2 min read
Definition
An overdraft limit is the maximum a business is allowed to be overdrawn on its current account — the agreed ceiling on how far below zero it can go. Staying within it keeps the facility available; exceeding it can trigger fees and refusal of payments.
In plain terms
The overdraft limit is your short-term borrowing headroom on the account. Living close to or at the limit permanently is a warning sign that a temporary tool is funding a structural need.
Why it matters
Managing within your overdraft limit — and not relying on it permanently — is basic cash discipline. See the business overdraft guide and cleardown.
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