A business overdraft is a credit facility available to Savings or Current Account holders where they can withdraw money from their accounts, even if the balance is zero.
This facility comes in handy during a financial crisis. You can quickly get the amount you need and meet your financial requirements. Moreover, with the ICICI Bank’s InstaBIZ app, this process has become even more seamless as you can manage and track it online.
Things to Keep in Mind Before Applying for a Business Overdraft
Here are some things that you need to remember before you apply for a business overdraft facility:
Overdraft amount
The first thing you need to check is the limit of the overdraft amount. This limit puts a restriction on the maximum amount you can withdraw from your Current Account. It depends on many factors, such as your repayment history, credit score, the relationship between you and your lender etc. So before proceeding any further, check whether the credit limit suits your needs.
Collateral not required
One of the best features of overdraft is that it does not need any collateral to be pledged. It becomes more accessible for small business owners to get the advantages of this facility.
Processing time
Some lenders may take considerable time to process your application for overdraft, and the time taken here may affect your business commitments. Thus, you should check how much time your favoured lender takes to approve your application. Depending on this information, make your decision.
Interest rate
The interest rate of an overdraft account is different from your usual loans. Here the interest rate is predetermined. It is only payable for the amount that has been withdrawn, not the whole amount that has been sanctioned for you. But you can withdraw money from the account as often as possible.
Additional charges
Some lenders may have extra fees associated with an overdraft account. Adding all these, your overall amount to be returned can become more than you might expect. So you need to check all these data beforehand and see if the final amount exceeds your budget. You can also look for other lenders and compare which suits you the best.
What are the Benefits of InstaBIZ Overdraft?
InstaBIZ allows small and medium business owners to complete all monetary transactions without visiting the branch. It offers an overdraft facility of up to Rs 50 lakh for existing customers and Rs 25 lakh for new customers. Apart from this, other benefits provided by the app are as follows:
Paperless processing and no foreclosure charges
InstaBIZ is a digital platform that does everything online. Starting from the application of an overdraft account, its processing, document verification, approval etc., everything is done with a few swipes. The whole process is paperless and takes very little time. Thus, the facility can actually cater to emergency financial needs.
Moreover, InstaBIZ does not charge any extra fees for foreclosing your overdraft account, and there is no commitment charge.
Quick sanction and disbursal
With the process being online, the overdraft is sanctioned quickly for existing and new customers. The disbursement of the required amount is also prompt for the current customers.
For others, they need to open an account, which they can do with a video KYC. Post-opening of the account, their credit will be disbursed within a very short time.
Interest only on the amount used
Likewise, InstaBIZ also offers an interest rate only on the amount withdrawn, not on the total amount sanctioned for withdrawal.
Conclusion
A business overdraft is undoubtedly a great facility enabling companies to manage their finances well. ICICI Bank’s InstaBIZ app in India has offered small and medium business owners several comprehensive banking solutions to fulfil all their financial requirements. With just a few clicks on your mobile phone, you can get the funds you need easily.
