Seasonal cash flow
Income spikes (harvest, summer trade, contract milestones) but expenses run year-round. Overdraft smooths the dips.
Business Finance · Bank Overdraft
Credit when you need it.
Quiet when you don't.
A business overdraft is approved cash on standby — attached to your transaction account, only costing you interest on what you actually use. The smoothest way to handle fluctuating cash flow.
How a business overdraft works.
A business overdraft is a revolving credit facility attached to your business transaction account. You can spend below zero up to an approved limit, and you only pay interest on the drawn balance — not the facility limit. Repayments happen automatically as customer payments credit the account. Suits fluctuating working-capital needs better than a term loan, which locks in a fixed amount whether you need it or not. Typically secured by a general security agreement (GSA) over business assets.
When an overdraft beats a loan.
Invoice timing gap
30/60/90 day customer terms but weekly payroll. Overdraft bridges, debtor finance scales — pick depending on size of gap.
Short-term opportunity
Bulk supplier discount, off-market stock, time-limited buy. Use it, repay it from sales, no fixed-term commitment.
Insurance & contingency
Approved facility you may never draw — the safety net for the month one big customer pays late.
Bank overdraft questions.
What is a business bank overdraft?+
A revolving credit line attached to your business transaction account. You can spend below zero up to an approved limit, and you only pay interest on the drawn balance — not the limit. Funds are repaid automatically as your account is credited.
When does an overdraft beat a business loan?+
When your need is fluctuating and short-term — covering payroll the week before customer payments arrive, or smoothing out invoice timing. A term loan locks in a fixed amount; an overdraft only costs when used.
What's the typical interest rate on a business overdraft?+
Variable, usually 1–4 percentage points above your bank's commercial reference rate. Higher than a secured term loan but lower than an unsecured business loan. Always check whether the rate is on drawn balance or facility limit.
What security is needed?+
Most banks require a general security agreement (GSA) over business assets, sometimes backed by real estate. Smaller unsecured overdrafts (under $50K) are available but priced higher.
Can TMF arrange overdrafts, or only the bank directly?+
TMF arranges overdrafts through our panel — including specialist lenders that compete with the major banks on rate and flexibility. Often we'll structure a hybrid: a secured term loan for capex plus a smaller overdraft for working-capital smoothing.