Business Overdraft Facility
For many businesses, operating with an overdraft is an essential and accepted part of normal commercial procedure. Many would simply not be able to survive without such an option.
- On overdraft is a line of credit extended to a business.
- It is set at a maximum amount and may have a time limit or may be on ongoing facility.
- The business pays interest on only that amount of the overdraft credit they utilise each month.
- Interest is charged monthly.
- A fee may or may not be charged by the bank to establish an overdraft.
Overdrafts are used for a range of purposes, including:
- Support cash flow with late paying and long-paying customers
- When commercial enterprises need to pay large amounts up-front for stock with costs not being recouped until the stock is sold well down the track
- Investing in growth, possibly to employ additional staff
- Temporary measure to cover cash flow shortages
- Cover short-term increase in costs such as employing additional staff to complete large projects or contracts
- Initial support for a new business
- Cash flow support for commercial enterprises subject to seasonal fluctuations such as in the agriculture and tourism
Most operations will seek an overdraft from their bank, but in some cases this is not possible. In those cases, a non-bank overdraft facility may be sought.
Non-Bank Lender Overdraft Business Loans
A non-bank lender overdraft operates in a similar way as a bank overdraft except it is provided by a lender that is not your transactional bank. This is a specialist type of commercial loan facility and is available through a select group of lenders. Many of these lenders are accessible only through industry connections as such, organisations reach out to professional brokers to arrange non-bank overdraft facilities.
Features
- The lender will have their own specific requirements in regard to eligibility for an overdraft.
- This type of facility may be established as a short-term solution.
- The lender extends the funds and interest is charged only for amount of funds which are drawn against each month.
- The interest rate may be fixed in negotiations between the commercial facility and the lender or as negotiated on behalf of the organisation by their broker.
- Alternatively, the interest rate may be at a variable rate.
- Interest is charged monthly.
- Fees and charges to establish this facility will vary from lender to lender.
- Security such as proper, is not usually required.
Sourcing a Non-Bank Overdraft Facility
To connect with a lender that offers overdraft facilities, just connect with us. We have direct contacts with lenders that operate in this specialist lending sector and may be able to assist you.
Connect with us for contacts with lenders that offer overdraft facilities.
