What is a Business Overdraft Loan?
A business overdraft loan or an OD loan for business is a credit facility. It lets you withdraw more money (up to an approved limit) than what is available in your current account. You only need to pay interest on the amount you use and for the number of days you use it.
This is a smart solution for businesses that want a flexible way to manage expenses. An overdraft does not require you to borrow a fixed amount for a fixed period. You can withdraw, repay and withdraw again within your sanctioned limit. It gives you complete control over your cash flow.
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Features of Business Overdraft Loan
A Business Overdraft Loan gives you easy access to funds whenever your business needs them.
Here are the features you should know about:
Loan Type
Revolving credit facility for businesses
Loan Amount
It is based on your business turnover. It can be from ₹1 lakh to ₹1 crore
Interest Rate
The competitive overdraft interest rates start from 9.5% p.a.
Tenure
It is from 12 months to 36 months. It is renewed annually
Collateral
Both secured and unsecured options are available
Repayment
Flexible, repay anytime within the tenure
Processing Time
Instant approval and quick activation
Benefits of Business Overdraft Loan
Choosing a business overdraft facility with My Mudra comes with several advantages:
Quick Cash Flow Support
It can manage your working capital needs, pay suppliers and cover operational expenses instantly.
Flexible Withdrawals
Withdraw funds as much as you need. You can repay when you receive payments from customers.
Pay interest only on Used Amount
You only have interest on what you actually use. It is not the entire limit.
No Fixed EMIs
Repay as per your convenience within the agreed limit period.
Continuous Access to Funds
You can get funds as many times as you need during the tenure. No need to reapply each time.
Who Should Apply for a Business Overdraft?
Have a small business that has sales and cash flow
If you need funds for paying suppliers, salaries or meeting urgent working capital requirements
Want a flexible alternative to your fixed-term business loans
Have a retail shop, manufacturing unit, trading business or service business that faces cash flow gaps
Tips to Get Business Overdraft Approved Quickly
You should maintain a good credit score. You can get it by paying suppliers and EMIs on time.
Keep your financial records updated. It helps you with easy verification.
Apply for a realistic overdraft limit based on your turnover.
You should avoid multiple applications with different lenders simultaneously.
Use trusted platforms like My Mudra for faster processing and better rates.
How to Apply for Business Overdraft Online
Getting a business OD loan through My Mudra is fast and easy:
Step 1
Click the Apply now button on this page.
Step 2
Fill Out the Online Form: Enter basic business details and the required limit.
Step 3
Upload Documents: Submit KYC, business proof, and financial records digitally.
Step 4
Instant Eligibility Check: Our system checks your profile and suggests the best lenders.
Step 5
Approval and Activation: Once approved, your overdraft limit is activated and ready to use.
Top Banks and NBFCs Offering Business Overdraft Loan
Here’s a comparison of interest rates, limits and features from leading banks and NBFCs that give you a business overdraft facility:
| Lender | Interest Rate (p.a.) | Overdraft Limit | Processing Fee | Renewal / Tenure |
|---|---|---|---|---|
HDFC Bank | Starting at 9.5% | ₹1 lakh - ₹50 lakh | Up to 2% of limit | Annual renewal available |
ICICI Bank | 9.75% - 12.50% | ₹1 lakh - ₹1 crore | Up to 2% of sanctioned amount | 12 months, renewable |
Axis Bank | Linked to Repo Rate | Up to ₹50 lakh | 1% - 2% of limit | 12 months, renewable |
Kotak Mahindra Bank | Starting at 10% | ₹1 lakh - ₹1 crore | Up to 2.5% | Annual limit review |
Note: Interest rates and fees can change. It is based on your business profile and lender policy.
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Frequently Asked Questions
Apply for Business Overdraft Loan Today
With My Mudra, you can apply for business overdraft online. We help you to compare lenders, get quick approval and start using your limit instantly.
Take control of your business cash flow today and keep your business running smoothly.