Finding the best Business Overdraft

As with any overdraft facility a business overdraft is linked to the current account. Therefore it is of utmost importance to look at all the features and their associated costs when choosing who to bank with and which type of account to use.

Most banks, whether they are high street banks or online are readily found by performing a simple search on the Internet. The individual sites will often show the rates of lending including those incurred via an overdraft as well as other services which are offered by the bank.

Banking industry is highly competitive so it pays to look around at the comparison tables on sites such as; Moneysupermarket.com this is just one of many comparison sites which can be used.

Some the main features to consider are as follows:

Feature	Comments
Arrangement Fee	With most overdraft facilities on Business Accounts there is an arrangement fee. This is usually a percentage of the agreed total overdraft which the bank are prepared to make available.
Renewal Fee	This is a common charge made on most overdrafts. It is usually a percentage of the amount of overdraft facility which the bank is prepared to make available again for the next 12 months. This fee is usually charged annually.
Term Of Overdraft	Many overdrafts are used as a short term option ie; 31 days. It is worth checking with the lender to confirm over what time period the overdraft is to be repaid. If longer term finance is required it may be advisable to look at alternative more cost effective options.
Increase Overdraft	If at a later date the applicants requests an increase in the overdraft limit there will usually be a fee for this. It is commonly set as a percentage of the additional amount requested.
Interest Rate	The interest rate is often discussed between the business owner(s) and the manager of the bank. The interest rate is the rate which is charged on the amount of overdraft used.
Minimum Charges	It is common for the bank to charge their rates as a percentage but they also often state a minimum charge. The fee will be charged at the higher amount.

 

Guide Contents

Business Overdrafts
Finding the best Business Overdraft
Applying for a Business Overdraft
Frequently asked questions about Business Overdrafts
Where to get more help and advice about Business Overdrafts

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