Is a business loan better than a bank overdraft?

Certainty versus flexibility

A term loan hands you a set amount on day one, repaid in predictable instalments to a fixed end date — easy to budget and ideal for a known cost like equipment. An overdraft has no fixed schedule: you dip in and out as cash swings, paying for what you use. The trade-off is predictability against day-to-day flexibility. The fuller comparison is in the difference between an overdraft and a business loan.

Why overdrafts are shrinking

Many banks have reduced or withdrawn business overdrafts, or repriced them sharply, leaving companies that once relied on the buffer looking for an alternative. Overdrafts are also repayable on demand, which makes them less dependable than they feel. That gap is part of why dedicated facilities have grown — see what is working capital finance.

Where a facility fits

A revolving credit facility like Credicorp Flex keeps the reuse-as-you-go feel of an overdraft — draw, repay, draw again — as a dedicated commercial line for limited companies, and without a personal guarantee. For a single known purchase, a term loan is simpler; for ongoing smoothing, a facility usually fits better. Compare the cost of any option with the true cost of borrowing calculator.