Money Matchmaker™ Business Overdrafts

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Business Overdraft

A business overdraft isn’t ideal for every business. However, if your business has a high turnover and needs fast access to funds on an irregular basis, an overdraft may be more suitable than other forms of business finance, such as a line of credit.

In summary, business overdrafts in Australia:

Range from $25,000 to $500,000
Have interest rates between 14.95% pa - 24.93% pa (APR)
Allow access to secure funds at any time
Only accrue interest on the amount withdrawn
Are assessed according to business turnover
Can be approved very fast by non-bank lenders
Usually involve an easy application process

Key Features

Borrow from $5,000 to $500,000
Fixed or variable interest rates
Repayments to suit your budget
Terms from one month to five years
Secured & unsecured options

Who is eligible?

Own a business and have an ABN
Business is GST-registered
Permanent Citizenship or Residency
Minimum business-operating time of six months
Can provide business bank statements

Shopping around for the right loan can save you thousands of dollars in interest and fees.

What is a Business Overdraft

A business overdraft is an extension of credit by a lender that allows a business to access funds greater than the amount available in its business trading account. It is often linked directly to your business account, allowing business owners immediate access to available overdraft funds. You can choose to apply with a bank or non-bank lenders.

A business overdraft is a popular form of business finance used in almost every industry, for managing working capital, purchasing inventory, funding new developments, and much more. In Australia, industries commonly using them include:

Retail
Wholesale
Manufacturing
Professional services
Food and beverage
Technology
Automotive

You can choose to apply with no security — called an Unsecured Business Overdraft — or provide security backed by property.

How to use a Business Overdraft

Below we'll look at two examples of how a business overdraft might be used.

Overdraft limit	$500,000	$500.000
Amount withdrawn	$400,000	$25,000
Amount accruing interest	$400,000	$25,000
Remaining overdraft credit	$100,000	$475,000
Annual business turnover	Less than $5m	More than $5m
Repayment frequency	Weekly	Weekly or Monthly

In the first example:

A business is approved for an overdraft of $500,000
The business withdraws $400,000
The amount accruing interest is $400,000
The remaining overdraft amount is $100,000
The business has an annual turnover less than $5m
The business will make weekly repayments

In the second example:

A business is approved for an overdraft of $500,000
The business withdraws $25,000
The amount accruing interest is $25,000
The remaining overdraft amount is $475,000
The business has an annual turnover of more than $5m
The business can choose between weekly or monthly repayments

Need fast access to finance?

Getting the right Business Overdraft

Terms on a business overdraft range from 3 months to 5 years. However, even if you agree to a 5-year term with a lender, they may be able to review the overdraft facility at any time.

Minimum term	Maximum term
3 months	5 years

Each lender will have their own fees and interest rates, however it’s common that you will be required to pay a facility fee — an annual fee to keep the overdraft amount available.

Interest on a business overdraft will only be calculated on the amount withdrawn and each time you withdraw an amount.

Business Loans for Australian Businesses

Overdraft amount	Annual facility fee
$500,000	$395

This is an example only. Actual fees may differ.

Lenders also have their own repayment requirements. For example, a traditional bank overdraft may only require you to pay back the interest on any amount withdrawn, while some specialist lenders may set a minimum principal repayment amount.

Be sure to research each lender’s repayment criteria before agreeing to an overdraft.

Lowest rate	Highest rate
14.95%	24.93%

Important: Interest rates may change. Check your personalised rate by using the Money Smart Form.

How to qualify and apply

To qualify for a business overdraft, lenders will need to conduct a credit assessment. While the most important consideration for any loan is your ability to repay the borrowed amount, you can only apply if:

You have a valid Australian Business Number (ABN); and
You are an Australian citizen or permanent resident; and
You have a residential address in Australia; and
Your business is registered for GST; and
Has an annual turnover of at least $250,000; and
Has been operating for at least three years; and
You have a good credit history; and
You intend to use the overdraft entirely or predominantly for business purposes.

You can apply for a business overdraft with some banks, though many borrowers will seek out non-bank lenders and specialist lenders, often due to the fast approval time and access to funds offered by these companies. Most specialist non-bank lenders will also allow you to apply online through a quick and simple form.

If you are looking to borrow up to $150,000, some specialist lenders will only require business bank statements to grant approval — you could apply online and have the funds available the next day.

You can apply for a Business Overdraft with GetCapital. Read our review of the lender or compare finance options from Australia’s leading business lenders by visiting our Lender Reviews section.

Have a unique need for business finance?

Can I increase my overdraft limit?

Yes. Provided you can demonstrate an ability to meet repayments on the new amount through increased business turnover, your lender should allow you to increase your overdraft limit.

What’s the average business overdraft interest rate?

Interest rates on a business overdraft in Australia can vary between 14.95% and 24.93%. The average interest rate for a secured overdraft will be between 14.95% and 18.95% and for an unsecured business overdraft between 18.95% and 24.93%.

Can I get an unsecured business overdraft?

Yes, you can apply without providing a deposit or any collateral as security — this is referred to as an unsecured business overdraft. However, you will get the lowest interest rates if you apply for a secured business overdraft, as a securitised overdraft presents less risk to the lender.

Is there a limit on the number of withdrawals?

Once you are approved for your business overdraft, you will be free to access the funds as and when they are required.

You'll still need to pay an annual facility fee for the access to your overdraft, and remember that any amount used will incur interest charges until it is repaid.