This could be due to a cash-flow bottleneck caused by a seasonal slowdown in your work, a long-term contract that doesn’t pay out until the project is completed, or a major client failing to pay the money they owe you. Whatever the reason, a business overdraft can be a valuable safety net that will keep your business operating through tough times. Here’s how to get your business overdraft up and running: 1. Determine if an overdraft is right for you. If you need less than $20,000, you might be better served by a business credit card. Or if you want to finance the purchase of new equipment, you may be better off taking out a chattel mortgage with a lower interest rate. But to help manage your cash flow, a business overdraft might be exactly what you’re looking for. 2. Compare lenders. Financial lenders offer a range of business overdraft facilities, all with varying payment terms, interest rates and fee structures. An overdraft facility may also be attached to your business loan, so make sure you compare the overdraft facilities lenders offer when considering your business loan options. 3. Consider hidden fees. Carefully consider any fees that are associated with the overdraft facilities you’re weighing up. For example, some lenders may charge significant penalty fees if you exceed your overdraft limit. Be clear on each lender’s fee structure so you know exactly what you’re getting into. 4. Ensure your business is registered. To apply for a business overdraft, most lenders require your business to be registered in Australia with ASIC. You’ll also need to supply your Australian Business Number (ABN) or Australian Company Number (ACN). 5. Gather your business information. Some lenders may ask you to provide information about the business owners or directors. This could include details about their assets, liabilities, income, expenses and credit history. You may also need to provide profit and loss statements, tax returns from the previous two years and balance sheet statements. 6. Provide security asset details. If you’re applying for a secured business overdraft, you’ll need to provide ownership evidence of the asset you’re using for collateral. This might be documentation for a property you’ll be using as security. 7. Show evidence of your business need. Some lenders may require you to show evidence of why you need the overdraft. The documentation required differs between lenders, but may include balance sheets that show income and expenses, payroll reports, or a contract that shows you’ll be receiving payment after the completion of a long-term project. A business overdraft can be a valuable safety net for your business. Make sure you understand why you need it and if you need to make any changes to prevent issues with your cash flow. InfoChoice recommends that, before you make any financial decision, that you seek professional advice from a qualified adviser. Please read our InfoChoice Financial Services Guide & Credit Guide for further information. If you’re ready to see how a business overdraft can help you, compare business loans to find one with an overdraft facility.