What is a business overdraft?
An overdraft is an approved extra amount of funds (or ‘line of credit’) attached to your business transaction account, which you can access whenever you need to.
You pay back what you can, when you can - if the overdraft stays under the approved limit. Interest is charged on the overdraft balance until it is fully repaid.
Who can apply?
- A business entity domiciled in Australia; or an individual 18 years and above or strata corporation domiciled in Australia and requires the funding for business or investment purposes other than investment in residential property.
- You need to be an existing Westpac business customer to apply for an unsecured business overdraft. Your business will also need to meet these requirements.
Why choose a business overdraft?
- Flexible line of credit linked to your business transaction account
- Use or repay funds at any time (within the approved limit)
- Only pay interest on the overdraft amount you use
- Fast unsecured choice for existing customers.
Benefits for your business
Quick access to extra funds to manage payments and expenses.
Expand your business by using extra funds to tender for larger jobs.
Negotiate better terms and discounts with suppliers using the overdraft for larger upfront payments.
Access funds to pay bills while you’re waiting to receive payments.
What’s the difference between an overdraft and a business loan?
A business loan is a lump sum paid into your transaction account. An overdraft is a pre-agreed amount you can access if your bank balance drops below zero.
A business loan may suit your business if you need funding for things such as a business acquisition, start-up costs, capital investment, property acquisition or development, or refinancing other lending.
A business overdraft may help relieve the strain on your cash flow, by supplying funds to cover expenses (such as buying stock and paying invoices and wages) until you get paid by your customers.
Secured and unsecured overdrafts: what’s the difference?
If you want access to less than $75k, an unsecured business overdraft may suit your needs. An unsecured overdraft can provide more funds in your business transaction account, without you having to offer a specific asset (such as a property) as security against the ‘loan.’ Please note that a director’s guarantee will be needed if you’re a corporate borrower.
If you’re looking for between $75K and $250K+, you could consider a secured business overdraft. This means we give you access to more funds in your business transaction account, and you provide security for the overdraft with a specific asset.
Frequently asked questions
If you already bank with us, we won’t need your individual ID again if we have it on file.
If you are new to the bank, we will need to see ID, such as your driver's licence or passport. We may also need to see your business registration documents.
Most businesses will need to show:
- Annual financial statements or a copy of tax returns
- Interim financial statements, as needed
- A copy of the latest full tax portal report.
In some cases, we may need more information, such as:
- Business Activity Statements or cash flow statements
- Recent management information appropriate to the risk and complexity of the loan (e.g., cash flow forecasts, management accounts, working asset statement etc.)
- Projected financial information.
For start-ups and complex requests, we will need more details, such as:
- Projected financial information, including detailed assumptions
- Other supporting management information appropriate to the risk and complexity of the loan.
Proof of individual income
We may also want to know your personal income if you are a director and/or shareholder of a company. We’re likely to ask you for your most recent individual tax returns.
If you earn other income unrelated to your business, or not shown in your tax return, you may want to provide this information as well. For example, you could show income from a rental property if you have one.
We will want to know your expenses to ensure the loan repayments can be paid. Expenses include things like bills, living expenses, current loan repayments and credit card limits. We may also require financial statements that detail business expenses to help us decide whether your business can meet your future repayments.
- Residential Property
- Commercial Property (non-specialised)
- Business Assets
- Farm Equity
- Cash (Term Deposit).
A line fee is charged monthly based on the total limit. The monthly charge is calculated using the line fee annual percentage rate, total limit, and number of days to arrive at the monthly amount.
For example, let’s say the line fee is 1.20% p.a., the limit of your overdraft is $10,000 and the month has 31 days.
The line fee is calculated as:
(1.20% of $10,000)/365x31 days = $10.20 per month.
If you choose to offer security for your business overdraft, you will typically pay a lower interest rate on the funds you draw down than if you choose the unsecured business overdraft option. Bear in mind that the interest rate is lower because we secure the overdraft using a pre-agreed asset, which we can recover against if you are unable to repay the overdraft.
Things you should know
Credit criteria, fees, charges, terms, and conditions apply. Talk to your banker for product details.
1. Rates vary depending on a number of factors, such as the type of security provided.
2. Eligibility, credit criteria and type of security determine how much you can borrow.
3. Charged at the beginning of the month. Other fees may apply.
Extra eligibility requirements for unsecured business overdraft
For existing customers applying for unsecured business overdraft, your business will need to:
- Hold a Westpac business transaction account in the same name that you will use to apply
- Have traded for at least 12 months with a valid ABN or ACN
- Be registered for GST
- Turnover more than $75K annually
- Operating as a sole trader (aged 18 years or over) or a sole director company (where the sole director is also the sole company secretary). For company borrowers, the sole director must supply a director’s guarantee
- Be a tax resident of Australia, that is based, registered, and operating in Australia
- Only use the finance for business purposes and will not be used to finance other lending, start a business, fund a property development, or buy residential property
- Have less than $1m in business lending with Westpac
- Have ATO payments, loan repayments and employee entitlements (including super) up to date.