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 Creditcorp facility
An overdraft is typically attached to a current account and provided by a bank. Creditcorp offers business loan facilities, Creditcorp Flex and Creditcorp 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 Creditcorp facility is a standalone business loan.
- Overdraft limits can sometimes be reduced or withdrawn by the bank at short notice.
- Your Creditcorp 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.
Creditcorp 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 Creditcorp product fits a particular need, our team can talk it through.
See also: How does Creditcorp Flex work?, What is a revolving credit facility? and Creditcorp Flex versus Creditcorp Slice: which suits your borrowing?.