An overdraft is a limit on your current account that you draw only when you need it, paying interest on what is drawn and nothing on the rest. We assess whether your account conduct supports an application and prepare it.
Some months the account is comfortable and some months it is not, and you cannot tell which is coming. A customer pays late, a supplier brings a shipment forward, a tax payment lands in a thin week. None of it justifies borrowing a fixed sum for five years.
An overdraft is headroom, and used as designed it is the cheapest facility a business can hold. It is also the one that most often goes wrong, because nothing in its structure forces you to repay it. There is no instalment and no maturity date. The discipline has to come from you, and where it does not, the annual review supplies it.
These are the banks’ requirements, not ours. They vary by institution and change over time.
An overdraft is not tied to a stated purpose the way other facilities are, which is both its advantage and the reason banks scrutinise how it is used. It is meant for short, self-correcting gaps inside the trading cycle.
It is the right facility where the need is genuinely irregular and short, and where the account swings back into credit regularly. Paying interest only on the daily drawn balance makes it far cheaper than a term loan for a gap you occupy eight days a month. Holding a limit you do not draw costs something, but not much.
It is the wrong facility once you know you will be at the limit all year. A balance that never returns to zero, what banks call a hardcore balance, is a term loan neither side has admitted to. You pay a higher rate than a term loan carries, nothing reduces the debt, and at the annual review the bank can cut or withdraw the limit at the moment you can least afford it. An overdraft is repayable on demand, and that phrase is not decorative. It is equally wrong for a capital purchase: funding a machine this way puts a ten year asset on a facility the bank can call next month, and a term loan or equipment financing is the right shape. If the account never recovers because invoices go unpaid, invoice financing treats the cause rather than the symptom.
| What | Why it matters |
|---|---|
| Conduct on the current account | More weight here than on any other facility, because the account is the facility. Returned cheques, failed standing instructions and excesses are visible and dated. |
| Swing, between credit and debit | An account in debit every day, even inside its limit, is assessed differently from one at the same average balance that clears regularly. |
| The hardcore balance | The lowest debit balance reached over the year is treated as permanent borrowing, and where it is substantial banks often require it converted at renewal. |
| Turnover against the limit | Banks expect the account to be worked. A limit that is large relative to the money passing through suggests the facility covers losses rather than timing. |
| Limits already held elsewhere | CCRIS shows limits and utilisation across every bank. Several overdrafts at once, or consistently high utilisation, is among the clearest distress signals. |
| Security, and the annual review | Because the facility is reviewed each year rather than set once, your conduct and the security are reassessed, and the limit can move either way. |
Enter the rate a bank has quoted you, or one you want to test. SMEBox does not lend and does not set rates, so there is nothing pre-filled here.
Name, company and a phone number is enough to start. We call you back, ask what the money is for, and tell you whether this is worth taking further before you send us anything sensitive.
We read the accounts and the bank conduct, and tell you where you stand against what banks are currently accepting. If this is the wrong facility, we say so. If we think no bank will approve you at present, we say that too, and what would need to change.
This stage usually takes three to five working days from receiving a complete set of documents.
We assemble the submission, present the financials consistently, set out the purpose of funds, and answer the questions a credit officer will ask before they ask them. You see it and approve it in writing before anything goes anywhere.
We lodge the application and handle the back-and-forth until the bank issues its decision. The decision on approval, amount and pricing is entirely the bank’s, and we cannot guarantee any outcome.
Banks typically take three to six weeks from a complete submission to a decision on this facility type.
SMEBox does not lend and does not set pricing. Rates, fees and terms are set by the bank and vary by facility, security, tenure and the bank’s own assessment of your business.
SMEBox does not lend and does not set pricing. Overdrafts are priced at a margin over the bank’s base rate, and that margin is normally higher than a term loan would carry, because the bank must hold capital against a limit that can be drawn at any moment. Interest is calculated on the daily debit balance, so the cost genuinely falls on the days you are in credit. As a guide only, SME overdraft pricing has sat at 7% to 11% per annum, with a commitment fee of around 1% per annum on the unutilised portion and a fee at each review. Sourced from published bank rate cards, reviewed September 2026. Anything drawn above the limit carries a penalty rate, and the excess is recorded whether the bank honours the payment or returns it.
Where none of those apply, we will tell you so on the first call rather than take you through a process you did not need.
Per ringgit borrowed, no. The rate is usually higher. What makes it cheaper is that you pay only on what you draw, for the days you draw it. In debit a week a month, it is far cheaper. In debit all year, a term loan costs less, and the term loan or overdraft question works it through.
The bank may ask for the whole balance back, and withdraw the limit, without waiting for a maturity date. In practice it rarely does so without cause, the usual trigger being a deterioration visible in the account. It is not a reason to avoid the facility, but it is a reason not to fund anything long-lived with it.
It is the portion of the overdraft that never gets repaid, the smallest debit balance reached over a period. It tells the bank that part of the facility funds permanent working capital rather than a timing gap. Banks often ask for it to be converted to a term loan at review, which is usually sensible rather than punitive.
Commonly, yes. A commitment fee on the unutilised portion is standard on Malaysian SME overdrafts, alongside an annual review fee. It is one good reason to request a limit that matches your real peak rather than the most you could get.
The bank may honour the payment or return it, and either way the excess is recorded. Interest above the limit carries a penalty rate, and a pattern of excesses is among the things most likely to affect the next review. A returned cheque is worse: whoever presented it sees it too.
Yes, and most established SMEs do. Banks want the structure to make sense: a term loan for capital spend, a trade line for shipments, an overdraft for day to day movement. What draws attention is several overdrafts at different banks, which shows in CCRIS and reads as a company covering gaps by opening new limits.
If the balance never comes back to zero, a term loan costs less and actually reduces. If the drawn balance tracks your unpaid sales ledger, invoice financing is a closer match and usually cheaper. If the pattern follows a cycle of buying stock and selling it, working capital financing is designed around that. An overdraft is the right answer for the unpredictable remainder, and it works best when it is not quietly carrying the load one of the others should take.
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