Overdraft Replacement: Instant access to the funds you need
Cost-effective short term business funding that can do much more than a traditional overdraftSpeak to one of our experts020 4525 5312
- Short term funding facility
- Cash for any purpose
- No cost for providing facility
- No impact on existing bank credit
Easy to use
- Individually agreed limits
- Adverse Credit – no problem
- Rolling facility
- Funding available on demand
A valuable extra business asset
- Valuable asset for your business
- Independent line of credit
- Scaled to suit your business
- ideal for stock and incedental costs
When your business needs short term cash, an overdraft is probably not going to provide an answer.
Table of Contents
Overdrafts used to be the most common form of everyday business funding.They were provided by your bank, and your overdraft facility would be agreed as part of your business banking arrangements.
It would let you withdraw cash that you didn’t have in your account, to use for a few days or a few weeks, as a buffer against cashflow slowdowns, or to deal with larger expenses. Your bank would only charge you for the cash you withdrew, and for the time you used it.
But when the credit crunch hit, the banks reduced or removed the overdrafts they extended to small businesses - leaving you with no way to access funds for the short term.
Fortunately, the Alternative Finance market has grown to plug the gap. Today there are a number of new funding solutions that can help offer the easy access to short-term funding that used to be provided by overdrafts. The simplest of these is Revolving Credit, also known as Overdraft Replacement or Alternative Overdraft Funding.
How Alternative Overdrafts work
Alternative Overdrafts are provided by a number of lenders, and offer instant access to funds, just like an overdraft, although no bank account is involved.
Instead, the alternative overdraft provides a line of credit with a limit agreed when you apply. This limit is usually based on your past income.
It is then up to you how much of this reserve of credit you draw down. Like an overdraft, the facility will only mean a cost to you when you actually use the facility, based on the amount you draw down, and the time which you hold it. You can repay at any time, and the funds will be ready for use again.
This can be a useful additional source of funding if you need access to small cash sums for short periods, for purposes such as buying in stock - although in practice there are no restrictions on how you use the money.
If you want to fund growth or to deal with temporary cash flow shortfalls, it can provide the ideal solution.
Rates will vary between providers and will also depend on the level of funding agreed. Both secured and unsecured arrangements can be provided, with those arrangements secured on assets usually offering more attractive rates.
Why you need Rangewell to arrange an overdraft replacement
Overdraft Replacement funding has become a very common financial solution, but some suppliers may demand high interest rates for the cash you need.
Getting a competitive solution for your facility is essential. Lending decisions and rates are based on risk. You need a lender that knows your business and the sector that you work to get the facility you need at the most competitive rate.
At Rangewell, we can help. We know the lenders who have knowledge of your sector and our team of business finance experts can work with you to understand the real issues that you are facing that are causing you to need a Working Capital Loan. They can help you find lenders who work in your sector and use their understanding of your business to help you secure the most competitive deal.
Our expertise works for you. We can discuss your objectives, and help find answers scaled to fit your turnover and your other obligations.
Why you should call us now
Preparing an alternative overdraft before you need it is a prudent way to safeguard the future of your business, and increase the financial resources you can call on.
Arranging a facility will cost you nothing if you don’t draw down the cash – but simply knowing you have a financial resource could mean valuable peace of mind, and increase the flexibility of your business.
Call us now.
REAL EXAMPLES OF WHAT WE CAN DO
Find a lender to advance an Overdraft Replacement facility for a company that had only been in business for three months
Source funds to support a high-street name through a summer retail downturn
Set up funding for a business that was already in a Creditors Voluntary Agreement
Find a small company the facility it needed at a rate 50% lower than it was first offered
Find a facility for a company in a turnaround
Discover our range of finances
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.
Helping you build your profits
The cash you need when you need itOverdraft replacement gives you a revolving credit facility that allows you to call on a reserve of funds if and when you need it. Once agreed, the cash is ready and waiting for you to call on.
Cash for any purposeYou can draw down cash for any purpose - buy stock, fund new equipment, or deal with temporary cash flow issues.
An independent source of financeUnlike a traditional overdraft, your bank is not involved. Your overdraft replacement provider may offer the facility under their own, more flexible, criteria.
Cost-effective fundingBecause overdraft replacement gives you a reserve of funds that you can call on only if you need to, it can be a cost-effective way to raise short-term finance. You pay only for the funds you take out.
Flexible financeA revolving credit arrangement lets you draw out funds as you need them and repay when convenient - on the same day if you wish. Once repaid, the funds are ready for you to use again.
Easy to arrangeApplication is straightforward, and a decision can sometimes be made in days, with access to credit available immediately.
Download Rangewell’s free and detailed guide to Overdraft Replacement
How does Overdraft Replacement work?
What are the real costs?
Is Overdraft Replacement a type of short term finance?
How can Overdraft Replacement help my business?
Why you must find the right lender to cut costs
The Downsides of Overdraft Replacement
What paperwork you need?
Am I charged fees which are similar to traditional overdraft fees?
Guarantees and security
Is it important to choose a lender who is authorised by the prudential regulation authority and regulated by the financial conduct authority and the prudential regulation authority?
How does it work - do I repay what I borrow by direct debit or standing order?
Key Terms to check