Lloyds removes up-front fees for small business overdrafts
The changes will benefit businesses that only require occasional use of an overdraft
High street bank Lloyds has changed its approach to small business overdrafts, introducing a new structure designed to give business clients greater control over their finances.
For Lloyds Bank and Bank of Scotland business customers borrowing up to 5, 000, new overdrafts will follow a pay as you go? model, with a 10 monthly fee payable only if an overdraft facility is used within that month.
The new model sees the removal of up front arrangement fees for customers with a small business overdrafts limit of 5, 000 or less.
Lloyds is the first mainstream lender to offer this approach, which it hopes will be particularly helpful for those business customers that only require occasional or short-term use of overdrafts, to cover unexpected costs.
The bank has also introduced new pricing tiers for small business overdrafts for customers borrowing between 5, 000 and 25, 000, and for those borrowing more than 25, 000, as outlined below.
Borrowing limit
Rate
Fee
Up to 5, 000
9.75 per cent above Bank of England base rate
Usage fee (£10 p/m)
£5, 001 to 25, 000
9.75 per cent above Bank of England base rate
Annual fee (1.75 per cent)
£25, 000 or more
Price on application
Annual fee (price on application)
The new small business overdrafts will be available to Lloyds Bank and Bank of Scotland’s small business customers from 11 December 2017, both in branch, over the phone and online. Existing Lloyds customers will be moved across to the new product in 2018.
Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.
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