Comparing the key features, rates, fees and suitability considerations of top bank overdrafts available to UK companies to help you judge the best option for your business.
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Looking for a business overdraft to help you manage temporary cash flow shortages? Overdrafts provide a handy buffer when money is tight, allowing you to dip into an agreed credit limit to make key purchases or meet financial obligations in slow or tricky periods.
We compare the key features of some of the top providers, including Barclays, Lloyds, HSBC, NatWest, Santander and RBS, to help you decide which might offer the best business overdraft for your needs.
The majority of UK banks offer competitive business overdrafts, particularly high street banks, each with different terms, rates and conditions. Scroll through our comparison of the best business overdraft for UK companies and see the different features, benefits, drawbacks and suitability considerations for each provider:
Barclays offers easy-to-access, unsecured overdrafts up to £50,000, with options for limits beyond this available upon request. Businesses can apply to increase or decrease their limit as business needs change, and overdrafts are repayable on demand and typically reviewed annually.
Key features:
Pros, cons and suitability considerations:
Flexible limits up to £50,000 and continuous access via digital banking make it easy to manage cash flow. However, relatively high top-end interest rates compared to some competitors. Suitable for businesses needing moderate-to-large short-term liquidity with digital banking convenience.
Lloyds’ business overdrafts offer clear and simple terms, with limits up to £25,000 for businesses with an annual turnover of less than £3 million. Fees include a one-time arrangement fee and a small monthly usage fee if the overdraft is not cleared within the month.
Key features:
Pros, cons and suitability considerations:
Lower rate structure tied to BoE base rate and tiered pricing options, but monthly or annual fees add costs, and rates can increase if the base rate rises. Suitable for smaller businesses seeking transparent pricing and a predictable structure.
HSBC offers a flexible business overdraft solution with same-day approval for amounts up to £30,000, making it a good option for businesses needing quick access to credit. You can apply online or via phone, and reduce or cancel your arranged overdraft at any time.
Key features:
Pros, cons and suitability considerations:
Same-day approval and simple arrangements from 1 to 12 months, with clear and reasonable rates and fees. Ideal for businesses seeking fast access to credit, manageable costs and convenience.
NatWest provides business overdrafts of up to £50,000 with competitive interest rates and arrangement fees. There are flexible, tiered options so businesses can adjust their overdraft limit as needs change.
Key features:
Pros, cons and suitability considerations:
Lower interest rates than most other overdrafts and no enforced minimum repayments, supporting cash flow management, while fees rise for larger credit limits. Suitable for firms with fluctuating cash flow who need flexibility and low-cost borrowing.
Santander’s business overdrafts are aimed at businesses with a turnover under £3 million and offer competitive rates and sophisticated mobile and online banking tools to help businesses manage their funds.
Key features:
Pros, cons and suitability considerations:
Reasonable rates, convenient solutions and user-friendly banking features, suited to SMES. However, Santander’s rates and fees were previously the lowest on the market, but have recently risen due to cost pressures and market conditions.
Naturally, RBS offers a similar business overdraft structure to NatWest, but with borrowing limits up to £50,000. Arrangements can be made with existing RBS users for up to 12 months, with a review to assess ongoing options.
Key features:
Pros, cons and suitability considerations:
Broad overdraft limit ranges available and competitive interest rates, but arrangement fees increase with higher limit agreements. Suitable for businesses seeking larger overdraft facilities with reasonable rates.
As one of the younger banks on this list, Metro Bank is known for its strong customer service and ease of access. There’s a straightforward application process, flexible terms and benefits like 30 free transactions per month.
Key features:
Pros, cons and suitability considerations:
Transparent cost structure, fee waivers and monthly perks, but significant penalties and rate increases for unarranged borrowing. Suitable for businesses valuing customer service and seeking flexibility, and those after higher limits – Metro Bank recently raised its maximum limit.
Each business overdraft provider has its strengths, and choosing the right option for your business depends on your specific needs, whether it's lower costs, high borrowing limits and greater flexibility and customer support. Compare rates, limits and terms carefully to find the best bank account with overdraft facilities that suit your situation.
Here is a handy comparison table for comparing business overdrafts at a glance:
*Rates, fees and limits quoted are correct as of 6th September 2025.
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Choosing the best bank for business overdrafts depends on your company size, financial needs and the flexibility level required. As you can see from our comparison of the top business overdrafts offered by banks, they have various advantages and disadvantages, and features that suit different types of businesses.
For example, Barclays, NatWest, RBS and Metro Bank offer higher limits, whereas HSBC stands out with its same-day approval process, which is ideal for businesses needing immediate access to ease cash flow.
When it comes to costs, NatWest offers lower interest rates (below Santander, which recently increased rates and fees), making it cost-effective for smaller businesses, while Metro Bank and Lloyds rank highly for mobile banking and customer support.
So, what you deem to be the best overdraft for your business comes down to your priorities and preferences for the credit facility.
It’s worth noting that some digital, challenger banks like Monzo, Starling and Revolut do offer business overdrafts, but most have limitations. For example, Monzo currently only provides commercial overdrafts to sole traders.
Business overdrafts from banks have several advantages over some other business finance solutions, such as ease of use, interest only being charged on what you use from the credit limit and the fact that they’re based on your existing banking activity. So, they’re a quick and easy finance option to use if your borrowing needs are minimal and ad hoc.
However, they’re a short-term financing option for temporary needs when cash flow is tight. Yes, they have these clear benefits, but they often offer much smaller funding amounts than other business credit facilities, plus interest rates can be high, and you may get penalised if you go over your limit, which can happen fairly easily, as they’re directly linked to your bank account.
Small business loans and overdrafts usually serve different needs. An overdraft is a flexible facility linked to a bank account and is ideal for short-term cash flow gaps or unexpected expenses. Interest is only applied to the amount used, with no fixed repayment schedule. However, interest rates and fees are typically higher, and banks can withdraw the facility and reduce the limit, depending on your situation.
A small business loan is also usually for short-term needs, but is more structured, with a fixed sum provided with periodic repayments for predictability and for varied use, such as working capital needs or investments for growth.
While loans usually have lower rates than overdrafts, applications can take longer to access, especially from banks and traditional lenders.
Iwoca offers flexible business loans designed for the needs of UK SMEs, supporting cash flow management and providing crucial working capital to invest in business growth.
Our short-term, unsecured loan solutions provide fast access to significant sums of capital (up to £1 million) with flexible and affordable repayments, tailored to your cash flow and business needs.
Here’s a comparison table between business overdrafts and iwoca’s Flexi-Loan to show you the key features and considerations side-by-side:
Find out how to get a business loan from iwoca and use our handy loan calculator tool to see your likely repayments.
Most banks require a personal guarantee, especially for higher overdraft limits or when exceeding certain thresholds. This reduces lender risks, especially as most business overdrafts are unsecured up to higher limits.
Interest rates charged by top banks for the use of business overdrafts range from around 13 to 19%, depending on your track record, risk level and the limit extended to your company. In addition, banks charge arrangement fees and, in some cases, usage fees, renewal fees and penalties for going over the limit.
This is subjective, as it depends on your needs and various suitability considerations. Each has pros and cons that can make them more or less suited to your particular business.
Business overdrafts only charge interest on credit used, which is not the case for many business loans, but overdraft rates are often higher. Also, the limit offered is usually far lower than you can get from a loan. Overdrafts are mainly for temporary financing needs, to cover shortfalls, whereas business loans can be for various short- and long-term funding purposes.
Yes, applying for a business overdraft may result in a credit check, which can temporarily lower your credit score. However, responsibly managing your overdraft can improve your credit over time.
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