---
title: What is an overdraft facility?
description: "An overdraft facility is a short-term credit option provided by banks, allowing account holders, especially businesses with current accounts to withdraw more money than is available in their account, up to a pre-approved limit. Interest is charged only on the…"
url: "https://yazodo.com/help/business-loan/what-is-an-overdraft-facility/"
updated: "2025-12-05"
category: Business Loan
tags:
  - Application Process
  - Business Loan
  - "Loan Amounts & Interest Rates"
  - Types of Business Loans
---

# What is an overdraft facility?

An overdraft facility is a short-term credit option provided by banks, allowing account holders, especially businesses with current accounts to withdraw more money than is available in their account, up to a pre-approved limit. Interest is charged only on the overdrawn amount, and some banks may also apply processing or usage fees. It offers flexibility in managing short-term cash flow gaps and urgent expenses.