When a business has an overdraft facility, it can spend more than its available balance up to an agreed limit. The bank will charge interest on the overdrawn amount, which can vary based on the bank's rates and the terms of the overdraft agreement. Businesses are expected to repay the overdraft, either by depositing funds back into their account or through regular payments.

The main benefits of a business overdraft include increased cash flow flexibility, the ability to manage short-term financial needs, and the convenience of accessing funds quickly without the need for a formal loan application. It can help businesses handle unexpected expenses or take advantage of immediate opportunities.

Yes, banks may charge various fees associated with a business overdraft. Common fees include arrangement fees for setting up the overdraft, monthly maintenance fees, and interest on the overdrawn amount. It's important for businesses to review their bank's terms and conditions to understand all potential costs.

To apply for a business overdraft, a company typically needs to contact its bank or financial institution. The bank will assess the business's financial health, creditworthiness, and cash flow needs. Required documentation may include financial statements, business plans, and tax returns.

Before using an overdraft, businesses should consider their ability to repay the amount borrowed, the interest rates and fees involved, and the potential impact on their cash flow. It's also important to evaluate whether there are more suitable financing options available, such as business loans or lines of credit, depending on the business's needs.