So what exactly is business overdraft and how can it benefit your business? Bob Ford couldn’t wait to tell the Money Hitman how he’s raised £50,000 cash to grow his business. It only took him five minutes – and all he did was write his signature. Don’t miss out – his method is open to you too!
You might already use an overdraft to tide you over, but don’t overlook it as a wonderful source of business capital. It’s simple, quick and cheap to arrange and unlike a loan or mortgage, you only pay interest when you need the money. With one call you can easily line up £500, £5,000… or even £50,000 to start or expand your business today!
The Best Business Overdraft Is One You Don’t Need
Line up an overdraft now, even if you don’t need one. You’ll have more time to find a better deal and also have a stronger negotiating hand with the bank. If they don’t give you their very best deal you can always say you’ll take all your banking business elsewhere! Not many bank managers will risk losing an account for no good reason.
Ask about a dormant or sleeping facility. With a sleeping overdraft everything is arranged in advance but all the charges are deferred until you use it for the first time.
Always Shop Around when looking for a business overdraft
Don’t arrange an overdraft with your current bank until you’ve shopped around. Little known fact: You don’t have to get your overdraft from the bank you use for day-to-day banking. Most banks will give you one even if they’re not your main bank – so long as you pay a minimum amount (i.e £50 or £100) into your account each month.
Find this week’s best business overdraft deals by checking in the financial pages of the Saturday and Sunday papers or do an online search. Several Internet sites also reveal today’s best deals.
Think Like A Customer…. Not A Debtor!
Don’t make the mistake of thinking your bank is doing you a favour. When you arrange an overdraft you’re not a debtor – you’re a borrowing customer. And customers deserve good service. Get a better deal by speaking to the manager in person. Ask why you should borrow money from them. Some managers will scrap your account charges or pay you interest on credit balances, on account of the money they’ll be making from you as a borrower. It could earn you hundreds of pounds extra each year.
Get The Very Best Business Overdraft Deal
Never be afraid to negotiate your overdraft deal. If your bank manager won’t, then go elsewhere… unless it’s already a dirt cheap deal:
• Negotiate the Interest Rate: Bankers quote overdraft rates as so much above base. The figure they mention isn’t the actual rate you’ll pay, but the amount above the current Bank of England base interest rate, which you can find in your newspaper. The above base’ figure is always negotiable.
• Negotiate the Fees: Most banks charge an initial set up fee and a monthly service charge whenever your account is overdrawn. These fees are way out of proportion to the actual admin work involved, so the manager can easily afford to reduce them – if you ask.
Crack The Jargon: Overdraft rates are normally quoted as ‘%pm’, which means the percentage of interest charged per month. By comparing the %pm for every bank it’s easy to spot the best one.
Go Secured: If your overdraft is secured on property (such as your house) you should ask for a lower rate, because the risk to the bank is less.
But Remember: If you don’t repay the overdraft your property could be repossessed.
What is business Overdraft – Brought to you by Money Hitman!
Manage Your Overdraft And Win
Be a shrewd money manager. Watch your bank statements and manage your credit and debit balances carefully. You’ll get the very best value from your overdraft.
• Ask for a bigger overdraft. By asking for £20,000 or £50,000 you’ll get better terms as a ‘big fish’ – even if you’ve no intention of borrowing that much.
• Set your own lending limit, based on what you can afford. Your overdraft should never be more than 30 times what you can comfortably afford to repay each month. If you can afford to repay £200 this month then your overdraft shouldn’t exceed £6,000.
• Put off paying all your bills until the last minute. And avoid paying by direct debit or standing order – they give someone else control of your overdraft.
• Pay cash and cheques into your account the day you receive them, so they reduce your overdraft instantly. Use a bank that gives you credit for cheques the day you pay them in, not three days later – you’ll save £££’s over the course of a year.
Bob Ford told us ‘My overdraft is easy, flexible business finance that I can use when I need it – and don’t have to pay for when I don’t. There’s no point going through the hassle of setting up a five- year loan or a 20-year mortgage if you expect to be in profit within six months.
“I use my business overdraft for stand-by capital. If I need quick finance for a new project, then I can move fast without having to apply for it, wait and get approval. All I need to do is sign my name on a cheque and the finance is there“.
A guide to business overdraft brought to you by moneyhitman.com.