Small Business Overdrafts Explained – Bank and Non-Bank Business Overdrafts

Managing cash flow is a critical element to get right for any business. With the uncertainty of the current environment and the difficulty in making cash flow forecasts, it has become more important than ever.

A small business overdraft can provide instant access to cash and help cover a range of ongoing expenses, providing cash flow relief when your business needs it most. In this article we explain what is a business overdraft, we conduct a business overdraft interest rates comparison, and we discover if an unsecured business overdraft is possible.

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What is a Business Overdraft?

A business overdraft is an extension of credit that allows a business to access funds beyond the balance it has in its business transaction account. The business overdraft facility essentially means that a business can continue to make withdrawals/payments when their transaction account is empty, up to its agreed overdraft limit.

If you find that one of your clients is late paying you but you have employees and bills to pay at the end of the month, then dipping into your business overdraft could be an option. As with any type of business loan, whatever you spend using the overdraft is a debt you must repay. Interest is charged daily on the overdraft balance until it is fully repaid.

Most business transaction accounts have an overdraft facility available. Sometimes it can be an unsecured business overdraft or a secured business overdraft – with a bank you’ll be less likely to find an unsecured business overdraft but it is available.

Loan TypeSecuritiesTermsAvg Loan SizeEstimated Interest Rate


The Cape Business Card deserves a special mention as it charges no interest whatsoever and can be used to pay for all business related expenses except payroll. Thus serving as a genuine and potentially cheaper alternative to a business overdraft. 

You can get anywhere between $5,000 and $500,000 AUD credit per month with your Cape card, depending on the financial profile of your business. A minimum business credit score of just 500 is required to apply, so even SMEs seeking bad credit business loans may be eligible.

The Cape Business Card

Pay for various business related expenses interest-free for up to 30 days* with the Cape Business Card. Based on Cape’s risk assessment, you can get anywhere between $5,000 and $500,000 AUD credit per month with your Cape card. To apply you must meet the following criteria: ✔️ Aus Pty Ltd company  ✔️ Min $75k turnover  ✔️ In business for 12+ months  ✔️ Minimum 500 Equifax score * Only for short-term borrowing. After 30 days a 2% late payment fee applies. Apply Now

Business Overdraft Interest Rates Comparison

Non-Bank Providers are more expensive than banks.

Through our research we’ve been able to identify unsecured business overdraft interest rates and fees as follows:

Establishment FeeAnnual FeeAdvertised Business Overdraft Interest Rates Starting At
NAB Available on applicationAvailable on application10.22%
ANZ$75 or 1% of facility size (whichever is more)Available on application15.2%
WestPacAvailable on application1.5% monthly fee13.21%
CommBankAvailable on application1.12%11.43%
Shift (formerly GetCapital) – Non-bank lender$0$495 – $79513.95% – 22.95%


As we can see in our business overdraft rates comparison, Shift, as an online lender, is the cheapest in terms of upfront fees. There are absolutely no fees applied to open a business overdraft with Shift but they do charge a fairly costly $495 annual fee. In most scenarios, this is the most expensive service fee of all. With WestPac charging a 1.5% fee of your overdraft limit per annum, the ongoing maintenance fees with WestPac would only be more expensive than Shift on business overdrafts of around $35,000 and more. . The ANZ business overdraft establishment fee could be expensive on larger facilities and you only find out about maintenance fees on application. The ANZ business overdraft interest rates are also the highest of any bank lender. The NAB business overdraft has the least information surrounding fees and you’ll only find out about establishment and maintenance fees on application.


The ‘interest rates starting at’ column makes for interesting reading. NAB’s business overdraft rates start at 10.22% – the lowest of any lender sampled. CommBank follows, with rates commencing at 11.43% and then there is a more notable increase when it comes to WestPac, starting at 13.21%, and ANZ, starting at 15.2%. Online lender Shift offers business overdrafts with an APR between 13.95% – 22.95%.

Note that business overdraft rates are variable so will benefit borrowers when interest rates are falling but when interest rates rise, borrowers with a variable rate loan will see their loan repayments increase.  

Comparing Business Overdraft Providers

A business overdraft, alongside a line of credit and a business credit card, is one the most common sources of finance for SMEs. According to Banjo’s 2023 SME Compass Report, 15% of its respondents planned to utilise either a business overdraft or business line of credit within the next 12 months.  The majority of online lenders including the industry’s largest lender, Prospa, offer a business line of credit, whilst Shift have a dedicated business overdraft solution. 

Using the form below you can apply for a business credit overdraft facility with more than 50 Australian lenders.



A Non-Bank Alternative for a Small Business Overdraft 

The very nature of a business overdraft lends itself to being provided by the transaction bank of your choice. It’s a credit limit on your transaction account that allows you to go into the red anywhere up to your limit. You could have an overdraft with another bank but chances are it’s the bank that handles your cash on a day-to-day basis. 

Innovative new technologies are changing things though. A new product from Shift allows you to link your transaction accounts with a Shift business overdraft. So you can still have transaction banking with your bank of choice but the flexibility of an overdraft with Shift. 

The Pros and Cons of a Business Overdraft

A business overdraft is one of the most straightforward ways to manage day-to-day cash flow shortages as and when they arise. That’s not to say it’s always the correct solution though and borrowers should be aware of both the advantages and disadvantages of a small business overdraft:


Easy access safety net. Simply continue to make payments from your account even if your balance falls below $0.

Re-use as and when necessary. Once you pay your overdraft back you’re free to use the funds again.

Flexible Repayments. Above your minimum repayment you can choose to pay off as much as you wish and as quick as you wish.

Multi-purpose. You can use a business overdraft for virtually any business expense.

You only pay interest on the funds you use.

Secured or unsecured business overdrafts available.

With business funding


Generally more expensive than most types of loan.

Application and ongoing fees apply, particularly from bank lenders.

Unlikely to come with the usual introductory offers that are associated with  applying for a business credit card.

Quick termination. This can be a benefit for the borrower to exit easily but similarly a lender may terminate the overdraft at any point.

Once linked you can seamlessly transfer funds from your GetCapital overdraft to any linked business account and manage cash flow as needed. Even if you change your transaction banking provider you can simply link your new bank account to the GetCapital business overdraft.

With no establishment fees and a very generous $750,000 credit limit it’s a solution that fits SMEs of all sizes. Unsecured business overdrafts are available, with no assets required as security in the lending process. 

GetCapital does ask that borrowers have been in business for at least 3+ years, which may make some early-stage business ineligible. 



Expedited Business Overdraft Loan Application

Consider using a Business Loan Marketplace to scan the market and apply with multiple lenders on your behalf. Lend, Become and Valiant Finance are some of the leading marketplaces which provide similar benefits and a free alternative to a business loan broker.

Final Word on Business Overdrafts

A business overdraft is one of the most popular forms of business finance available in Australia. It’s used in almost every industry to manage day-to-day working capital requirements, which can include purchasing stock, paying staff, or any other cash flow needs. Unsecured business overdrafts are available but you should expect to pay more for a business overdraft unsecured than a business overdraft secured. The business overdraft rates comparison provides insight into the application and ongoing fees which are involved with a small business overdraft but it’s hard to judge exactly what interest rate your business will be eligible for on your own business overdraft.