Overdraft Replacement: Instant access to the funds you need

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.