Overdraft Facility Loans A business overdraft on your everyday account, arranged by a broker.
A business overdraft is a line of credit attached to your transaction account: keep drawing when the balance runs out, and pay interest only on what you use.
Cover cash flow gaps · Interest on the amount used · Based in Bella Vista, NSW
Why choose Greenline for your overdraft facility?
Greenline Home Loans can arrange a line of credit through an overdraft facility provided by a bank, as an extension of your business's everyday transaction account. The facility lets you draw further funds once the account's own balance is used up, which gives you quick access to money when cash flow is tight.
As an award-winning finance brokerage, Greenline Home Loans is committed to finding you an overdraft facility that suits your business, with customer service you will value for the life of the facility.
How a business overdraft works
An overdraft facility covers shortfalls in your cash flow by letting you keep making withdrawals after your account reaches nil. These are the features worth understanding before you set one up.
Interest on what you use
Interest is charged on the amount of the overdraft you have used, not on the whole limit. Unpaid interest is added to the balance, so clearing the overdraft regularly keeps the cost down.
Usually no prepayment charges
Repaying a loan early usually attracts a prepayment charge. An overdraft is different: when you repay the amount you have drawn, usually no prepayment charge applies.
No fixed monthly repayment
An overdraft usually has no set minimum monthly repayment, as long as what you owe stays within the overdraft limit.
Joint borrowers
Joint borrowers can share one overdraft application. Whatever share each has drawn, both applicants are responsible for repaying the overdraft on time.
Overdraft, line of credit or term loan?
A business overdraft is attached to your transaction account: once the balance reaches zero you keep drawing, up to the limit, and interest is charged on the overdrawn amount. A business line of credit is a separate facility you draw on as needed, often for larger amounts; a business term loan is a lump sum repaid over a set term. For day-to-day timing gaps, wages before invoices are paid, stock before the season, the overdraft is the simplest tool; for a planned purchase, a term loan is usually cheaper.
How to qualify for a business overdraft
- Solid business turnover: lenders ask for your latest balance sheet and profit and loss statement.
- Security: many overdrafts are secured by equity in a property, and some lenders allow borrowing of up to 85 per cent of the property's value for business purposes. Unsecured overdrafts exist, with smaller limits and higher rates.
- A legitimate business need: lenders want to see a regular, ongoing need for an overdraft rather than a one-off cost.
Greenline compares the banks and non-bank lenders that offer business overdrafts and finds one that understands business owners. See how the finance process works.
What a business overdraft costs
You pay interest on the overdrawn balance, and most facilities also charge a fee on the approved limit whether or not you use it, so an overdraft you rarely draw on can cost more than it saves. Lenders can review and reduce a limit, usually at an annual review, which is why an overdraft suits short-term timing gaps rather than long-term borrowing. Your broker sets out the interest rate, the facility fee and the review terms before you commit.
Business overdraft FAQs
What is a business overdraft?
A line of credit attached to your business transaction account that lets you keep making payments after the balance reaches zero, up to an approved limit. Interest is charged on the overdrawn amount, and most facilities also charge a fee on the limit.
How does an overdraft facility work?
The lender approves a limit on your transaction account. Your income and expenses run through the account as normal; when the balance goes below zero you are using the overdraft, and when money comes in the balance is restored. There is usually no fixed repayment as long as you stay within the limit, and usually no charge for paying it down early.
What is the difference between an overdraft and a business line of credit?
An overdraft sits on your everyday transaction account and suits small, frequent timing gaps. A business line of credit is a separate facility, often with a larger limit and its own terms, that you draw down deliberately for working capital. Both charge interest on what you use; a line of credit may have fewer account fees but a more formal review.
How do I qualify for a business overdraft?
Lenders look for solid turnover, shown through your balance sheet and profit and loss statement, security such as equity in a property for larger limits, and a regular, ongoing need for the facility. Unsecured overdrafts are available with smaller limits for businesses with strong trading.
Is there a minimum monthly repayment on an overdraft?
Usually not. With most facilities, as long as what you owe stays within the overdraft limit there is no set minimum repayment, and interest is added to the balance. Paying the overdraft down regularly keeps the interest cost low.
Is a business overdraft secured?
It can be either. Secured overdrafts, usually over property, offer larger limits and lower rates; unsecured overdrafts rely on the business's trading and cash flow, with smaller limits and higher rates. Your broker compares both.
Can two business owners share an overdraft?
Yes. Joint borrowers can apply for one overdraft facility. Whatever share each has drawn, both are responsible for repaying the overdraft on time.
Do you need an overdraft facility?
Get started on your business loan and commercial loan journey with Greenline Home Loans. We're here to help! Speak to one of our professional finance brokers today.
Request a call back.
Leave your name and number and a Greenline broker will call you back within one business day. No obligation, no fee for our service in most cases.