Business Overdrafts

You know your business but are you paying too much to manage your cashflow needs. We detail the overdraft options below.

Kiwibank
58458
Business Overdraft
Interest Rate (p.a.)

7.50%

Establishment Fee

Minimum of $75.00

Monthly Overdraft Fee

0.10% per month ($5.00 minimum)

Unarranged overdraft fee: $10 per month

    ASB Bank
    58459
    Business Overdrafts
    Interest Rate (p.a.)

    9.13%

    Establishment Fee

    Up to 1.00% of the approved limit. Minimum $25.00

    Monthly Overdraft Fee

    0.12% of the limit or the highest daily overdrawn balance, whichever is the greater. Minimum $5.00

    Unarranged overdraft fee: 0.12% of the highest daily overdrawn balance. Minimum $10.00

      Bank of New Zealand
      58460
      MyMoney for Business
      Interest Rate (p.a.)

      8.9% plus margin

      Establishment Fee

      From $100

      Monthly Overdraft Fee

      $8.50

      Unarranged overdraft fee: 0.15% per month ($5.00 minimum)

      • MyMoney for Business is specifically for small businesses with an annual turnover of less than $1 million.
      Nelson Building Society
      58461
      Commercial Overdraft Facility (Arranged)
      Interest Rate (p.a.)

      Starting from 9.95% p.a.

      Establishment Fee

      1.00% (minimum charge $25.00)

      Monthly Overdraft Fee

      0.18% (minimum charge $5.00) of the limit

      Unarranged overdraft fee: 0.25% (minimum charge $20.00) of the highest daily limit

        ANZ Bank
        58462
        ANZ Business Overdraft
        Interest Rate (p.a.)

        10.60%

        Establishment Fee

        A minimum amount of either $75 or 1% of the approved credit limit or increase, whichever is greater

        Monthly Overdraft Fee

        0.12% (minimum $5 a month)

        Unarranged overdraft fee: $5.00

          Westpac
          58463
          Westpac Business Overdraft
          Interest Rate (p.a.)

          19.95% p.a

          Establishment Fee

          From $400 per loan/facility

          Monthly Overdraft Fee

          -

          Unarranged overdraft fee: $9.00

            The Co-operative Bank
            58464
            Overdraft Arranged
            Interest Rate (p.a.)

            17.50% p.a.

            Establishment Fee

            $25.00

            Monthly Overdraft Fee

            $3.50

            Unarranged overdraft fee: $10 per unauthorised month

              Nelson Building Society
              58465
              Commercial Overdraft Facility (Unarranged)
              Interest Rate (p.a.)

              Starting from 9.95% p.a.

              Establishment Fee

              1.00% (minimum charge $25.00)

              Monthly Overdraft Fee

              0.25% (minimum charge $20.00) of the highest daily limit

              Unarranged overdraft fee: 0.25% (minimum charge $20.00) of the highest daily limit

                Bank of New Zealand
                58466
                First Transact
                Interest Rate (p.a.)

                10.2% p.a. plus margin

                Establishment Fee

                From $100

                Monthly Overdraft Fee

                Pay as you go: No fee - $10 or $20 plan

                Unarranged overdraft fee: 0.15% per month ($5.00 minimum)

                  Bank of New Zealand
                  58467
                  Business First on Call
                  Interest Rate (p.a.)

                  10.2% p.a. plus margin

                  Establishment Fee

                  -

                  Monthly Overdraft Fee

                  -

                  Unarranged overdraft fee: $5.00 for any month overdrawn

                    The Co-operative Bank
                    58468
                    Overdraft Unarranged
                    Interest Rate (p.a.)

                    22.00% p.a.

                    Establishment Fee

                    $25.00

                    Monthly Overdraft Fee

                    $3.50

                    Unarranged overdraft fee: $10 per unauthorised month

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                      What is a business overdraft?

                      A business overdraft is a short-term solution to meet small business needs. It is a line of credit that gives businesses access to a set amount of money that can be used to finance unplanned expenses. This gives businesses the flexibility to adapt and change as their cash flow does.

                      How does it work?

                      Having a business overdraft means that your business has access to a pool of funds which can be used at any time. It is similar to a business credit card with some exceptions. You are only charged interest on the money you use until it is repaid. This means the money that is not used remains interest free.

                      Types of business overdrafts

                      Secured Business Overdraft

                      A secured line of credit involves business assets being allocated as collateral security for the money that is lent. These are usually short-term assets rather than capital assets. The lender may take on ownership of the collateral if the business fails to pay back the balance.

                      Unsecured Business Overdraft

                      An unsecured overdraft typically requires a personal guarantee and general lien to secure the account rather than assets. This type of line of credit requires businesses to have a strong credit profile and a good track record. Unsecured overdrafts may also have higher interest rates than secured overdrafts.

                      Business overdraft vs term loans

                      A business overdraft and a business loan are very similar in the respect that both supply a business with funds which must be paid back. The difference lies in the approach.

                      An overdraft provides access to funds up to a maximum amount. Businesses may then use these funds as they need them for business expenses. Any money used must be paid back with interest. If businesses do not use the full amount, they can borrow against the overdraft account again when they require additional funding. Interest rates are often high with an overdraft and are best suited to smaller, short-term business expenses.

                      In comparison, a business loan is a fixed amount of funds the business borrows as a lump sum. The loan is paid off over a prearranged amount of time until the loan plus interest is completely paid off. Loans typically offer larger amounts and are ideal for costly business expenses.

                      Applying for a business overdraft

                      When applying for a business overdraft the lender will require a range of documentation to ensure the businesses eligibility and creditworthiness. Some of these documents may include:

                      • Business licence
                      • Tax returns
                      • Bank statements
                      • A business bank account
                      • Other financial documents

                      Things to be aware of

                      • Due to the nature of the overdraft product, borrowing more than you can afford is a dangerous mistake commonly made by businesses. It is very easy to fall in to deeper debt when taking out more money than what you require.

                      • Don't take too long to pay back funds used. Overdraft accounts tend to have higher interest rates than other borrowing options. Therefore, the longer you take to repay the funds, the more interest and charges that will accumulate and the more expensive it gets.