The top 15 business overdraft providers

An overdraft is a credit facility within your business bank account that extends your available balance. That means you could have zero funds in your account but as you have an overdraft you can still continue to spend up to your overdraft limit. Depending on the terms of the overdraft, you may be charged a fee or interest for using the facility. 

For consumers and businesses alike, an overdraft can provide a helpful financial safeguard at times when your spending is likely to exceed the money going into your account. It can be a more readily available and manageable form of credit than taking out a loan or business credit card. However, like all credit, you should be mindful of the repayment terms and not taking on too much debt. To avoid getting into any debt whatsoever, consider using a business expense app to carefully track your expenditure.

Let’s look at some of the main banks and building societies and their overdraft options as part of their business bank accounts. 

HSBC are the one of the biggest banks in the world. However, their customer service score is only mid table amongst the main UK banks. Here are the terms of their business overdraft:

• Borrow up to £30,000 
• Get same day approval
• Representative EAR: 9.9% 
• Arrangement fee: 1.75% (minimum £25
• Annual renewal fee: 1.5% (minimum £25)

Find out more about the HSBC Business Overdraft

Barclays offer an overdraft facility which is easy to arrange and allows for flexibility if your business circumstances change. 

• Agreed limit up to £50,000
• Representative AER: 11.01% – 8.02% (depending on agreed limit)

Find out more about the Barclays business overdraft

Natwest’s overdraft facility also comes with a Family First event option, meaning “you could apply for added benefits to your business, to help smooth any bumps in your income during this period.”

• Agreed credit limit up to £50,000
• Arrangement fees and EARs vary depending on borrowing

Find out more about the Natwest business overdraft

The Lloyds Bank business overdraft offers simple pricing and options based on your turnover. Its mobile banking also scores favourably. 

• Agreed limit up to £25,000
• Representative EAR: 10.31% (turnover <£3m) and £7.66% (turnover >£3m)

Find out more about the Lloyds Bank business overdraft

Santander are not currently accepting applications for business overdrafts and are instead directing existing customers to the Bounce Back Loan Scheme. 

Find out more about Santander’s business overdraft

According to the TSB website, they are: “offering overdrafts from £50,001 up to £250,000 backed by the government Coronavirus Business Interruption Scheme (CBILS), which helps customers by providing an overdraft facility which has arrangement fees and interest paid by the government for the first 12 months.”

Find out more about the TSB business overdraft

If you have a Metro Bank business account you can apply for a business overdraft up to and over £25,000. Metro Bank also scores highly for customer service and mobile banking. 

• Representative EAR: 10%
• Arrangement fee (up to £25,000): 1.75% or £50 (whichever is greater)
• Arrangement fee (over 25,000): 1.25 of its limit

Find our more about the Metro Bank business overdraft

Challenger bank Starling offers what it terms a “fairer overdraft”. It is one of Which’s recommended banks and scores highly across the board for customer service, mobile banking and application process. 

• Agreed credit limit up to £5,000
• No arrangement or additional fees.
• Manage borrowing amount via app.
• Offer interest rates of 15%, 25% and 35% EAR (variable) depending on applicant

Find out more about the Starling Bank business overdraft.

Bank of Scotland offer a business overdraft with simple pricing.

Find out more about the Bank of Scotland business overdraft. 

Ulster Bank offers a flexible overdraft facility. 

• Agreed credit limit up to £50,000
• Representative EAR: 7.29%
• Arrangement fee: £150 (£15,000<), £200 (£20,000<), £250 (>£20,000)

Find out more about the Ulster Bank business overdraft.

Yorkshire Bank offer an unsecured overdraft facility for its business bank customers.

• Agreed limit up to £25,000
• Representative EAR: 9%
• Arrangement fee: 2.5% (minimum of £120)

Find out more about the Yorkshire Bank business overdraft. 

Clydesdale Bank offers the same business overdraft terms as Yorkshire Bank.

• Agreed limit up to £25,000
• Representative EAR: 9%
• Arrangement fee: 2.5% (minimum of £120)

Find out more about Clydesdale Bank’s business overdraft. 

Royal Bank of Scotland offers the same terms as the Natwest business overdraft. 

• Agreed credit limit up to £50,000
• Arrangement fees and EARs vary depending on borrowing

Find out more about the Royal Bank of Scotland business overdraft.

Co-operative Bank offers business overdrafts “made clear and simple”.

• Agreed credit limit up to £250,000
• Offered on secured and unsecured basis
• Representative EAR: 6.28% (variable) on amounts under £25,000
• Arrangement fee: 1.5% (minimum £50)

Find our more about the Co-operative Bank business overdraft. 

Cashplus offers what it calls an ‘iDraft’.

• Agreed limit of up to £2,000
• £1.50 per day flat usage fee

Find out more about the Cashplus iDraft.