Business bank accounts with overdrafts UK 2022

Business overdrafts can be a useful safety net, but be aware of fees and charges.

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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.

An overdraft facility can be a solution, but only once you’ve ruled out the alternatives, because it can be quite expensive.

Compare business bank accounts with overdrafts

1 - 10 of 71
Name Product Account fee Bank transfers Interest (AER) Accounting integrations Arranged overdraft Account management Key benefits Link
OFFER
Start Up Business
Free
£0.35
0% AER
FreeAgent
Branch, online, app & phone
Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.
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FREE TRIAL
The Co-operative Bank Business Current Account
£10
(waived in first 30 months)
Free
0% AER
QuickBooks, Sage, Xero, Multiple providers

On application (subject to status, eligibility and The Co-operative Bank's Lending policy)
Branch, online, app & phone
Free everyday business banking for first 30 months. Sole traders or Single Directors only. Apply online. Charges apply for cash and cheque transactions & other special services. Subject to status, eligibility and T&Cs.
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View details
OFFER
Cashplus Business Bank Account
Free
£0.30
Free for first 3 payments sent each month (£0.30 for every transfer thereafter)
0% AER
Clear Books, FreeAgent, KashFlow, QuickBooks, Sage, Xero

By invitation
Online & app
No annual or monthly fee when you apply using the Finder link
Go to site
View details
OFFER
Business Account
Free
£0.35
0% AER
FreeAgent
Branch, online, app & phone
Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.
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View details
OFFER
Business Account - Standard Tariff
Free
£0.35
0% AER
FreeAgent
Branch, online, app & phone
Use the digital accounting tool FreeAgent to make invoicing, payroll and managing your cash flow easy. It’s worth more than £145 + VAT a year (based on annual fee as of Aug 2021), but free for you.
Go to site
View details
Business Current Account - e-Payments Plan - £400k-£6.5m turnover
£8.50 per month
Free for EU digital transfers (SEPA)*
0% AER
Multiple providers

Subject to application, financial circumstances and borrowing history.
Branch, online, app & phone
Free invoice and accounting software, provided by FreshBooks, with your Barclays business account. T&Cs apply. *Charges for other bank transfers and card payments apply. Visit here for more information.
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Business account - e-Payments Plan - Turnover up to 400k
£8.50 per month
Free for EU digital transfers (SEPA)*
0% AER
Multiple providers

Subject to application, financial circumstances and borrowing history.
Branch, online, app & phone
Free invoice and accounting software, provided by FreshBooks, with your Barclays business account. T&Cs apply. *Charges for other bank transfers and card payments apply. Visit here for more information.
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Business account  - Mixed Payments Plan - Turnover up to 400k
£8 per month
£0.35 for EU digital transfers (SEPA)
0% AER
Multiple providers

Subject to application, financial circumstances and borrowing history.
Branch, online, app & phone
Free invoice and accounting software, provided by FreshBooks, with your Barclays business account. T&Cs apply. Charges for some bank transfers and card payments apply. Domestic card purchases are 35p per item. Foreign card purchases are 2.75% fee per item. For bank transfers, EU digital transfers (SEPA) are 35p, EU manual transfers (SEPA) are £1.50, International digital transfers (BIPS) are £15 and International manual transfers (BIPS) are £25.
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Business Current Account - Mixed Payments Plan - £400k-£6.5m turnover
£8 per month
for EU digital transfers (SEPA)
£0.35 for EU digital transfers (SEPA)
0% AER
Multiple providers

Subject to application, financial circumstances and borrowing history.
Branch, online, app & phone
Free invoice and accounting software, provided by Freshbooks, with your Barclays business account. T&Cs apply. Charges for some bank transfers and card payments apply. Domestic card purchases are 35p per item. Foreign card purchases are 2.75% fee per item. For bank transfers, EU digital transfers (SEPA) are 35p, EU manual transfers (SEPA) are £1.50, International digital transfers (BIPS) are £15 and International manual transfers (BIPS) are £25.
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Business Current Account - Mixed Payments Plan - Start-ups
FREE TRIAL
Business Current Account - Mixed Payments Plan - Start-ups
£8 per month
(waived in first 12 months)
£0.35
0% AER
Multiple providers

Subject to application, financial circumstances and borrowing history.
Branch, online, app & phone
No monthly account fee for 12 months on the Start up business plan, thereafter a monthly charge of £8 applies. Other charges apply. *Charges for other bank transfers and card payments apply. Visit here for more information. Free invoice and accounting software, provided by FreshBooks, with your Barclays business account. T&Cs apply.
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Latest reviews of business accounts with overdrafts

Cashplus - Cashplus Business Bank Account

Cashplus Business Bank Account

★★★★★

Go to site Read review
No annual or monthly fee when you apply using the Finder link.
The Cashplus business account has no monthly fee and can be applied for in a matter of minutes online. Once your account is up and running, you'll be told whether you're also eligible for a business overdraft of up to £2,000, which can help you cover any unexpected expenses. If you're eligible, you'll be able to simply add your overdraft to your account through the app or via online banking. The account can also be integrated with accounting software such as Xero, Quickbooks and Sage, offers spending reports and instant notifications for payments and transfers, and enables you to capture and add digital receipts in the app. There's also the option to upgrade your account for a monthly fee, which will offer additional benefits such as cashback on your card spend and a credit builder feature, to help your business improve its credit score over time.
  • Have account up and running in 5 minutes
  • Overdraft option "Cashplus iDraft" once you're eligible
  • Currency cards to use overseas
  • Online services in addition to the mobile app
  • Charge to have your bank card issued
  • Traditional bank still needed for majority of your business finance needs
Account fee Free
Bank transfers £0.30

Free for first 3 payments sent each month (£0.30 for every transfer thereafter)
Accounting integrations Clear Books
FreeAgent
KashFlow
QuickBooks
Sage
Xero
Requires credit check
Overdraft



By invitation

The Co-operative Bank - The Co-operative Bank Business Current Account

Free everyday business banking for first 30 months.
This business account from the Co-op offers free business banking transactions for the first 30 months, including ATM withdrawals, debit card purchases, faster payments and automated debits and withdrawals. After that, a £10 monthly service charge applies and certain transactions will also be charged a fee. You'll be able to apply for an overdraft of up to £250,000 on the account, but whether you'll be eligible will depend on your individual circumstances. To apply, you'll need to complete and return an overdraft request form, plus an assets and liabilities form if you're applying for more than £10,000. These can be found on the Co-op website. Further benefits of the account include access to the payment app from Incomeing, and to legal, technical and HR services with Assurant. Customers also have access to merchant services with Fiserv, tailored business insurance cover with AXA, and access to free business webinars.
  • Free everyday business banking for 30 months
  • Access to a payment app, as well as additional support services
  • Multiple ways to bank
  • Monthly service charge applies after 30 months
  • Only suitable for sole traders or single directors
  • Fees apply to certain transactions
Account fee £10
(waived in first 30 months)
Bank transfers Free
Accounting integrations QuickBooks
Sage
Xero
Multiple providers
Requires credit check Yes and Ethical Policy screening
Overdraft



On application (subject to status, eligibility and The Co-operative Bank's Lending policy)

Lloyds Bank - Business Current Account

Business Current Account

★★★★★

Read review
12 months' fee-free monthly and transactional banking for switcher customers.
This business account from Lloyds is designed for start-up and small businesses that have an annual turnover of less than £3 million. New businesses can enjoy free everyday business banking for the first 12 months, after which a monthly account fee of £7 will apply. Certain transaction fees will also be payable after 12 months, such as for cheques and cash payments. In addition, you'll be able to apply for an unsecured overdraft of up to £25,000 on the account. Customers can apply for a quote online to see how likely they are to get accepted for an overdraft without affecting their credit score. This bank account also offers dedicated support from Lloyds' UK-based business management team, plus access to useful guides and business tools. For a fee, the account can also be integrated with Business Finance Assistance. You must be aged 18 or over and a sole trader, partner or company director to apply.
  • Free everyday banking for first 12 months
  • Free electronic payments
  • Access to Business Finance Assistance and Lloyds Bank Academy
  • Fees apply after first 12 months
  • No interest paid on credit balances
  • Fee applies to Business Finance Assistance after three months
Account fee £7 per month
Bank transfers Free
Accounting integrations N/A
Requires credit check Soft search with no impact on credit score
Overdraft





Up to £5,000 subject to eligibility and application

HSBC - Kinetic Current Account

No monthly account fees for 12 months, thereafter a monthly charge of £6.50 applies.
This everyday business bank account from HSBC has no monthly maintenance fee for the first 12 months, but charges £6.50 per month after this. You can apply for the account via the app and most accounts are up and running within 48 hours. There's also the option of applying for an overdraft of up to £30,000 in the app, with funds available on the same business day that your credit assessment is successful. Through the account, you'll be able to manage direct debits, standing orders and future payments, get insights on your business spending through automatically categorised transactions, and keep track of your finances with a monthly breakdown of cash flow. You'll also be able to freeze your debit card if you misplace it, and unfreeze it again when found, plus scan and deposit cheques and make payments of up to £25,000 per day in the app.
  • Easy to apply for and manage
  • Arranged overdraft
  • Useful app features to help you track spending
  • No monthly fee for 12 months
  • Interest is charged on overdraft
  • Monthly maintenance fee applies after first 12 months
  • No interest paid on credit balances
Account fee £6.50 per month (waived in first 12 months)
Bank transfers Free
Accounting integrations QuickBooks
Sage
Xero
Requires credit check Soft search with no impact on credit score
Overdraft



What’s a business overdraft?

A business overdraft is not unlike a personal overdraft: it’s a feature of your business current account that allows you to keep spending even if your account balance goes below zero.

Just like with personal accounts, you can choose whether or not you do want one as part of your account. There are quite a few fees and costs (more on this below), so you should weigh up options carefully before applying.

Business overdrafts are a flexible, if not cheap, way of borrowing money, and can help you with unexpected costs (bills, invoices and so on) as well as with occasional cash flow issues.

Can I get a business bank account with an overdraft?

Most traditional banks offer business overdrafts with their business accounts, and even some challenger banks will let you apply for one.

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.

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 sets of costs to take into account:

  • Interest rate. This 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 England official base rate.
  • Fees. These tend to be fixed and are charged annually or monthly. Some banks will charge it whether you use the overdraft facility or not (and call it something like “arrangement fee”).

The advertised interest rate on business overdrafts is often quite decent, but do 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).

On fees, make sure you have 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 unauthorised borrowing fees, which can be quite hefty.

Will I be credit-checked if I apply for a business bank account with an overdraft?

Yes, the bank will check your business credit score. Depending on how it is, your business may be refused the overdraft application or offered a higher rate. You can check your credit score here.

However, many banks will let you check your eligibility first. Using a so-called “eligibility checker” is always a good idea because it will tell you how likely your business is to get accepted without leaving a trace on your credit record.

Who might open a business bank account with an overdraft?

An overdraft can be a good option for a number of businesses, from very small to bigger ones.

However, it should be seen as a safety net you can fall on if something goes wrong more 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 too.

Pros and cons of business overdrafts

Pros

  • Business overdrafts are a great safety net to cover unexpected costs.
  • You can use the funds for any purpose.
  • They are very flexible; you can borrow money anytime and pay it back anytime.
  • You only have to pay interest if you do in fact use the overdraft facility.
  • Quick to arrange as it’s just an extra feature of your business account.

Cons

  • Fees can be quite high, even if you don’t use the facility.
  • 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.
  • Only available to businesses that have a pretty good credit score.

The 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).

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