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What's the difference between a secured and unsecured overdraft

If you're considering a business overdraft, there are a couple of key differences to understand between the unsecured business overdraft and the secured business overdraft. These are good to know because this may save your business money in the long run.

1.      How much is the business overdraft for?

If you want less than $50K, we offer the unsecured business overdraft. A director’s guarantee will be required for corporate borrowers.  This means we give you access to additional funds in your business transaction account, without having to secure the overdraft with a specific asset as security.

If you want more than $50K and less than $250K, you can choose the secured business overdraft. This means we give you access to additional funds in your business transaction account, and you secure the overdraft with a specific asset (such as residential, commercial or rural property) as security.

2.      How much interest did you want to pay?

When you secure the business overdraft, you will typically pay a lower interest rate on the funds you draw down from the overdraft. Keep in mind the interest rate is lower because we secure the overdraft over a specific asset, which we can recover against in the event that you are unable to repay the overdraft.

3.      What assets do you have to secure the overdraft?

If you want a secured business overdraft, we ask you to provide assets such as residential, commercial, rural property, bank guarantees and in some situations, term deposits, inventory or other investments as security. We only accept vehicles or equipment as security when they are out of debt.

Our unsecured and secured business overdrafts are ongoing (with no fixed term), and you repay what you can, when you can – as long as the overdraft stays under the agreed limit.


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Things you should know

1.  Lending criteria, terms and conditions and fees and charges apply.

This information does not take into account your personal circumstances and is general. It is an overview only and should not be relied upon. This information including any tax information provided in this article should be used as a guide only. We recommend that you seek independent professional legal and tax advice about your specific circumstances.