Which bank provides the best business overdraft?

Of the nine UK banks we checked on 14 October 2026, the Co-operative Bank publishes the lowest rate, at 10.20% EAR, and the largest standard limit, at £250,000. Whether you can have it is another matter: every overdraft here sits on a business current account with the same bank, so your real choice is usually your own bank, or moving. A business overdraft is a buffer for the weeks when money is tight. You dip into an agreed limit, pay interest on the days you're overdrawn, and clear it when your customers pay.

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What nine UK banks charge for a business overdraft

We compared the nine UK banks that publish their business overdraft terms on four things: the rate, the fee, the limit, and whether you need to bank with them already. Rate and fee come first, because those are the two the published numbers let you compare honestly.

Every figure here comes from that bank's own business overdraft page, checked on 14 October 2026.

Each bank quotes a representative effective annual rate (EAR): the rate it expects to give at least 51% of the customers it accepts, counting interest and compounding but not fees. Your own rate depends on your company's finances, so read these as the benchmark rather than the quote. Lloyds and Bank of Scotland price theirs at 10.85% above the Bank of England Bank Rate, so both move when the rate does. The Co-operative Bank's page put the Bank Rate at 3.75% on the same date.

Speed varies more than the rates do. Barclays says an existing customer with a pre-assessed limit can get a decision in as little as 15 minutes and the money within 48 hours, and NatWest says a limit increase can be funded within 24 hours.

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What a £10,000 overdraft costs for three months

Drawn in full for three months, a £10,000 overdraft costs about £396 at the Co-operative Bank and about £569 at Lloyds or Bank of Scotland – a spread of about £173 on the same borrowing. Most of that gap is interest rather than fees. The fee is still worth a look, because you pay it on the limit whether you borrow against it or not.

Each figure is the full £10,000 held for three months at that bank's representative EAR, plus the arrangement fee on a £10,000 limit. HSBC, NatWest, and RBS aren't in it: HSBC publishes no fee percentage, and NatWest and RBS publish no representative EAR, so there is nothing to work the figure from.

Santander makes the fee point itself, on a smaller limit. Its page works a £1,000 overdraft used in full for seven days at £2.69 of interest, plus the £100 annual fee, and then says plainly: 'If you have an overdraft of £1,000 but don't use it, you'll still be charged the annual arrangement fee.'

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Which bank will actually give you one

Your own bank, most likely. Every overdraft on this page sits on a business current account with the same bank, and HSBC, Lloyds, Bank of Scotland, Santander, and the Co-operative Bank all say so on their own pages. So the table above matters most when you're choosing where to bank, or working out whether it's worth moving.

Four other things decide what you'll be offered:

• Turnover. NatWest and RBS set separate terms above and below £2m of turnover. The representative rate at Lloyds and Bank of Scotland applies to companies turning over up to £25m.
• Company structure. Santander's overdraft is open to a private limited company with no more than two directors, who own the business entirely.
• Your company's credit file. Every bank here decides on it. Applying usually leaves a hard search on the company's file, plus a soft search on the applying director's personal file, which doesn't affect their score. There's more on how a business overdraft affects your personal credit, and you can check your business credit score for free with iwoca Credit Compass, which shows the Equifax score a lender sees and what's affecting it.
• The limit itself. Banks size an overdraft on the turnover going through the account, rather than on the figure you ask for.

The limits are where the nine differ most, from £25,000 at Santander to £250,000 at the Co-operative Bank:

You can hold a loan and an overdraft at the same time, but both count towards the total borrowing your bank will allow. RBS asks you to speak to a relationship manager once your total debt with it passes £50,000, so a loan from the same bank can cut the overdraft limit it offers you.

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Your bank can reduce or withdraw the overdraft at any time

An arranged overdraft is repayable on demand. HSBC's page says it can ask for repayment, reduce the limit, or close the facility at any time, and Metro Bank and the Co-operative Bank say much the same. That's the honest shape of the product: it suits short dips you can clear, rather than a gap you'll be carrying all year.

The pressure point is the annual review. Most of these facilities run for about 12 months, and the bank looks at your accounts again before renewing, usually with another fee. If trading has dipped since the limit was set, that's the moment it can come down. The flexibility runs your way too – HSBC lets you reduce or cancel your arranged overdraft at any time, and NatWest and Metro Bank let you change the limit online or in the app.

A review date bites hardest on companies whose income arrives in lumps rather than evenly, and on those whose limit was set when turnover was higher. If an overdraft is carrying part of your cash flow every month, put that date in your forecast.

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What you pay if you go over the limit, and what you sign

Going over an arranged limit costs far more than using it, and it's easy to do by accident, because the facility sits on the same account your payments leave from. Metro Bank charges 25% EAR on unarranged borrowing and the Co-operative Bank charges 25.59%, against arranged rates of 14.13% and 10.20%. HSBC applies its standard debit rate of 19.50%. Lloyds and Bank of Scotland add a £12 monthly fee, in place since 10 December 2025, plus £7 for each payment they can't make.

Most of these banks want security as well, and for a smaller company that usually means a director's signature rather than property:

• Santander says all directors of a limited company have to give a personal guarantee before the overdraft is available.
• The Co-operative Bank usually requires one, and may secure the overdraft if you ask for a limit above £10,000.
• Metro Bank usually needs one, and may ask for other security too.

A personal guarantee means the director who signs can be personally responsible for the debt if the company can't repay it. It's worth reading what you're signing before the limit goes live, rather than after.

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Monzo is the only app bank offering limited companies an overdraft

If you bank in an app, there is one overdraft open to you. Monzo offers approved limited companies £500 to £5,000, one per company, applied for by a director with admin access who gives a personal guarantee. The representative rate is 35.9% EAR, from rates of 19%, 29%, or 35.9%, with an annual fee of £20 to £100 depending on the limit. Monzo renews it each year with another fee and another hard search on the company.

The others don't have one. Revolut Business says it doesn't provide credit, credit cards, or overdrafts. Starling wasn't taking new applications for business overdrafts when we checked on 12 October 2026, and Tide doesn't offer one.

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When the gap is bigger than the limit your bank will offer

A £25,000 limit doesn't stretch far when a single customer's unpaid invoice is bigger than that. If the gap is bigger than the limit your bank will offer, or your bank won't offer you one at all, the other route is to borrow away from your bank account.

If you're waiting on an invoice, a Flexi-Loan can cover the gap, and you can clear it with no early repayment fee once your customer pays.

The ceiling isn't set by the turnover going through one account: you can borrow £1,000 to £1m. You have 30 days after approval to draw the money down, so the funding can be in place before the gap opens, and the interest starts only when you use it. Interest is charged on what you draw rather than on the limit, so there's nothing here equivalent to an arrangement fee you pay whether you borrow or not. Many of our customers only take out our finance for a few weeks, or even days.

That's a timing problem rather than a trading one. How quickly you can clear a facility often matters more to what it costs you than the headline rate on it.

Flexi-Loan in action: VCare Group

Victoria Simpson runs a social care business, and there's a gap between delivering the care and being paid by the local authorities she invoices. She draws around £200,000 to cover payroll, then pays it back within a week as those payments come in. Read Victoria's story

If the gap is always the same unpaid invoices, invoice finance does a similar job, advancing a share of each invoice as you raise it. And if what you need is a known amount over a known period rather than a buffer, that's a business loan rather than an overdraft.

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What a Flexi-Loan costs, and what you sign up to

Here are the terms in one place:

• Term: a fixed term of 12 months to five years, with no fee for repaying early, so three weeks of borrowing costs three weeks of interest.
• Cost: interest is charged only on what you owe. The business loan calculator shows what your own borrowing could cost.
• Personal guarantee: every new Flexi-Loan needs a personal guarantee from at least one director, though not every director has to sign.
• Who we lend to: we lend to UK limited companies.

A decision is made within 24 hours, but it might be longer depending on the complexity of the request. A quick decision isn't a light one: we look at your revenue and what your business can afford to repay before we make an offer, and our credit team reviews larger or more complex applications.

A Flexi-Loan won't beat these overdrafts on the headline rate. If your bank will give you a limit that covers the gap and you'll clear it inside the month, an arranged overdraft is usually the cheaper way to do it.

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