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Business overdraft

Business Overdraft

A business overdraft is where the bank allows you to use your current account up to an agreed credit limit.

This is a means of providing working capital in order that you can pay your bills pending receipt of income you have invoiced. The intention is the overdraft fluctuates in and out of credit in line with your cash flow and credit limit.

Often banks want security for this type of lending. However, this can restrict the growth of your business as a bank will not go above a certain level usually linked to the security value.

Sometimes cash flow can be better financed via debtor finance which can grow with your business.