Every business needs some ‘wriggle room’ from time to time. An arranged business overdraft is often unsecured and can be a low-interest way to access credit for your business when you need it that is cost-effective for short periods. If you’re currently shopping around for the best business overdraft available, these are some of the best overdrafts that are connected to business current accounts.
Featured: Capital On Tap*
- -Offer a revolving credit line of up to £100k.
- -Quick and simple application that won’t affect your credit rating.
- -Access to funds within minutes.
- -No signup or drawdown fees just pay interest for the days you use your overdraft.
- -Simple web portal and mobile app.
- -Transfer your overdraft to your bank account.
- -Flexible repayments as and when you can.
- -Make repayments by direct debit and debit card.
- -Helped more than 120,000 businesses including over 20,000 sole traders.
- -Rated 4.8 out of 5 on Trustpilot.
Companies are ranked in no particular order.
| Bank | Borrowing Limit | Fee | Interest Rate |
|---|---|---|---|
| Starling Bank | Up to £10,000 | No fees | 15% EAR |
| Barclays | Up to £50,000 | £95 - £295 OR 1.6 - 1.9% | Rep EAR 8.72-11.01% |
| NatWest | £50,000 | Up to £500 fee of £50, up to £1,500 fee of £100, over £1,500 1.5% fee or a minimum of £150 | Find out when you apply |
| HSBC | Find out on application | From £25 | Representative EAR of 10.36% variable |
| Lloyds | Up to £25,000 | £12 per month on £500-5k, 1.99% (min £120) on £5,0001-25k | 11.52% EAR representative |
| Metro Bank | Up to £25,000 | 1.75% or £50, whichever is greater. | 10% EAR |
| Bank of Scotland | Up to £25,000 | £12 per month on £500-5k, 1.99% (min £120) on £5,0001-25k | 11.25% EAR representative |
| TSB | £15,000+ | Under £15,00 fees from £100-250, over £15,001 0.4-1.5%, minimum fee £250 | 10.16% annual rate |
| Santander | £500 to £25,000 | Annual fee of 1% of the agreed overdraft (£50 minimum) | Representative 5.1% EAR variable until 10 November 2021 then 10%. |
| Royal Bank of Scotland | £50,000 | Up to £500 fee of £50, up to £1,500 fee of £100, over £1,500 1.5% fee or a minimum of £150 | Apply for details |
| Ulster Bank | Up to £50,000 | Up to £500 fee of £50, up to £1,500 fee of £100, over £1,500 1.5% fee or a minimum of £150 | 7.29% representative EAR. |
| Co-operative Bank | Up to £250,000 | 1.5% arrangement fee (£50 minimum) for borrowing up to £25,000 | 6.28% Variable (for overdrafts up to £25,000) |
| Allied Irish Bank | Up to £25,000 | 1.5% arrangement fee (minimum £500). Renewing or increasing charged at 0.5% minimum. | 6.24% EAR (variable) representative |
| Danske Bank | Enquire for details | Enquire for details | Enquire for details |
1. Starling Bank
- Available with the Starling Bank business current account.
- Up to £150k overdraft available.
- Their current account has zero monthly fees.
- Flexible borrowing.
- No fees for arranged overdrafts for Sole Trader Current Accounts.
- An annual fee of 1.5% of your limit or £50 (whichever is greater) applies for Business Current Account customers.
- Interest is calculated and payable monthly.
- Digital bank account that is managed through their app.
- Caters for sole traders and small businesses.
- Rated ‘Excellent’ on Trustpilot.
Website: Starling Bank Business Overdraft
Read the full Starling Bank Business Bank Account review.
2. Barclays
- Available with Barclays business current accounts.
- Overdraft is available up to £50,000.
- Unsecured borrowing.
- Can be available in days.
- Easy to arrange.
- An arrangement fee applies.
- Fees vary depending on your arranged limit.
- Variable EAR of 8.72-11.01%
- Apply to increase or decrease whenever you need to.
- Can assist with short-term cash flow challenges and seasonal changes.
Website: Barclays Business Overdrafts
Read the full Barclays Business Account review.
3. NatWest
- Available with NatWest business current accounts.
- Borrow up to £50,000.
- An unsecured facility is available.
- Flexible borrowing solution.
- No set minimum repayments.
- An arrangement fee applies.
- Pay interest only when you use the overdraft.
- Reviewed annually but you can increase or decrease your limit at any point.
- Can apply for added benefits if you have a Family First event.
- Apply online.
Website: NatWest Business Overdraft
Read the full NatWest Business Account review.
4. HSBC
- Available with HSBC business current accounts.
- Limits and fees not available on the website, apply for more info.
- Pay interest only on the amount you use.
- Interest is calculated daily.
- Variable EAR of 10.36%.
- An arrangement fee applies from £25.
- Can be arranged for periods of 1-12 months.
- Reviewed annually and a renewal fee will apply.
- Can check your eligibility on their website.
- You can apply online.
Website: HSBC Business Overdraft
Read the full HSBC Business Account review.
5. Lloyds Bank
- Available with Lloyds Bank current accounts.
- Simple pricing.
- Arrange an overdraft from £500 to £25k.
- Unsecured loan.
- Immediate access once approved.
- 11.52% EAR.
- Interest rates are linked to the Bank of England rate.
- Annual fees may apply.
- Only pay interest on the funds you use.
- Apply online.
Website: Lloyds Bank Business Overdraft
Read the full Lloyds Bank Business Account review.
6. Metro Bank
- Available with the Metro Bank current account.
- Up to £25,000.
- Fees are stated upfront.
- 10% EAR variable.
- An arrangement fee or 1.75% or £50 applies.
- Arrange it in-branch which are open 7 days a week.
- A credit check will be undertaken.
- Security may be required.
- Only charged for what you borrow.
- Annual review applies.
Website: Metro Bank Business Overdraft
Read the full Metro Bank Business Account review.
7. Bank of Scotland
- Available with Bank of Scotland business current accounts.
- Overdrafts from £500 to £25,000 are available.
- Unsecured borrowing.
- Interest is calculated daily and charged monthly.
- 11.25% EAR representative.
- Usage fee or annual fee applies.
- Only pay interest on the funds you use.
- Borrowing over the authorised limit will additional charges will apply.
- Interest is linked to the Bank of England rate and can change at any time.
- Open to sole traders, partners and company directors.
Website: Bank of Scotland Business Overdraft
Read the full Bank of Scotland Business Account review.
8. TSB
- Available with TSB’s business current accounts.
- Overdrafts available up to £15,000 and above.
- Annual interest rate 10.16%
- Arrangement fees vary depending on the term and amount.
- Arrangement fees from £100-250 under £15,000.
- Arrangements fees from £15,001 range from 0.40-1.5% with a minimum fee of £250.
- Only pay interest on the funds you use.
- Can apply for an amount that suits your business and its needs.
- Apply over the phone.
- Open to UK sole traders, partners and directors.
Website: TSB Business Overdraft
Read the full TSB Business Account review.
9. Santander
- Available with Santander’s business current accounts.
- Arrange an overdraft of £500 to £25,000.
- 5.1% EAR variable until 10 November 2021 then 10% EAR.
- Only pay interest on the amount you borrow.
- An annual fee applies of 1% of agreed limited with a minimum £50 fee.
- First year’s fees are waived if accepted for a CBILS overdraft.
- Available to business owners of sole traders, partnerships, LLPs and PLCs.
- Business Banking Manager may be available to support you.
Website: Santander Business Overdraft
Read the full Santander Business Account review.
10. Royal Bank of Scotland
- Available with the Royal Bank of Scotland’s business current account.
- The facility to borrow up to £50k available.
- Unsecured borrowing.
- Reviewed every 12 months.
- An arrangement fee applies.
- Only pay interest on the amount you borrow.
- No minimum monthly pay back.
- Manage the overdraft through online banking.
- Apply through your Relationship Manager or online if you don’t have one.
- Added benefits to help if you have a Family First event.
Website: Royal Bank of Scotland Business Overdraft
Read the full Royal Bank of Scotland Business Account review.
11. Ulster Bank
- Available with the Ulster Bank business current account.
- Businesses must be registered in Northern Ireland.
- Borrow up to £50,000.
- An arrangement fee applies.
- Short term solution for 12 months.
- Decision within 2 working days.
- Credit approval applies.
- Security could be required.
- Flexible repayments with no minimum month amount.
- Apply through your Relationship Manager or online if you don’t have one.
Website: Ulster Bank Business Overdraft
Read the full Ulster Bank Business Account review.
12. Co-operative Bank
- Available with the Co-operative business current accounts.
- Up to £250,000 available.
- Apply easily for up to £25,000.
- 6.28% variable EAR on overdrafts up to £25,000.
- Interest rates for amounts over £25,000 are discussed on application.
- Can be secured or unsecured.
- Variable interest rates based on the Bank of England Base Rate.
- An arrangement fee applies.
- Apply in writing by email or post.
- Aim to process applications within 10 business days.
Website: Co-operative Bank Business Overdraft
Read the full Co-operative Bank Business Account review.
13. Allied Irish Bank
- Available with Allied Irish Bank business current accounts.
- Up to £25,000 available.
- 6.24% EAR variable.
- Unsecured borrowing.
- An arrangement fee applies.
- Credit limit will be agreed based on your business’ needs.
- Only pay interest on the money you borrow.
- Interest is calculated applied quarterly.
- Subject to an annual review.
- Apply over the phone or at your nearest Business Centre.
Website: Allied Irish Bank Business Overdraft
Read the full Allied Irish Bank Business Account review.
14. Danske Bank UK
- Arranged overdrafts available with the business current account.
- Two rates are available – Bank of England Bank Rate and the 3 month LIBOR.
- A variable interest rate applies based on either the Bank of England rate or ICE LIBOR.
- Interest is calculated on a daily basis.
- Only pay interest on the money you borrow.
- Set up fee applies.
- Limit is reviewed every 12 months.
- An annual fee is charged.
- Security may be required.
- Suitable for short-term cash flow issues and seasonal fluctuations.
Website: Danske Bank UK Business Overdraft
Read the full Danske Bank UK Account review.
How much can I borrow using a business overdraft?
Overdraft limits vary but commonly range from £500 to up to £25,000. Some businesses can apply for larger amounts and will be assessed based on their circumstances and needs.
How much do business overdrafts cost?
Just like any other type of credit, there’ll be interest to pay on the amount you use. Most business overdrafts also have an arrangement fee, which will be paid when you set up the overdraft facility. There will often be a charge for reviewing the overdraft each year.
What details will I need to provide to get a business overdraft?
Your bank will conduct a credit search on your business. They’ll also search the information they already have with your current account, including incoming cash, outgoings, and other financial data. To apply, you might need to provide some extra information about the business and its director/s, but it’s usually a fairly fast process.
Can I get a business overdraft if I already have a business loan?
Sometimes, yes. Your bank may suggest a loan instead of an overdraft if it will suit your needs better. If you already have a loan with your bank, they will review this before they accept your overdraft application.
Are business overdrafts the best way to borrow money?
Depending on the terms and the interest rates, business overdrafts can be a good way to borrow money, but not universally. Before you commit, it’s important to assess what you need the credit facility for, what it will cost, and whether a alternative finance solution might be better for you.
* Please note we have an affiliate relationship with Capital On Tap, which means we get paid if you open an account with them. This comes at no cost to you.