Overdraft: What is it & how to use it

Find out useful information about the overdraft facility and how it can help you meet your needs

The journey of a business, regardless of size or industry, is exciting and full of experiences. Along with positive milestones, professional successes and creative moments, there are also difficulties, which can however be overcome if you're well-prepared. One of these difficulties concerns cash flow.

There are many factors that can affect your business’s liquidity, but there are also solutions to meet your basic operational needs, such as an overdraft facility linked to your corporate sight account.

How is it different from lump sum loan?

The overdraft facility is often confused with lending. While they may be similar in some ways, there are, however, significant differences between these two solutions. Specifically:

  • Unlike regular instalment business loans which are a medium and long term source of financing, the overdraft facility works in the short term, since it provides liquidity to the business instantly and for a short period of time, in exceptional cases when the need for working capital exceeds the amount which is available in its account. 
  • In the case of a one-off loan with regular instalments, the amount granted by the bank is specific, for a predetermined period of time, whereas an overdraft facility provides the option of easy access to cash with an overdraft limit linked to the sight account, through which your business transactions are carried out.

Overdraft: What is it & how to use it

What you should know

There are certain overdraft features that you should be aware of before activating this option on your business sight account.  

  • The bank determines the amount that can be "unlocked" after evaluating your business’s financial data, as well as your transaction profile. 
  • The duration of the overdraft is fixed at one year, with a renewal option.
  • As in any form of lending, the overdraft facility requires the usual personal and real collateral (guarantees of individuals, real collateral, etc.), depending on each case.


In addition to the overdraft facility, there are other liquidity products suitable for the current needs of a business. A Business Advisor has the expertise and experience to offer you the appropriate guidance and to discuss with you the best solutions tailored to the needs of your business.