Compare two reusable facilities

Business overdraft versus line of credit in New Zealand

Compare how a business overdraft and business line of credit can support recurring New Zealand working-capital needs.

Start with how the business uses cash

If the operating account regularly moves above and below zero, an overdraft may feel natural. If the business wants to separate funded projects or draw only when needed, a standalone line of credit may offer clearer tracking.

Neither should become permanent hidden debt. Set rules for when the facility can be used and how each draw will be cleared.

Compare access and control

Ask whether limits are reviewed, how repayments restore availability, whether the account can be frozen and what information is required to keep the facility open. These operational details affect usefulness during a busy period.

A term loan may be clearer for one known purchase because it provides a fixed amount and schedule. Reusable credit is most valuable when the need genuinely repeats.

Use a forecast to set the limit

Map expected receipts and expenses by week and find the lowest projected balance. Add a measured buffer for realistic delays rather than choosing the largest limit available.

Review facility use after each cycle. If the balance never reduces, the business may need a longer-term structure or an operating change rather than more revolving debt.

Helpful New Zealand resources

These primary sources support the general finance and legal information in this guide. Product contracts and individual circumstances still determine the actual outcome.

Information reviewed 11 September 2026.

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