A buffer attached to your trading account
Business overdrafts that cover the gap between paying and getting paid.
Compare overdraft limits, line fees and review conditions across bank and non-bank lenders. Your broker explains the numbers before you decide.
What is a business overdraft?
A business overdraft is an approved limit attached to your business transaction account that lets the balance go below zero up to that limit, with interest charged only on the negative balance. It is designed to absorb short timing gaps, not to fund long-term purchases.
An overdraft sits on the account you already trade through, so there is nothing to draw down and nothing to request. When a supplier payment lands before a customer pays, the balance dips below zero and interest accrues on that shortfall until deposits bring it back up. For businesses with steady turnover and lumpy timing, that is often cheaper than a term loan, because you are charged only for the days you are actually short.
The trade-off is cost structure and control. Most lenders charge an establishment fee plus an annual line fee of roughly 1–3% on the approved limit whether or not you use it, and limits are formally reviewed each year. Secured overdrafts backed by residential or commercial property price near business mortgage levels; unsecured limits are smaller, usually capped around $250,000, and priced closer to unsecured lending.
Your broker checks how deep and how often your account actually goes negative before recommending a limit. An overdraft sized too small gets exhausted in the first tight week; one sized too large costs line fees on capacity you never touch. We model both against your last twelve months of statements.
Business overdraft at a glance
| Amount | $10,000 – $500,000 |
|---|---|
| Term | 12–12 months |
| Rate type | Variable |
| Indicative rates (Q3 2026) | 8.5% – 19.5% p.a. · see rate history |
| Security | Unsecured (guarantee may apply) |
| Repayments | No set repayment — deposits reduce the overdrawn balance |
| Typical speed | 3–10 business days depending on security |
| Best for | Established businesses with regular deposits and short, recurring cash-flow gaps |
| Consider something else if | Funding an asset purchase or any expense you will repay over years |
| Tax | Interest and line fees on business-purpose overdrafts are generally deductible. Confirm with your accountant. |
Advantages
- Interest only on the days you are overdrawn
- No drawdown request — it works through your existing account
- Automatically repays as customers pay you
Trade-offs
- Annual line fee applies even at zero utilisation
- Limits are reviewed and can be reduced or withdrawn
- Unsecured limits are modest and slower to approve than fintech loans
How to apply for a business overdraft
- 01
Show the pattern
Twelve months of trading account statements so we can see how deep and how often the balance goes negative.
- 02
Size the limit
Your broker sets a limit against real shortfalls, then compares interest rate, line fee and establishment fee across lenders.
- 03
Approve and attach
The facility attaches to your trading account. You draw simply by transacting, and deposits clear it down.
Documents lenders commonly ask for
- ID and ABN
- 12 months of business transaction account statements
- Financials or BAS, plus security details if property-backed
Lenders we compare for this
Westpac, NAB, ANZ, Moneytech, Shift and others on our panel. See the full panel.
Estimate your repayments
- Number of repayments
- 12
- Total interest (est.)
- $5,175
- Total repaid (est.)
- $80,175
This calculator provides an estimate only and does not account for fees, charges or the specific terms a lender may offer. It is not financial advice or an offer of finance.
Key terms
What is a business overdraft?
A business overdraft is a revolving credit limit attached to a business transaction account. The account can be overdrawn up to the approved limit, interest is charged daily on the overdrawn balance, and deposits automatically reduce what you owe.
How much does a business overdraft cost?
Overdrafts typically carry an interest rate on the overdrawn balance plus an annual line fee of about 1–3% of the limit and a one-off establishment fee. Because line fees apply whether or not you draw, the effective cost depends heavily on utilisation.
Is a business overdraft secured or unsecured?
Both exist. Secured overdrafts are backed by property or a general security agreement and carry lower rates and larger limits; unsecured overdrafts rely on trading performance and a director’s guarantee, and are usually capped well below $250,000.
Business overdraft FAQs
What is the difference between a business loan and a business overdraft?
A business loan advances a fixed amount that you repay over a set term. An overdraft is a limit attached to a transaction account that you draw on and repay as needed, with interest charged only on the balance used. A loan suits a defined purchase or a one-off cost; an overdraft suits timing gaps between paying suppliers and being paid. Overdrafts often carry a line fee whether or not you draw the limit, so compare the total cost of holding the facility.