Business overdraft, revolving credit or a flexible facility — how the NZ banks' working-capital lines actually differ

A business overdraft is a limit sitting on top of your everyday transaction account, drawn and repaid daily as cash moves through the business, with interest charged only on what you've used. Revolving credit (sometimes called a line of credit) does the same job but as a standalone facility, usually for a larger sum and usually against security, not tied to your day-to-day account. ANZ's Business Flexible Facility sits between the two: overdraft-style daily drawing, but priced and secured more like a loan. A term loan is a different tool entirely — a lump sum for a specific purchase, repaid on a fixed schedule. Which one is right depends less on the label than on how much you need, what you're willing to secure it with, and how much certainty you want over the cost.

How a business overdraft actually works

An overdraft is linked directly to your business transaction account. Westpac describes it as a financial safety net that lets you draw funds above your available balance up to an agreed limit; ASB and ANZ describe the same mechanism in their own words. ANZ is explicit about the practical effect: you only pay interest on the amount you use, calculated daily, with no minimum or fixed repayments — the facility revolves in real time as money comes in and goes out.

Interest is calculated the same way at every bank that publishes detail on it. Westpac calculates interest daily on funds actually drawn and charges it to the account on the last day of the month. Kiwibank does the same: interest is calculated daily and charged monthly in arrears on the amount you've been overdrawn during that month. There's no compounding surprise here — you're charged for the days you were actually in the overdraft, not for the whole limit.

Limits can start small. Westpac's minimum overdraft limit is $500, with the maximum set by the bank's own credit lending criteria; ASB's limits also start as low as $500 and are tailored from there. ASB positions the overdraft as suited to businesses that want an option with no set term and, in some cases, no security — a genuinely different starting point from revolving credit, covered below.

What the banks actually charge — and what none of them publish

Here's the part every comparison glosses over: none of the major banks publish an actual overdraft interest rate on their public pages. Westpac's own rate page states its overdrafts are priced as a base rate plus a customer margin, without naming a current figure. ANZ's page goes further and simply shows a blank where the ANZ Working Capital Base Rate should be, describing the pricing as that base rate plus a margin on the amount you use. Kiwibank names a "Business Overdraft base rate" plus a margin without showing a number either. ASB's overdraft page doesn't name a base rate or margin at all — only that a line or limit fee, a monthly account fee and interest "typically" apply. In every case, the actual rate is confirmed only once you apply, based on your own risk profile and the size of the limit.

What is published, and worth reading carefully, are the fees and the penalty rates:

Bank	One-off application/establishment fee	Ongoing limit fee	Unarranged/excess rate
Westpac	Establishment fee applies (amount not published)	Line of Credit Charge, or "LCC" (amount not published)	19.95% p.a., calculated daily, plus a $4/month unarranged overdraft fee
ANZ	Greater of $75 or 1% of the approved limit or increase	0.12% of the highest agreed limit that month, minimum $5/month	ANZ Working Capital Base Rate plus 7% p.a.
Kiwibank	Minimum $75 for a new or increased limit; 0.25% of a temporary increase (minimum $75)	0.10% of the credit limit per month, minimum $5/month	Not published
ASB	Establishment, Line and Undrawn fees may apply (amounts not published)	Line/limit fee and monthly account fee (amounts not published)	Not published

The two fully quantified numbers here are worth sitting with. Westpac's unarranged rate — 19.95% p.a., calculated daily, plus a flat $4 a month — is the real cost of letting an overdraft slip past its agreed limit, and it's a rate most businesses would never accept if it were the headline price. ANZ's excess rate is structured the same way: its working capital base rate plus a flat 7% p.a. on top, whatever that base rate happens to be at the time. Both banks are telling you the same thing in different words — staying inside your agreed limit is worth protecting, because the cost of not doing so is real and disclosed, even when the everyday rate isn't.

One fee-naming trap is worth flagging specifically. ANZ calls the ongoing charge on its standard overdraft an "Overdraft Management Fee" at 0.12% of the limit every month — annualised, that's roughly 1.44% a year. ANZ uses the exact same fee name on its Flexible Facility, but there it's 0.50% per annum of the limit, worked out and charged monthly — a lower annualised cost despite the identical fee label. Comparing two ANZ products by fee name alone, rather than by the actual percentage and how it's calculated, would lead you the wrong way.

You'll also see NZ non-bank lenders like ScotPac market their own line-of-credit products against bank overdrafts, quoting bank overdraft rates as "generally higher (10–15% p.a.)" in their own comparison tables. That figure comes from a lender selling an alternative to the overdraft, not from any bank's own rate card — treat it as a sales comparison, not a published bank rate, and get your own bank's actual number in writing before you compare anything against it.

Security: when the bank says "may" and when it means it

Security terms vary more than most business owners expect, and the same bank can require very different things depending on which product you're looking at.

On its standard overdraft, ANZ says "various types of security, like business assets, may be considered" — language that leaves room for an overdraft with no security at all, depending on the amount and your file. Westpac says similarly that, depending on the size of the overdraft, you might need to provide security such as residential property, commercial property or business assets — again, discretionary and scaled to the limit. ASB's overdraft page goes further, describing an option where no set term or security is needed at all, terms permitting.

But ANZ's own Flexible Facility runs on a completely different security basis: it uses your home or other residential property as security, and a first registered mortgage over that property is required — not optional, and not limited to business assets. That's a meaningful trade-off buried in a product ANZ markets as more flexible than a term loan and potentially more cost-effective than an overdraft: the flexibility and pricing on the Flexible Facility are bought with a mortgage over your home, in a way the plain overdraft usually isn't. If you're weighing an ANZ overdraft against an ANZ Flexible Facility, that's the real difference to interrogate before the rate. Our guide to what you're actually signing with a personal guarantee covers the same territory from the guarantee side, which usually travels alongside a mortgage requirement like this one.

Revolving credit and lines of credit: the step up

ASB describes its own revolving credit facility plainly as the next step up from an overdraft — it works well if you have suitable security, whether property or business assets, and want to maintain a larger ongoing credit limit than an overdraft is built for. Two ASB products sit under that umbrella at different scales: a Commercial Flexible Finance Facility secured by residential property, offering credit limits between $10,000 and $750,000, priced at ASB's Housing Variable rate plus a margin, charged monthly; and a Business Credit Facility for larger needs, starting from $500,000, priced at a Floating Corporate Indicator rate plus a margin.

Kiwibank's equivalent — its Revolving Credit Loan, a separate product from its overdraft — is secured against your home, other residential property or business assets, has no fixed repayment timeline, and its rate depends entirely on the security you offer.

BNZ's CreditPlus is worth a closer look because its terms are unusually specific. It's a revolving credit facility with a minimum loan amount of $500,000, secured against the value of plant, vehicles and equipment rather than property. You draw down when you need it and BNZ doesn't require you to disclose what the funds are used for. There are no fees for drawdowns or repayments, the minimum drawdown is $1,000, and additional repayments also need to be $1,000 or more. Repayments combine principal and interest by monthly direct debit, there's no fixed term, and there are no penalties for early partial or total repayment. The interest rate itself isn't published — BNZ reviews it quarterly in line with the market, and you'd need to ask directly for a current figure.

It's worth noticing that BNZ's CreditPlus and ASB's Business Credit Facility both sit on a $500,000 floor. Products marketed under a "flexible working capital" banner that sounds aimed at small business are, at that end of the market, really built for mid-sized and larger borrowers. If your business needs $50,000 or $100,000 of revolving headroom rather than half a million, an overdraft, ANZ's Flexible Facility, or ASB's smaller Commercial Flexible Finance Facility are the products actually built for that size — not the revolving credit facilities that lead with a six-figure minimum. A standalone line of credit from a non-bank lender, like ScotPac's, can also sit in that gap: ScotPac offers lines up to $200,000 based on monthly sales performance without requiring property security up to that level, with property or additional security required for larger facilities. If tying up property isn't an option, our piece on what invoice finance actually costs in NZ covers another way to fund working capital against your receivables rather than your house.

ANZ's Flexible Facility as the middle option

ANZ markets the Flexible Facility explicitly as sitting between the two more familiar products: more flexible than a term loan, and potentially more cost-effective than an overdraft. Mechanically it behaves like an overdraft — interest is calculated daily on the outstanding amount only, at a floating rate — but it's priced and secured more like a loan.

The fees are fully disclosed and worth working through on a real number. On a $50,000 facility: a flat $12.50 monthly account fee, plus a Monthly Overdraft Management fee of 0.50% p.a. of the highest agreed limit that month (roughly $20.83 a month on $50,000, though never less than $5), plus a one-off application fee of up to 1% of the facility amount, subject to a $250 minimum — so up to $500 on a $50,000 limit. Set against the plain ANZ overdraft on the same $50,000: an application fee of the greater of $75 or 1% ($500), and an ongoing management fee of 0.12% of the limit each month ($60/month, or roughly 1.44% annualised) — before either bank's actual interest rate, which again, isn't published for either product.

Reviews, and when the bank can pull the limit

Westpac says a facility's limit will be reviewed regularly to make sure it's still working for the business, and that you can arrange to reduce it yourself at any time — but doesn't set out a specific cadence, such as an annual review, or spell out the circumstances in which the bank itself can reduce or cancel the limit. BNZ discloses a review cycle for CreditPlus, but only for the interest rate, which it reviews quarterly in line with the market — that's a pricing review, not a statement about the limit itself.

None of the banks spell out on their public product pages exactly how the limit-side review works or what triggers a unilateral reduction. That's a genuine gap between the marketing page and the facility letter, and it's worth asking your relationship manager directly, in writing, before you sign — not something to assume either way from the website. It's also one of the more common reasons a facility that felt secure for years suddenly doesn't; our note on why business loan applications get declined touches on the same annual-review risk from the lending-criteria side.

When a term loan is the better answer

All of the above is built for a working capital gap that moves — money in, money out, a limit that revolves. A term loan is built for the opposite: a defined, one-off need. ASB positions its business loan for buying a commercial property or a business, delivered as a lump sum and typically repaid over a number of years, with the repayment frequency tailored to your cash flow rather than left open-ended. It can be secured with residential property, commercial property, cash or a mixture of these, and interest is charged on the outstanding balance as it reduces — a fundamentally different cost profile from a revolving limit you might only use for three weeks a month.

If you're financing a purchase with a known price and a sensible payback period, a term loan usually beats stretching a revolving facility to cover it — the repayment discipline is built in, and the rate is generally set for the term rather than reviewed against a floating base. If security is the sticking point rather than the structure, it's worth reading our guide to unsecured business loans in NZ before assuming property is unavoidable, and our note on what lenders actually look at before you apply for any of these.

Frequently Asked Questions

Is a business overdraft a good idea? It's the right tool for short, recurring cash flow gaps — covering a slow month, bridging between invoices — where you want to pay interest only on the days you're actually drawn. It's a poor tool for funding a purchase you know you'll be repaying for years; that's what a term loan is for.

How much can I overdraft my business account? Westpac and ASB both start limits as low as $500, with the maximum set by the bank's own credit lending criteria and your security. There's no fixed ceiling published — it's assessed file by file.

Do I need security for a business overdraft? It depends on the bank and the amount. ANZ and Westpac both describe security as something that "may" be required depending on the size of the limit; ASB explicitly offers an option with no set term or security needed. That changes completely once you move to a revolving credit facility or ANZ's Flexible Facility, where security — often a mortgage over residential property — is the norm rather than the exception.

What's actually different between an overdraft and a line of credit? An overdraft sits inside your everyday transaction account. A line of credit, as ScotPac's own product illustrates, is a standalone facility not tied to that account at all — funds redraw as you repay, and interest applies only to what's drawn, but it's assessed and secured as its own facility rather than an add-on to your banking relationship.

Why can't I just compare the interest rates online? Because none of the banks publish them. Every major bank overdraft, revolving credit product and ANZ's Flexible Facility is priced as a named base rate plus a margin confirmed only at application — the fees above are the only numbers you can actually compare before you apply.

Deplexifi works NZ business owners through exactly this comparison — overdraft, revolving credit, a flexible facility or a term loan — against the fees and security each bank actually requires, not just what the product page promises. Talk to us about your working capital before you sign anything.

None of the major NZ banks publish their actual overdraft, revolving credit or flexible-facility interest rate online — it's a named base rate plus an undisclosed margin confirmed only at application, so comparing products on published fees alone (or on a non-bank lender's marketing claim about "typical" bank rates) misses the number that actually matters

Nothing here is regulated financial advice. Deplexifi arranges commercial finance for businesses — this article describes general lending practice and the published position of the sources listed below, not a recommendation for any individual business.