Apply now

When is the best time to think about Overdraft Replacement?

Published on 28th March 2018 - Last update on 31st December 2018

Although many business owners consider Bank Overdraft Facilities a great way of borrowing funds on a short-term basis, meeting the necessary criteria can prove difficult. This is especially true if you run an SME business with a limited trading history, which could leave you feeling cut off from an essential source of external funding. However, there is a solution available in the form of Overdraft Replacement. Also referred to as an Alternative Overdraft or Revolving Credit, Overdraft Replacements present you with a Line of Credit from you which you can instantly withdraw funds from a set allowance for a wide range of purposes. So if you need access to external funds on a short-term basis, here some of the most common reasons for using an Overdraft Replacement:

  • Paying operating costs and resolving tax liabilities monthly
  • Funding various stages in essential growth projects
  • Providing relief during unexpected emergencies

Can Overdraft Replacement support my business’ tax liabilities and overhead expenses?

If you’re due to run into a slow trading period or expect to receive a large bill in the near future, resolving the matter could prove problematic if your business lacks access to sufficient capital.

Yet, whether it’s tax liabilities, operating costs or any other expenses, you still need to get them resolved in a prompt manner all the same. However, choosing to use an Overdraft Replacement could allow you to borrow the necessary amount, sparing you the need to draw funds from your own finances. So, as soon as you’re aware that your overheads may place too much strain upon your business’ working capital, applying for an Overdraft Replacement could be a wise decision.

Need help stabilizing your finances? Looking for a way to grow your business whilst easing the pressure on your working capital? Apply for an Overdraft Replacement facility or learn more about how your business could benefit!

Can Overdraft Replacement be used to support and fund growth projects for my business?

As well as helping you stabilize your business' finances, Overdraft Replacement can also be used to aid and support various growth projects. So if you work in a sector where you may need to support a particular growth project for a long time, such as Construction, Manufacturing or Agriculture, applying for Overdraft Replacement could prove advantageous. For example, at different stages of the project, you may need to pay staff wages, site inspections, purchase equipment, acquire fresh supplies or even market your business. Plus, unless these costs are dealt with in a timely manner, it could cause the project to grind to a halt. However, because Overdraft Replacement allows you to quickly withdraw and repay funds on a revolving cycle, it enables you to fund each phase in the project’s progression whenever it’s required. Therefore, Overdraft Replacement allows you to pursue and achieve your goals, regardless of how long or complex they may be.

Can Overdraft Replacement provide emergency funding?

Depending on the complexity of the request, Overdraft Replacement agreements can sometimes be set up in as little as 48 hours. Once agreed, you can instantly withdraw the funds that your business requires, making it an invaluable resource should you need it during an emergency. So as well as giving you the means to stabilize your finances, Overdraft Replacement can also be used to gain emergency relief should your business premises get damaged or if you need to replace broken or stolen assets (equipment, machinery or vehicles) for example. Although you’ll no doubt want to file a claim with your insurer, obtaining the funds that you may be entitled to under your policy can sometimes take time. But with an Overdraft Replacement facility in place, you can quickly borrow external funds to help get your business back on its feet and operating again, minimising disruption. Plus, you’re only charged for the money that you withdraw and aren’t obliged to use all of the funds that have been made available to you. This means that an Overdraft Replacement facility can act as a buffer that you can instantly call upon whenever the need arises, giving you confidence and peace of mind.

Is your business in need of Overdraft Replacement?

When running any business, having access to sufficient amounts of funding is crucial for stimulating growth and reinforcing sustainability. But if your monthly revenue slows for a sustained period or you need to settle a large unexpected expense, the pressure placed upon your working capital may hinder your ability to drive your business forward. Although your first port of call might be to set up an Overdraft Facility to work alongside your current banking arrangements, there are other finance solutions available through the Alternative Finance industry that may wish to explore as well. So if you’re looking to acquire short-term finance solutions that will allow you to borrow funds from an allowance as and when it’s needed, apply for an Overdraft Replacement today or find out more with Rangewell.

Share this article

Discover your range of finance. Every type of finance for every type of business.

Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.

Find Funding
David Harrison

David Harrison

Content writer
By using our services, you agree to Rangewell's Cookies Policy.