A flexible way to manage cash flow
Business overdrafts
Whether you're covering a temporary gap in cash flow, waiting for a payment to come through, or managing seasonal fluctuations, a business overdraft can be helpful to keep your business on track.
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What is a business overdraft?
Running a business means juggling a lot of financial decisions, and sometimes you need a little extra cash to keep things running smoothly. A business overdraft can provide that quick support, offering access to funds when you need it most.
A business overdraft allows you to borrow money short term by withdrawing more from your business bank account than you currently have. It acts as a financial safety net, helping you manage your cash flow by providing immediate access to funds when needed.
Your bank will set a predetermined limit that you can borrow, depending on your business creditworthiness and its financial health. With this added flexibility, you can cover expenses even when your balance is low.
What are the benefits of a business overdraft?
Benefit from flexible borrowing
With a business overdraft, you borrow and repay funds as needed, as long as it’s within the approved limit. This gives you the flexibility to use the funds when you need them most.
Access funds quickly
Setting up an overdraft is usually a fast process, which is a real advantage when you need cash fast, for example to cover an upcoming bill.
Pay interest only on what you use
You only pay interest on the money you actually use, not the full limit. This means you can manage your interest expenditures.
How does a business overdraft work?
When you apply for a business overdraft, your bank will assess your financial health, including your existing revenue and business credit score. Based on this, they will determine your eligibility and set your credit limit.
Once approved, your overdraft acts as an extension of your existing balance. You can draw funds from it just like any other balance in your account.
What fees are associated with a business overdraft?
Business overdrafts often come with several fees, depending on your bank's terms. These include:
Remember to review your bank’s terms to fully understand all potential fees.
What are the alternatives to a business overdraft?
While overdrafts are useful for short term borrowing, they might not be the best choice for larger or long-term funding needs. Here are some alternatives that could better suit different business needs:
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Is an overdraft right for your business?
A business overdraft can be a useful tool for managing short term cash flow challenges and seizing short term opportunities. However, there are many other options available that may better suit your specific business needs.
If you're unsure which option is right for you, our dedicated funding specialists are here to help. With over 100 UK lenders on our platform, with Capitalise, you can search the entire marketplace and receive the right support to find the best funding solution for your business. Contact us today to explore your options.
Ready to get started?
Apply for funding and find out your business options