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Allica Bank has launched its business overdraft designed specifically for established businesses, marking a strategic milestone in the bank’s mission to transform finance for a part of the economy that has long been overlooked.
- The provision of overdrafts has collapsed by over 80% since the year 2000. In 1998, overdrafts accounted for 31% of all SME bank lending, compared to just 5% in 2024.
- Businesses can apply for Allica's new overdraft, with limits between £25,000 and £2 million, before opening a current account, with automated applications meaning decisions are made in days rather than weeks.
For many established businesses, access to overdrafts – one of the most flexible and widely used forms of working capital – has become increasingly difficult.
Since the year 2000, the provision of overdrafts for SMEs has collapsed by over 80%, falling from £18 billion, when adjusted for inflation, to stand at just £2.7 billion in 2024 – a key finding in Allica’s recent flagship lending research.
Allica’s research further underlined a fundamental collapse in the offering of SME overdrafts over the past 25 years – in 1998, overdrafts accounted for 31% of all SME bank lending compared to just 5% of all SME lending in 2024.
It has left a critical gap in day-to-day cashflow support for those established businesses with 5-250 employees, who are a forgotten but vital part of the UK economy, contributing a third of all employment and GDP.
Allica has carved a niche for itself as the only digital bank dedicated especially to this segment, helping it become the UK’s fastest-growing fintech ever in 2023, according to Deloitte.
The fast-scaling fintech bank revealed it had lent over £3.5 billion to established businesses, with analysis from Oxford Economics showing that every £1 million Allica lent supported £2.4 million in GDP, 35 jobs, and £600,000 in tax revenue.
This collapse in overdraft provision has created challenges particularly for established businesses managing seasonal income, growing order books and short-term working capital pressures. Too often businesses are forced to make big commitments before knowing whether the finance they need will actually be available.
Allica Bank’s new business overdraft, with limits between £25,000 and £2 million, is designed to help plug this gap, offering a more straightforward and human way for established businesses to access working capital. Previously available to a subset of its existing customers, Allica Bank now launches its business overdraft to a wider audience, furthering its mission to reinvigorate banking for Britain’s established SMEs.
Unlike many legacy banks, which typically require businesses to open and switch to a current account before applying – often with no certainty of approval – Allica has flipped the model. Businesses can apply for an overdraft and receive a credit decision before opening a current account, removing unnecessary risk and delay at a time when cashflow decisions are often time-critical.
Applications are also automated, meaning decisions are provided in days rather than weeks, with consistent human support throughout the process.
Richard Davies, CEO of Allica Bank, said:
“Overdrafts used to be one of the most crucial types of working capital for UK business owners. Since the global financial crisis they’ve all but collapsed, and not because demand has dried up – the system just stopped providing them, leaving established businesses with no safety net.”
“The £15 billion funding hole that’s been left is a symptom of a system that no longer works for established businesses, creating a problem Allica was built to fix. For too long, established businesses have been caught in the middle – too complex for one-size-fits-all banking, yet not big enough to get proper attention from legacy banks.”
“We’re changing that by making overdrafts simpler to apply for, quicker to decide, and overseen by experts who understand the needs of established businesses and their role in the real economy.”
The launch of its overdraft builds on Allica Bank’s rapid growth and expanding support for established businesses across the UK. By combining relationship-led banking with powerful technology, Allica aims to address long-standing gaps in business finance and help more established businesses manage cashflow with confidence.
