Business loan vs overdraft: which suits your need

How each one works

A business loan hands you a fixed amount up front, repaid over a set term in regular instalments — ideal for a defined cost. An overdraft lets you dip below zero on a current account up to a limit, charging only on the amount overdrawn — ideal for smoothing short, unpredictable gaps.

Cost compared

A loan's cost is predictable: you know the total repayable from day one. An overdraft can be cheaper if used lightly and briefly, but expensive if you live in it — some carry higher rates and fees, and a permanently overdrawn account signals a deeper cash issue. For recurring flexible need, a dedicated credit facility often beats both.

When a loan wins

Choose a loan for a known, one-off cost: equipment, a specific project, consolidating pricier debt, or funding a defined growth step. The fixed structure makes budgeting simple and the total cost is clear up front.

When an overdraft wins

Choose an overdraft (or a revolving facility) for the unpredictable day-to-day: a customer paying a week late, a supplier wanting cash before a sale lands. You want headroom you can dip into and repay quickly, paying only for the days you use it.

Or use both, deliberately

Many companies run a loan for planned investment and keep an overdraft or facility for flexibility — provided both are affordable together.

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.