What a business overdraft does
An overdraft is a limit attached to your trading account. The account works exactly as it does now, except it can go below zero up to the agreed limit. You pay interest only on what you've actually used, and only for the days you use it.
That makes it the cheapest way to handle recurring, unpredictable timing gaps. If you dip fifty thousand for eight days a month, an overdraft costs a fraction of what a term loan for the same amount would, because with a term loan you're paying interest on the full balance for the whole term, whether you need it or not.
Typical terms across our panel
| Limit | $25,000 to $2 million, larger where property security is offered |
|---|---|
| Rate range | Roughly 8% to 20% p.a. on the drawn balance. Banks at the low end, non-banks above |
| Line fee | Commonly 1% to 2% a year on the limit, drawn or not |
| Interest charged | Only on the balance actually used, calculated daily |
| Term | Ongoing, reviewed annually and repayable on demand |
| Security | Unsecured options exist; property security lowers the rate materially |
| Setup time | Days with a non-bank lender, three to six weeks with a bank |
Bank or non-bank?
This is the real decision with overdrafts, and it's a genuine trade-off rather than an obvious answer.
- Banks price sharply, often in single digits, but usually want property security for anything meaningful and will take three to six weeks to assess. If you have equity and time, this is the cheaper road.
- Non-bank lenders can set up an unsecured limit in days and read trading performance rather than a balance sheet. You pay materially more for that.
If your need is genuinely urgent, take the non-bank facility and refinance it to a bank line once the pressure is off. That's a normal sequence, not a failure. Just make sure you actually do the second half.
Watch the annual review
Overdrafts are typically reviewed every twelve months and are repayable on demand. A limit that's been sitting fully drawn all year reads as core debt rather than a working buffer, and that's when limits get reduced or pulled. An overdraft should swing: drawn some weeks, back to zero others. If yours never comes back, it's the wrong product and you want a term facility instead.
What lenders are looking at
- Account conduct above all. Overdrafts are assessed on how you run the account, and dishonours matter a great deal here.
- Swing. Evidence that the balance moves up and down rather than sitting at the floor.
- Available security. Property changes both the limit and the price.
- Existing facilities and the total debit load already on the account.
What you'll need to send
- Twelve months of business bank statementsEvery trading account. This is the main thing a lender reads.
- Your ABN and GST registrationWe pull most of this from the ABR ourselves.
- Director identificationDriver's licence or passport.
- An ATO integrated client account statementOnly where there's a balance owing.
- Recent financials and BASUsually only above $250,000, or where the lender asks.