Overdraft Line of Credit
	An overdraft line of credit differs greatly from a traditional line of credit in that this not a credit facility that you can draw down on your own free will. This type of business line of credit is geared specifically and is tied to the usage of your checking account. Recent legislation has changed so that customers are now required to give explicit consent when you apply for an overdraft line of credit. Prior to the passing of this new legislation, banks and other depository institutions could automatically enroll you in this service without having to provide you with information that relates to traditional financing vehicles. However, the fees associated with an overdraft line of credit in the past were very expensive. Usually, short term interest rates that equaled several hundred percent were applied to purchases that overdrew the checking account. However, usage of these credit facilities is less common among businesses than it is for individual usage (i.e..personal checking accounts). Now, you must directly apply for an overdraft line of credit when you open a new business checking account. However, there really is no need for this type of protection as you should be closely monitoring your bank account and cash flow at all times. Again, this is especially true if you operate a capital intensive business that requires near constant cash flow and/or treasury management. The costs relating to having an overdraft line of credit can be very expensive. Again, despite the recent changes in regulations regarding overdraft protection, banks still have the right to levy fees (on a per transaction basis) in addition to very high interest rates on any outstanding balance. Additionally, having a negatively drawn bank account can also add to the already expensive fees and interest that you are paying against the drawn down principal of an overdraft line of credit. Many banks charge fees to customers that have checking accounts with negative balances. If you have ongoing capital needs – it is in your best interest to apply for a traditional business LOC or line of credit rather than seeking overdraft lines of credit or similar backstop protection for your checking out. Additionally, economists have recently pointed out that an overdraft line of credit is an indication that a business may be in financial trouble and as such – a successful business may have issues securing traditional debt in the future if a loan officer sees that a business has overdraft protection in place. Essentially, it provides a signal to the bank that the business does not have effective procedures in place for appropriate treasury management.
	Below are a number of articles that you can read that will assist you in obtaining a business LOC:
	Business LOC vs. Business Loan Securing a Business LOC Do You Need a Business Plan to get a Credit Line? How has the Economy Affected People's Ability to get Credit? Unique Business LOC Types Property Rehab Loans and Lines of Credit What is a Warehouse Line of Credit? Businesses Best Suited for a Business LOC Alternatives to Business Credit Facilites Using Personal Credit Cards Instead of Business LOC The Mechanics of a Business Loan The Mechanics of a Business Line of Credit Importance of Establishing a Business Line of Credit Using a Business LOC for Startup Capital Questions That Will Be Asked By Your Banker The Importance of Personal Credit When Obtaining a Business LOC What is an SBA Backed Business Line of Credit? Determining How Much You Can Borrow Through A Business LOC How a Business Line of Credit Should Be Used Comparing Offers from Banks for Business Lines of Credit Business LOC and the Concept of Leverage Secured Vs. Unsecured Business Line of Credit Using a Business Loan/Credit Line Brokerage Repayment of a Business LOC Commonly Used Terms in Lending Using a Small Bank to Obtain a Business Line of Credit New Business Line of Credit Business Revolving Line of Credit Overdraft Line of Credit Small Business Lines of Credit Accounts Receivable Backed Lines of Credit