Overdrafts have long been a source of short-term working capital funding for many businesses, but they are becoming more difficult to obtain as commercial banks have become reluctant to lend on overdraft in recent years.
The disadvantage of using an overdraft for working capital is that it often has a limited credit limit, limiting your options. They’re essentially unsecured loans, so even if you’re fortunate enough to acquire one, the amount you may borrow will probably be limited unless your company has a great track record.