Just like Capital on Tap, iwoca provides fast funding, but you have access to larger amounts. Depending on your eligibility, funds can be available within 24 hours, making iwoca a great fit for businesses that need to move on opportunities quickly.
2. Built for business growth: iwoca’s business loans are specifically designed to help businesses grow, whether you need to hire new staff, expand your product line, or invest in new equipment. With Capital on Tap, your spending limit is tied to creditworthiness, while iwoca can provide the capital you need based on your broader financial picture.
3. Flexible repayments: One of iwoca’s standout features is its flexible repayment terms. You can repay early without penalties, helping you save on interest costs if your cash flow improves. This flexibility can provide some extra peace of mind compared to the variable interest charges of a credit card.
4. Larger loan amounts: If you need significant funding, a small business loan can offer amounts of up to £1,000,000—well beyond the typical limits of business credit cards. This can be particularly important for businesses making large-scale investments or expanding into new markets.
5. Simpler fees: Unlike some credit cards, which may surprise you with fees for late payments or foreign transactions, iwoca offers end-to-end transparency. You’ll know exactly what your loan will cost upfront, making it easier to manage your finances.

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The bottom line: which is right for you?

When deciding between a Capital on Tap credit card and a business loan, the right answer will depend on your specific needs:

• Choose Capital on Tap: If you’re looking for a flexible line of credit to cover day-to-day expenses, such as paying suppliers or managing cash flow fluctuations, the Capital on Tap credit card can be a great tool, particularly if you want to take advantage of cashback and other rewards.
• Iwoca Flexi-Loan if your business needs a lump sum to fund significant growth initiatives—such as opening a new location or launching a new product line—iwoca’s Flexi-Loans provide the capital you need with transparent terms and flexible repayments.

To learn more about how iwoca can support your business’s growth, check out how much you could borrow with our small business loan calculator.