What is a Business Bank Overdraft?

18 March 2020

If you have a business transaction account with your bank, you probably know you can also apply for an overdraft. A business bank account with an overdraft facility attached to it allows you to draw down funds below the zero balance in your account.

Qualifying and getting approved for a business bank overdraft can be a lengthy process. Banks typically require property security in order to provide a business with an overdraft. The application process usually requires 3 years of financial statements and a track record of strong cash flow and financial performance.

There is also the issue of fees. Fees are charged on the credit used and typically applied daily. In addition, some banks may charge line fees, commitment fees or an undrawn facility fees.

A Business Bank Overdraft without the bank

There is a better alternative to the traditional business bank overdraft.

GetCapital combines the convenience of a revolving facility and a single annual fee structure with the flexibility of linking any existing business transaction account to your facility.

The GetCapital Business Overdraft is a stand-alone facility up to $750,000 that gives you more control and options beyond your bank. There’s no need to set up a new account, or to change banks. GetCapital can link your Overdraft to one or more existing business banking accounts at any Australian bank.

Common pitfalls with Bank Overdrafts

One of the common pitfalls with Business Bank Overdrafts is that business owners can misuse them. For example, some businesses run their overdraft facilities as core debt and have the overdraft continually drawn.

Traditional interest-only business bank overdrafts can lead business owners to live inside their overdrafts for extended periods placing tremendous stress on the business. In contrast, with a principal and interest (P&I) repayment model, with no additional purchases the overdraft reduces to zero in 24 months, eliminating the stress that comes with holding on to long-term debt.

How to set up a bankless Business Bank Overdraft

You can get started now with the application. Provide some information about your business and you can expect a response within 24 hours.

GetCapital’s proprietary Bank Connect technology allows us to retrieve your business’ bank statement data, in encrypted form, which means fast processing and less paperwork for you. You won’t have to go through the time-consuming process of a bank application, and your information can be quickly accessed for any future applications.

After approval, just log in to GetCapital Online, and you’re ready to transact.

  • Transfer funds seamlessly from the Overdraft to any linked business banking and transaction account.
  • Set up and change daily transfer limits, depending on your business’ cash flow needs.
  • Pay down your Overdraft from your transaction banking account.
  • Arrange direct debits to make additional repayments from any linked account, at any time.

Business finance with an overdraft facility means you always have the necessary funds for your business to operate and grow, even without the bank.

Learn more about the GetCapital Business Overdraft. It’s bankless.