An overdraft facility is an arrangement with a bank that lets a business account go into a negative balance up to an agreed limit. Interest is usually charged only on the amount actually used, and the limit can often be drawn and repaid repeatedly.
How it differs from a Credit Corp facility
An overdraft is typically attached to a current account and provided by a bank. Credit Corp offers business loan facilities, Credicorp Flex and Credicorp Slice, which are separate agreements with their own terms rather than an extension of your bank account.
- An overdraft sits on your bank account; a Credit Corp facility is a standalone business loan.
- Overdraft limits can sometimes be reduced or withdrawn by the bank at short notice.
- Your Credit Corp offer sets out the amount, term and rate agreed for your company.
Choosing what suits your business
Overdrafts can be useful for short, unpredictable cash-flow gaps. A structured loan can suit a planned cost or investment where you want a clear repayment schedule. Many companies use both for different purposes.
Credit Corp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. If you want to understand which Credit Corp product fits a particular need, our team can talk it through.
See also: How does Credicorp Flex work?, What is a revolving credit facility? and Credicorp Flex versus Credicorp Slice: which suits your borrowing?.