By John Pierre Saliba · April 2026 · OverdraftMe
A $20,000 business overdraft has three cost components: interest on what you draw, a line fee on the total limit, and a one-off establishment fee. Here are the real numbers.
| Cost component | Typical range | Annual cost on $20,000 |
|---|---|---|
| Interest rate (on drawn balance) | 14.55% – 25% p.a. | Depends on usage (see below) |
| Line fee (on total limit) | 1% – 2% p.a. | ${int(int(amt_slug)*0.01):,} – ${int(int(amt_slug)*0.02):,} |
| Establishment fee (one-off) | $0 – $995 | $495 – $795 typical |
The real cost depends on how much you actually draw. Most businesses don't use their full limit every day.
| Usage scenario | Avg drawn balance | Monthly interest (at 18%) | Monthly line fee (1.5%) | Total monthly |
|---|---|---|---|---|
| Light use (25%) | ${int(int(amt_slug)*0.25):,} | ${int(int(amt_slug)*0.25*0.18/12):,} | ${int(int(amt_slug)*0.015/12):,} | ${int(int(amt_slug)*0.25*0.18/12)+int(int(amt_slug)*0.015/12):,} |
| Moderate use (50%) | ${int(int(amt_slug)*0.5):,} | ${int(int(amt_slug)*0.5*0.18/12):,} | ${int(int(amt_slug)*0.015/12):,} | ${int(int(amt_slug)*0.5*0.18/12)+int(int(amt_slug)*0.015/12):,} |
| Heavy use (75%) | ${int(int(amt_slug)*0.75):,} | ${int(int(amt_slug)*0.75*0.18/12):,} | ${int(int(amt_slug)*0.015/12):,} | ${int(int(amt_slug)*0.75*0.18/12)+int(int(amt_slug)*0.015/12):,} |
| Full draw (100%) | $20,000 | ${int(int(amt_slug)*0.18/12):,} | ${int(int(amt_slug)*0.015/12):,} | ${int(int(amt_slug)*0.18/12)+int(int(amt_slug)*0.015/12):,} |
Yes. All interest and fees on a business overdraft used for business purposes are generally tax deductible. At the 25% base rate entity tax rate, a monthly cost of $250 effectively becomes ${int(int(monthly_high.replace(",",""))*0.75):,} after the deduction.
If your business needs a $20,000 cash flow buffer, the real question is: what does NOT having it cost you? Late supplier payments, missed opportunities, ATO penalties (non-deductible), or worse - not making payroll. For most businesses, the cost of the overdraft is a fraction of the cost of running out of cash.
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