An overdraft line of credit is typical financing for businesses across all sectors which can be used for anything from managing working capital to supporting inventory purchases and new construction. We have over 60 Australian lenders, and you can compare Australian lenders instantly via our website.
What Are Business Overdraft Loans?
When a lender extends credit to a company for more than what is in the company’s trade account, this is called an Overdraft. Business Overdraft Loans are often connected directly to corporate checking accounts, giving company owners instantaneous access to any available overdraft cash for business use.
This is a significant advantage compared to approaching financial banking institutions, where you might have to spend considerable time and submit a lot of documentation. While business overdraft loans from other lenders might sometimes have higher interest rates, quick access to finance and the easy application process more than makeup for it.
Industries in Australia That Commonly Use Business Overdraft Loans
Various industries commonly use business overdraft loans such as:
- Wholesale
- Manufacturing
- Retail
- Professional services
- Technology
- Food and beverage
- Automotive
You can apply for an unsecured business overdraft loan or provide property-backed security.
Are Business Overdraft Loans For You?
Business Overdraft Loans in Australia are only suitable for some types of business. However, if you have a high turnover and need quick access to funds sometimes, an overdraft might be better suited than other business finance options, such as line of credit loans.
Business overdraft facts
- Range from $25,000-$500,000
- Secured and unsecured options
- Interest rates can be between 14.95% pa and 24.93% pa (APR)
- Have variable or fixed interest rates
- Allow access to secure funding at any time
- Only accrue interest amount on the total funds withdrawn
- Repayments that suit your budget
- Are assessed per your business turnover
- Overdraft agreements for businesses often have maturities between three months and five years. Even if you and your lender agree to a period of five years, the lender may reevaluate the overdraft capacity at any moment.
- Overdraft costs and interest rates vary per lender, but it’s usual to pay a facility charge once a year to keep the business overdraft loan line open. The business overdraft would only accrue interest on the funds withdrawn and at the time of withdrawal
- Can be approved quickly by non-bank lenders on Business Finance Loans
- 100% online application process
Business Overdraft Loans’ Repayment Requirements
The lending institution also sets the terms. You may have to start repaying the interest on an overdraft from a regular bank, but specific specialist lenders may ask you to pay back at least a portion of the original principle.
Note- Before consenting to an overdraft, you should learn the terms and conditions of each lender.
Eligibility Criteria For Business Overdraft Loans
Business overdrafts often need a positive credit history to be approved by a lending institution. Although your capacity to repay the loan is the most crucial factor, you are only eligible to apply if:
- Own a business
- Have a valid ABN
- The business must have GST-registration
- Permanent Australian Citizenship/Residency
- You have a valid residential address in Australia
- You intend to use the business overdraft loan predominantly/entirely for business purposes
- Should be able to provide the required business bank statements
- Must have been in business for at least three years ( check individual lender requirements while applying)
Specialist lenders on Business Finance Loans often offer fast approval timeframes and access to the funds. As mentioned, we have a 100% online application and approval process. The application form is straightforward, and we are always here to guide you if you need any information or help.
If you are looking to borrow up to $150,000, some specialist lenders will only require business bank statements to approve — you could apply online and have the funds available the next day.
Compare Aussie Lenders Instantly via Business Loans
Business Finance Loans is your one-stop shop for all types of loans for commercial purposes. We understand that time is of the essence for a business owner, and we have created a user-friendly, efficient and fast way to obtain exactly what you need. You can compare Aussie lenders instantly, meaning effort, time and money saved for you.
You get access to 60+ vetted Australian vendors to find the most suitable business overdraft loans for your needs. Try the online loan calculator, and check out the available loan options. If you still need help understanding how the platform works or your loan options, feel free to discuss your requirements with our knowledgeable team.
