Business Overdraft

A business overdraft has been a popular source of business finance for many years. However, not everyone is aware of how an overdraft works and the potential implications it can have on their business. If you’re thinking of taking out a business overdraft, it’s important to understand how it works and what charges may be involved.

How does a business overdraft work?

A business overdraft is a revolving loan that allows funds to be drawn up to a pre-determined credit limit. It works similarly to a business credit card, where the business only pays interest on the funds used. With many overdrafts, if you exceed your overdraft limit, you will almost certainly be charged a fee, so it’s necessary to read the terms and conditions of any financial product before taking the plunge.

While a business overdraft can be a fast small business financing option, there are other financing options that can offer similar advantages. Here at Prospa, we offer small business loans and a Business Line of Credit that can help you overcome any financial hurdle your business is facing. Prospa offers fast application and approval, and funding is possible in 24 hours for approved NZ businesses.


Experience quick and convenient access to funds in NZ


If you’re still not sure about whether a business overdraft is right for your business or not, our small business loan could offer an alternative. Prospa’s small business loans are available in amounts ranging from $5,000 to $100,000, with terms ranging from 3 to 36 months and cash flow-friendly repayments that can be made daily or weekly. We also provide the Prospa Plus Loan to approved businesses with funding options up to $500K. For both products, no asset security is required upfront to access Prospa funding up to $150K. With small businesses at the heart of everything we do, we have received local and international recognitions, including the Telstra Best Medium Business award in 2017 and the Deloitte TechFast 50 in 2015, and we ranked first in the Asia Pacific in the Financial Times High Growth Companies for 2018. We are also rated #1 by Trustpilot. This is all thanks to thousands of our clients who expressed their satisfaction with our products, offers and customer service.

Find out more about Prospa’s business financing options and our current offers by visiting the Prospa NZ website today.


Why small business owners prefer small business loans over business overdrafts


A business overdraft isn’t your only option for keeping your small business moving. Even though an overdraft fee can be tax-deductible, it could better to find a financial provider that also offers other services so you can make the right decision based on your current needs. Remember that despite their small size, overdraft charges can quickly add up.

Recently our Prospa customer success account manager opted to arrange for an extended small business loan for a New Zealand fruit picking business to cover cash flow during labour shortages. Through the Prospa small business loan, the customer managed to cover business operating costs while not trading at full capacity while also focusing on planning their wedding, meaning they could spend less time worrying about the business. Since our customer success account managers are very much familiar with the challenges present in NZ small businesses, he was able to suggest extending the term of the loan with only a slight increase in the repayments.


Enjoy a quick, convenient, and seamless business transaction with our experts


At Prospa, we understand that maintaining business operations in the 21st century relies on accessing seamless, convenient, and fast financing options and transactions. That’s why our financing options for small businesses are purposefully designed with the intention of helping them maintain and monitor operations without adding any stress to their current financial situations. As New Zealand’s small business lending specialists, we invested in the power of technology to make our financing process faster and easier for our clients. Additionally, our stellar team of business lending specialists can assist you in applying for loans that are suitable for your small business needs.

Apply now!


Why a small business loan can be a better alternative to a business overdraft


A business overdraft is one option that provides a surprising amount of flexibility, and it’s where many businesses turn to when they’re in a tight spot. While a business bank overdraft can offer some breathing room, it’s not always the best solution for your business. In fact, a small business loan can often be a much better alternative to an overdraft – simply because you know exactly what you owe and when, making it easier to budget.

Prospa’s small business loans are a great option. You can use our loans for the following purposes:

  • working capital
  • renovations
  • technology and staffing
  • business acquisitions
  • much more…


Learn if you’re eligible to apply for a small business loan


Here are the eligibility requirements that you need to meet to qualify for a small business loan with Prospa:

  • You must be a New Zealand citizen (or permanent resident).
  • You need to be over 18 years old and own a New Zealand business (with a valid NZBN/IRD).
  • Minimum trading history applies.

If you apply for a Small Business Loan with Prospa, our online form can be completed in as little as 10 minutes and a dedicated business lending specialist will contact you to assist you.

Why Prospa? Because we support small business.

No more compromising or missed opportunities with Prospa by your side. This time tomorrow you could have access to funds for growth and cash flow support. It’s just what we do. We’re New Zealand’s small business lending specialist.


Fast application and decision, and funding possible in 24 hours on flexible options up to $500,000.


Talk to real people. Business Lending Specialists who are focused on getting you what you need, sooner.


Thousands of small businesses
have borrowed from Prospa.
You could benefit too.



In business finance, overdraft fees can be tax deductible and are frequently categorised as operating expenses. However, business overdraft fees must be associated with your business bank accounts, not your personal bank accounts, since overdraft fees and other bank charges incurred while using a personal account are likely not tax-deductible.

There’s no definitive answer to this question, as the size of an overdraft will vary depending on the business’s individual circumstances. However, as a general rule of thumb, a business should aim to keep its overdraft limit to an amount that is no more than 10% of the dollar value of its total sales. This will help ensure that the business has enough cash flow to cover its expenses and meet its financial obligations.

Other questions? Talk to a specialist