Key takeaways
- Allica’s standard business overdraft criteria include being a UK-registered limited company or LLP, trading for more than 24 months, being profitable and generating annual turnover above £500,000.
- A business does not need to bank with Allica before applying, but an approved facility must run through a Business Rewards Account used as the business’s primary current account.
- Allica overdrafts are available from over £25,000 up to £2 million, subject to status, credit assessment and business lending criteria.
What is a business overdraft?
For anyone asking, “What is business overdraft?”, an arranged business overdraft is a lending facility linked to a business current account, with a pre-agreed business overdraft limit.
Allica’s facility is secured. Unlike an unsecured business overdraft, security requirements can include a debenture and/or personal guarantee, depending on the facility. Interest is charged only on the amount used, rather than the full limit. The overdraft has no fixed repayment schedule: incoming revenue reduces the balance as it reaches the account.
For businesses asking “how much business overdraft can I get?”, Allica offers facilities from over £25,000 up to £2 million, subject to assessment.
The facility is repayable on demand and usually reviewed annually. Businesses comparing business overdraft interest rates and fees can use Allica’s overdraft cost calculator.
Business overdraft eligibility criteria
The main business overdraft requirements are straightforward, but every application remains subject to status, credit assessment and Allica’s lending criteria.
1. Legal structure and trading history
Allica’s overdraft is available to UK-registered limited companies and limited liability partnerships. Sole traders and traditional partnerships are not eligible.
The business must have traded for more than 24 months. The brief also specifies two years of filed accounts for facilities above £50,000.
2. Turnover and profitability
As a standard requirement, annual turnover must be above £500,000 and the business must be profitable. Where an application is supported by the Growth Guarantee Scheme, a lower turnover threshold of above £300,000 can apply, subject to eligibility and business lending criteria.
These thresholds form part of the business overdraft criteria; they do not guarantee approval.
3. Account requirements: why primary banking matters
Applicants must hold, or be willing to open, a Business Rewards Account and use it as the main business current account through which all UK turnover is managed.
This matters because a business current account overdraft works through the account itself. Revenue arriving in that account automatically reduces the amount drawn. A secondary or occasional-use account would not support the facility in the same way.
How to apply for a business overdraft with Allica
For businesses considering how to get a business overdraft, preparation can make the business overdraft application more straightforward.
What to prepare before applying
Applicants should be ready to explain how much they want to borrow and why, and provide recent business bank statements and financial accounts. Allica may also ask for information such as an aged trade debtors report and cashflow forecasts.
A clear view of expected receivables over the next three to four months can help explain how the SME overdraft facility is expected to be used and cleared.
Where primary banking needs to move to Allica, the decision on lending and activation of the facility are separate milestones.
The three steps to getting an Allica business overdraft
- Step 1: Apply online. The application covers the required borrowing amount, purpose and supporting financial information.
- Step 2: Get a decision. Allica reviews the information provided and may request more before approving the limit.
- Step 3: Activate the facility. If approved, a new customer must open a Business Rewards Account and make it the primary account before the overdraft becomes available. Switching primary banking can simplify that move.
How long does the process take?
An online application can be completed in minutes, but approval timing varies according to the business’s circumstances and the completeness of the information supplied. Full completion can take longer where security documents, KYC checks or an account switch are required.
Frequently asked questions
Can a business apply if it does not already bank with Allica?
Yes. An existing Allica account is not needed to apply. If approved, the business must open a Business Rewards Account and make it the main current account before the overdraft can be activated.
Is the Growth Guarantee Scheme available for business overdrafts?
Yes. Allica is approved to offer overdrafts through the Growth Guarantee Scheme. For Allica, it can provide an alternative eligibility route with a turnover threshold above £300,000 rather than £500,000. GGS applications remain subject to the scheme’s rules and Allica’s credit assessment.
Can a business increase or reduce its overdraft limit once it is set up?
Yes. A business can ask its relationship manager to increase, reduce or remove its business overdraft limit. Any change is subject to review and lending criteria.
Can an arranged overdraft be withdrawn or not renewed?
Yes. The facility is repayable on demand and reviewed annually. In practice, this means the available limit can change following a review of the business’s circumstances, credit position or continued eligibility.
A revolving credit facility may suit some businesses that need a different form of working-capital flexibility, but it works differently from an overdraft.
Ready to find out if your business qualifies?
A profitable UK limited company or LLP that has traded for more than 24 months and meets the relevant turnover threshold may be eligible, subject to status and credit assessment.
Businesses can check their eligibility and apply for an Allica business overdraft online.
Disclaimer: This is information – not financial advice or recommendation.
