SMEs Prefer Overdrafts to Loans

More small-business owners are using bank overdrafts rather than loans to finance their firms during the recession, according to credit reference agency Creditpal. A Creditpal survey of 540 small businesses found that 30% had applied for an overdraft or overdraft extension during the past two years, while just 21% had applied for a bank loan, despite business loans being a much cheaper form of debt finance. “Many small firms have chosen to stick with their current bank for overdraft facilities, rather than try to approach a new lender for a loan,” said Creditpal chief executive, Chris Poll. “Overdrafts are obviously a fast and effective means of extending finance and businesses shouldn’t avoid them automatically if they are suitable for their needs. But the rates of... »

Loans & Overdrafts

Do you need more information to help you decide whether you should take out a loan or an overdraft? This section looks at: whether loans and overdrafts are suitable for your business needs how to obtain a loan interest rates on bank loans Using FAQs to answer some common questions and resources to find more in depth information will help you assess whether loans or overdrafts are the right options for your business. If you’ve been unable to obtain a loan you might qualify for help through the SBS Small Firms Loan Guarantee Scheme. »