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Business bank accounts with overdraft protection in Canada

Overdraft protection offers a useful safety net for your business, but watch out for fees and interest.

From a piece of equipment breaking to the cancellation of a major order, business owners often have to deal with unexpected costs that can push their business account balance below zero.

A business overdraft facility could be the solution, but only once you’ve ruled out the alternatives because it can be quite expensive. In this guide, we’ll look at some popular business bank accounts with overdraft in Canada, plus learn how an overdraft facility can help your business.

Business bank accounts with overdrafts in Canada

Want to add overdraft to your business bank account or skip overdraft fees altogether? Keep reading to find out about popular business accounts with overdraft protection – or no overdraft fees at all.

Vault Business Account

Vault Business Banking Account

$0
Monthly Account Fee
CAD, USD, GBP, EUR
Multicurrency Accounts
0.35%
Currency Conversion Fee
Want to skip paying overdraft fees altogether? The Vault Business Account charges no overdraft fees. This business account can also be useful if you conduct business in multiple countries outside of Canada, since it's a multi-currency account. Other perks include no monthly account fee and you can earn cashback when you spend with your Vault credit card.
  • No overdraft fees
  • No monthly account fee
  • Easy online signup process
  • Send funds in over 30 currencies
  • Earn cash back on spending
  • Not available for sole proprietors or partnerships
  • Not available in Quebec
  • Can't accept credit card payments
Monthly Account Fee $0
Multicurrency Accounts CAD, USD, GBP, EUR
Currency Coversion Fee 0.35%
GIC Available Yes

RBC Digital Choice Business Account

RBC Digital Choice Business Account

$6
Monthly Account Fee
CAD only
Multicurrency Accounts
Varies
Currency Conversion Fee
With an RBC Business Account, you have the option to add Royal Business Overdraft Protection to your account. The RBC Digital Choice Business Account is catered toward those who prefer to manage most of their business banking via their smartphone. With the RBC Mobile app you can quickly and easily pay employees and suppliers, request payments, track your spending and business performance, deposit cheques, send transfers and much more.
  • Unlimited electronic debit and credit transactions
  • Unlimited Moneris and electronic cheque deposits
  • Easy to use app
  • Competitive foreign exchange rates
  • Can only spend and receive in CAD
  • Comes with a monthly fee
  • Fees for cash deposits and paper deposits
Monthly Account Fee $6
Multicurrency Accounts CAD only
Currency Coversion Fee Varies
GIC Available Yes

TD Every Day Business Plan

TD Everyday Business Plan A

TD Everyday Business Plan A

$19
Monthly Account Fee
CAD
Multicurrency Accounts
unknown
Currency Conversion Fee
The TD Every Day Business Plan is designed to provide a cost-effective way to manage your day-to-day business banking needs. It's available in three plans — A, B and C — that support 20 transactions as well as . Each plan also comes with a monthly fee, but this is waived if you meet minimum balance requirements. Overdraft protection with TD usually comes with a monthly fee, but the fee is waived on this account. $5,000 cash deposits, 50 deposit items, and there's no application fee required to add overdraft protection to your account.
  • No monthly fee for overdraft protection
  • Three plans available to suit your business' transaction needs
  • Transaction limits won't suit all businesses
Monthly Account Fee $19
Multicurrency Accounts CAD
GIC Available Yes

BMO Business Builder

BMO Business Builder 1 Chequing Account

BMO Business Builder 1 Chequing Account

$22.50
Monthly Account Fee
CAD
Multicurrency Accounts
unknown
Currency Conversion Fee
The BMO Business Builder is an account that can suit a wide range of businesses. It's available in four plan sizes that support 35 transactions per month, including two Interac e-Transfers and unlimited Moneris transactions, and . You can also add BMO's Small Business Overdraft Protection Service to your account to take advantage of 25 items deposited per month and $2,500 in cash deposits. You can either pay a fixed $22.50 monthly fee for the service, or you can choose the pay-per-use option and pay a fee every time you need overdraft.
  • Flexible overdraft protection
  • BMO Overdraft Transfer Service also available
  • Choose the plan that suits your transaction needs
  • Not as much overdraft as some other accounts
  • Monthly account fees apply
Monthly Account Fee $22.50
Multicurrency Accounts CAD
GIC Available Yes

Scotiabank Right Size Account for Business

Scotiabank Right Size Savings for Business

Scotiabank Right Size Savings for Business

$0
Monthly Account Fee
CAD
Multicurrency Accounts
unknown
Currency Conversion Fee
The Right Size Account for Business is designed to suit the needs of businesses that perform limited transactions. You only pay for the transactions you make with this account, while a $0 monthly fee also applies. It's easy to manage your finances via online and mobile banking, and you can add overdraft protection to your account for just per month. Credit limits of $500 to $10,000 are available, and the funds you borrow are treated as a revolving line of credit that you pay back whenever you are able to.
  • Account can be tailored to suit your transaction needs
  • Overdraft protection of available
  • No deposit fees on payment processing with Chase Merchant Services
  • Overdraft interest rate of 3.5%
  • Transaction fees apply
  • Not suited to businesses that perform a high volume of transactions
Monthly Account Fee $0
Multicurrency Accounts CAD
GIC Available Yes

CIBC Advanced Business Operating Account

CIBC Advanced Business Operating Account

CIBC Advanced Business Operating Account

$35
Monthly Account Fee
CAD
Multicurrency Accounts
unknown
Currency Conversion Fee
Designed for growing businesses, the CIBC Advanced Business Operating Account supports up to 100 transactions. e-Transfers are included in the monthly limit, and you can also . If you want to add overdraft protection to your account, you can access $5,000 cash, $500 coin deposits and 50 cheque deposits. Protection is also available in US and Canadian dollars, providing extra flexibility for Canadian businesses that operate in the US.
  • Apply for secured overdraft protection to get a lower rate
  • Protection available in CAD and USD
  • Easy to apply
  • monthly overdraft protection fee
  • $35 monthly account fee ()
Monthly Account Fee $35
Multicurrency Accounts CAD
GIC Available Yes

National Bank Premium Business Package

National Bank Premium Business Package

National Bank Premium Business Package

$95
Monthly Account Fee
CAD
Multicurrency Accounts
unknown
Currency Conversion Fee
National Bank's Premium Business Package supports unlimited electronic transactions, unlimited e-Transfers and 100 assisted transactions per month. It offers all that for a $95 monthly fee, which is waived if you have a balance of $80,000 or more. You can also take advantage of National Bank’s Business Overdraft Limit, which allows you to add between $1,000 and $10,000 of cover to your account. Then when you spend more than you have, funds are automatically transferred to cover the cost of the transaction.
  • Up to $10,000 of overdraft protection
  • Unlimited electronic transactions and e-Transfers
  • Reduced monthly fee if you have a Platinum Business Mastercard credit card
  • $5 fee per overdraft transaction
  • High monthly balance required to avoid account fee
Monthly Account Fee $95
Multicurrency Accounts CAD
GIC Available Yes

What is a business overdraft?

A business overdraft is a feature of your business chequing account that allows you to keep spending even if your account balance goes below zero. This means you can continue to cover expenses and unexpected costs even if you have an unexpected cash flow shortage, and you can avoid paying expensive NSF fees.

Just like a personal overdraft, you can choose whether or not you want overdraft protection as part of your business account. It’s a flexible way of borrowing money, but there are quite a few fees and costs that apply (more on this below). Make sure you weigh up your options carefully before applying.

What is an NSF fee?

NSF stands for non-sufficient funds. Your bank or financial institution charges an NSF fee when you don’t have enough money in your chequing account to cover a transaction. This fee can be $40 or more, so overdraft protection is often a cheaper option if your business bank account sometimes gets low on funds.

Can I get a business bank account with an overdraft?

Yes. Most business bank accounts come with overdraft protection. Some accounts have overdraft automatically built in, while others offer it as an optional extra for an additional monthly or annual fee.

Business overdrafts are more often unsecured, but some banks may also offer a “secured” option, which means you’ll have to use your business assets as collateral.

Overdraft limits, interest rates and fees will depend on the bank, on your business’s turnover, and on how much you borrow during the year.

How much does a business bank account with an overdraft cost?

There are two main overdraft costs to take into account:

  • Interest rate. Overdraft interest is only charged if you do in fact end up using your overdraft. The rate you are offered will often depend on your business turnover and credit score. The final cost will also depend on how long it takes you to pay the overdraft back. The rate is usually variable, which means that it changes with the Bank of Canada’s official overnight rate.
  • Fees. Overdraft fees are often fixed and are charged annually or monthly. Some banks will charge it whether you use the overdraft facility or not, while others will charge a per-use fee on each overdraft transaction you make.

The advertised interest rate on business overdrafts is often quite reasonable, but keep in mind that it is not necessarily the same as what your business will be offered (which will largely depend on its credit score).

As for fees, it’s important to read the terms and conditions carefully so you know what and when you’ll be charged. You should also watch that you don’t go beyond your arranged overdraft’s limit to avoid any unauthorized borrowing fees, which can be quite hefty.

Will I need to complete a credit check if I apply for a business bank account with an overdraft?

Yes, the bank will check your business credit score when assessing your application. Depending on your score, your overdraft application may be refused or you may be offered a higher rate.

It’s a good idea to check your business credit score in advance so you know where you stand. Taking steps to improve your score could help you qualify for a lower overdraft interest rate.

Who might open a business bank account with an overdraft?

An overdraft can be a good option for many businesses, including small businesses and much larger operations.

However, it should only be seen as a safety net you can fall on if something goes wrong, rather than as a line of credit to use regularly. It is a fairly expensive way of borrowing money, so if you need it often, you may want to look for a cheaper solution.

For example, you can consider a business credit card, which can help your business cash flow and lets you borrow interest-free as long as you always pay back your bill on time. Fees also tend to be lower than with overdrafts and you might get additional benefits and perks too.

Do I qualify for business overdraft?

The exact requirements you’ll need to meet to qualify for an overdraft facility vary between banks. But as a general guide, you will need to:

  • Have a business bank account that has an overdraft facility
  • Have a good credit score
  • Have a detailed business plan
  • Meet revenue requirements

Check with your bank to find out if you’ll need to provide any additional documentation during the application process.

Pros and cons of business overdrafts

Pros

  • Manage short-term cash flow issues. Business overdrafts offer a handy safety net when your business experiences an unexpected shortfall.
  • Avoid NSF fees. A business overdraft lets you avoid expensive NSF fees if you don’t have enough funds in your account to cover a payment.
  • Flexible. You can use overdraft protection funds for any purpose, and you can borrow funds at any time and pay them back at any time.
  • Maintain your business’ reputation. Having overdraft protection in place can prevent you from missing a payment and harming your business’ reputation.
  • Only pay interest on the amount you use. You only have to pay interest if you do in fact use the overdraft facility, and you only pay interest on the funds you access.
  • Easy application process. It’s quick and easy to set up overdraft protection on your business account, and it’s much less complicated than applying for new credit.

Cons

  • Monthly fees. Monthly fees for overdraft protection can quickly add up, even if you don’t use the facility.
  • Overdraft fees. Your bank may also charge overdraft handling fees on each transaction for which you don’t have sufficient funds.
  • Overdraft interest. Check the interest rate that applies to your overdraft amount. Keep in mind that the rate is variable so the cost of using the overdraft facility may increase.
  • Difficult to shop around. As overdrafts are part of your business account, shopping around for the best deal is a bit hard unless you are prepared to switch the whole account.
  • You’ll need good credit. Overdraft protection is only available to businesses that have a pretty good credit score.

Compare more business bank accounts

1 - 5 of 5
Name Product Monthly Account Fee Multi Currency Accounts Currency Conversion Fee Corporate Credit Card Expense Management Accounting Integration Account Management Offer
RBC Digital Choice Business Account
$6
CAD only
Varies
Quick books, Sage, Xero
In Branch, Online or App
Get unlimited electronic debit and credit transactions, unlimited electronic cheque deposits, unlimited Moneris deposits and 10 free outgoing Interac e-Transfer transactions per month.
Save time and money when you bank digitally. Easily send money to suppliers, vendors or employees.
Loop Global Business Banking Account
$0
CAD, USD, GBP, EUR
0.1% - 0.5%
Quick books, Xero
Online
Eliminate FX fees with a Loop credit card. Spend in CAD, USD, GBP and EUR and earn points to use toward travel and experiences. Get up to a $1M credit limit.
Get global banking details, multi-currency corporate credit cards, international payments and more.
Wise Business
$0
CAD, USD, GBP, EUR, AUD, HUF, NZD, RON, SGD, TRY
0.43%
Quick books, Xero + more
Online or App
No hidden charges, high rates or monthly fees. Get the mid-market exchange rate.
Pay employees, get paid and manage your cash flow in over 70 countries.
RBC Flex Choice Business Account
RBC Flex Choice Business Account
$7
CAD
Varies
Quick books, Sage, Xero
In Branch, Online or App
No minimum or maximum transaction limits. Only pay for the transactions you make plus a low monthly account fee.
Bank both digitally and in-branch and only pay for what you use.
Vault Business Banking Account
$0
CAD, USD, GBP, EUR
0.35%
Quick books, Xero
Online
Earn 1% unlimited cashback on your Vault multi-currency corporate credit card. No currency limitations.
Set up accounts in CAD, USD, GBP and EUR, enjoy $0 local transfers (EFT, ACH, etc.), and seamlessly integrate your accounting systems.
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Bottom line

Just like personal overdrafts, business overdrafts shouldn’t be used all the time. But they can be good to have if anything goes wrong and your business has to face extra costs.

Be especially careful when applying and make sure you have read and understood all the fees and costs (particularly what happens if you go over the credit limit).

Business overdraft frequently asked questions

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