What is a Business Overdraft loan?

18 March 2020

A business overdraft loan is a line of credit or revolving facility that becomes available for withdrawals up to a predetermined limit, once the balance in a business transaction account reaches zero.

Businesses find overdrafts useful and convenient, particularly to compensate for temporary cash flow shortfalls or while waiting on payment of invoices. The facility can be typically be used for any business purpose, you only need to pay for funds used and repayments are generally flexible. But like any loan product, it must be repaid according to the agreed terms.

What is a Business Overdraft account?

Business Overdrafts are traditionally attached to a business transaction account with the existing bank or lending institution.

In practice this means that a business with a number of different business transaction accounts could sometimes have several overdraft facilities, all tied to different institutions and potentially secured or cross-collateralised with property or guarantees. This can make financial management cumbersome and inefficient.

The GetCapital Business Overdraft solves this problem by using a proprietary Bank Connect technology to link seamlessly to any existing business transaction account, with any Australian bank. And if you change banks – simply link your new account to your GetCapital Business Overdraft.

What types of businesses use Overdrafts facilities?

  • Recruitment firms – to fund staff salaries until receipt of commissions
  • Project based businesses – to fund operations until payment receipt on project
  • Exporters – to fund shipping of goods
  • Importers – to fund purchase of goods

Here are a few examples of situations that are well suited to Business Overdrafts:

Example 1: A seasonal business that generates most of its revenue in the winter could use a Business Overdraft to fund business activities in the slower summer months.

Example 2: A business could use a Business Overdraft to fund marketing and sales-related expenses ahead of a new product launch. The upfront expenses could be funded by the drawdown on the overdraft with the overdraft paid off relatively quickly once customer sales are made.

Example 3: An importer needing to pay for goods overseas could use an overdraft to fund its upfront investment in inventory, when it has to wait 60-90 days before selling those goods.

What exactly is a GetCapital Business Overdraft facility?

GetCapital’s Business Overdraft has some unique features and major advantages, making it a flexible alternative to traditional overdrafts, namely:

  • Connect easily to any business transaction account.
  • Access up to $750,000.
  • No financials or property security required for limits to $150,000.
  • It’s simple to apply, no need to fill out complicated forms.
  • It’s quick. Funds are typically available on the following business day.
  • Interest is payable only on funds used.
  • Principal and interest repayments are also flexible, and can be arranged weekly or monthly.

Find out more about GetCapital’s Business Overdraft.

What are the Business Overdraft limits?

You can apply for a business overdraft with a limit up to $750,000. The process is straightforward:

  • Answer a few simple questions about your business.
  • Complete an application form.
  • Provide 6-months of bank statements for all your business-related accounts.
  • Provide a copy of any relevant trust deeds.
  • For amounts up to $150,000, no property security or financials are needed.
  • For higher amounts, additional documentation or security may be required depending on the strength of your application.

You can get started online now, and have the funds you need to keep your business moving and growing.

About Shift

Shift provides credit and payment platforms that help businesses trade, pay and access funds.  As one of Australia’s fastest-growing technology companies, Shift is changing the way businesses access finance. Shift has been recognised by AFR’s Fast 100, Deloitte’s Technology Fast50, Smart Company’s Smart50, Deloitte’s Asia Pacific Technology Fast 500, IDC Digital Disruptor and has been named the Commercial and Asset Finance Brokers Association Fintech of the Year in 2020, 2021 and 2022.

For media queries, please contact media@shift.com.au