The lowest non-bank overdraft rates start at 14.55% p.a. on drawn balance through the OverdraftMe panel. Your actual rate depends on credit score, revenue, trading history, and whether you offer property security. Secured facilities get lower rates.
Rate ranges by lender type
There is a big gap between what banks advertise and what most businesses actually get approved for. Here is how rates break down across lender types in Australia right now.
| Lender Type | Rate Range (p.a.) | Typical Approval | Property Required? |
|---|---|---|---|
| Major banks (CBA, ANZ, NAB, Westpac) | 8% to 12% | 2 to 6 weeks | Usually yes |
| Second-tier banks | 10% to 15% | 1 to 3 weeks | Often yes |
| Non-bank lenders (OverdraftMe panel) | 14.55% to 25% | 1 to 4 hours | No (under $150K) |
Banks offer the lowest headline rates. But most small and medium businesses do not meet their criteria. Banks want 2+ years of financials, property security, and strong credit. If you are a newer business or do not own property, non-bank lenders are your realistic option.
Important: Bank rates of 8% to 12% are advertised rates for their best customers. The rate you are offered after assessment is often higher. Non-bank rates are transparent from the outset.
What drives your overdraft cost down
Your rate is not random. Lenders price based on risk. Here are the factors that push your rate lower.
- Equifax score above 650. A clean credit file with no defaults or late payments gets better pricing.
- Monthly revenue above $20,000. Higher turnover means lower risk for the lender.
- Trading history of 12+ months. The longer your track record, the more confidence the lender has.
- Property security offered. Offering a property charge (even a second mortgage) can reduce your rate by 3% to 5% p.a.
- Low existing debt. If you are not already servicing multiple facilities, lenders see you as a safer bet.
- Industry type. Some industries (trades, medical, professional services) are considered lower risk than hospitality or retail.
Key rate factors at a glance
Total cost breakdown
The interest rate is only part of the picture. You need to look at total cost, including fees. Here is what most non-bank overdrafts include.
- Establishment fee: 1.5% to 3% of the facility limit (one-off, paid at settlement)
- Monthly line fee: Some lenders charge 0.1% to 0.3% of the total limit per month, regardless of usage
- Draw-down fee: Usually nil on non-bank facilities
- Early exit fee: Some lenders charge a break cost if you close the facility within 12 months
Worked example: $80,000 overdraft at 17.5% p.a.
Facility limit: $80,000
Average drawn balance over 12 months: $35,000
Annual interest cost: $35,000 x 17.5% = $6,125
Establishment fee (2%): $1,600
Total first-year cost: $7,725
That works out to about $644 per month for access to $80,000 in working capital. You only pay interest on the $35,000 you actually use, not the full $80,000.
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A lower rate does not always mean a lower cost. Here is why.
A bank might offer you a business term loan at 8% p.a. on a $100,000 lump sum. You pay interest on the full $100,000 from day one, even if you only need $30,000 right now. That is $8,000 per year in interest.
A non-bank business overdraft at 17% p.a. where you draw an average of $30,000 costs you $5,100 per year. You save $2,900 by paying a higher rate on a lower balance.
This is the core advantage of revolving credit. You only pay for what you use. If your cash flow needs vary month to month, an overdraft almost always costs less than a fixed loan, even at a higher rate.
Why the cheapest rate is not always the best
Chasing the lowest rate can cost you time and money. Here is what happens in practice.
- You apply to a bank for a cheap rate. They take 3 to 6 weeks to assess your application.
- They decline you because your trading history is under 2 years or you do not own property.
- You have lost a month. Your cash flow gap has not been fixed. You may have missed supplier discounts or delayed staff payments.
- You then go to a non-bank lender and get approved in hours at a slightly higher rate.
The cost of waiting often exceeds the interest saving. A business that needs $50,000 today should not wait 6 weeks to save 3% per annum. That 3% on $50,000 is $1,500 per year, or $125 per month. If the delay costs you a $5,000 contract or a $2,000 supplier discount, the "cheap" option was actually expensive.
Read more about comparing overdraft options and check the latest 2026 overdraft rate guide for updated pricing across all lender types. You can also review our full overdraft guide and borrowing capacity calculator.
Rates disclaimer: All rates mentioned are indicative only and subject to lender assessment, credit approval, and individual circumstances. Rates may change without notice. Contact us for a personalised quote based on your business profile.
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