The flexibility of overdrafts can also be their downfall, however, as they are repayable on demand and so can be called in if the bank thinks that the business may be in difficulty. Interest rates are also higher than for loans and so using them for long-term borrowing will cost more. Despite this flexibility, and the bank being able to recall, security may still need to be provided.

Average loan:   £500 – £10,000
Average APR :   5.5% – 12.5%
Repayment terms:   Business overdrafts are charged at a monthly interest percentage
Restrictions:   Ranges from bank to bank, including cash flow and asset worth