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Bank Withdrew My Overdraft Facility

A bank usually removes an overdraft from a company if the bank is worried about the company’s ability to repay the money. If banks believe you remain a risk, they therefore will want to take precautions to protect themselves from any possible loss.

Bank Withdrew My Overdraft Facility – Why?

Please take a moment to think about your recent account activity. If you frequently exceed your overdraft limit, what consequences exist? Are their credits regularly made into the business account? All these factors remain mportant for your business manager to monitor to gauge performance and risk.

The timing of the withdrawal of an overdraft facility couldn’t be worse for businesses already struggling. So, if you continuously depend on your overdraft, and then suddenly withdrawn. Sourcing extra cash to repay an overdraft can be difficult for a small business. A lack of extra cash flow may cause the business to miss payments, eventually leading to its closure. Not having a credit buffer can worsen the situation by preventing inventory and supply purchases.

How can HBG Advisory help if the bank withdraws my overdraft?

An overdraft remains classified as an unsecured debt, meaning it can be included in any debt solution. We can draw up a bespoke proposal, such as an Individual Voluntary Arrangemen (IVA) or Debt Management Plan DMP, and present it to your creditors.. We have a good track record of creating debt solution proposals accepted by creditors, such as business banks.

How can an IVA help if my business overdraft facility has been withdrawn?

An IVA is an agreement to pay off debts over a set period. This can lower monthly payments on unsecured debt, such as an overdraft. Meaning the bank stops making demands for immediate repayment. Moving forward,reduced monthly outgoings can mean that cash flow improves, leaving money to purchase stock and supplies. An IVA usually lasts five years, so you can plan your finances with certainty. 

Your sole trader business will be allowed to continue trading, so not also hit with a loss of income.

How Can A DMP Help If Bank Withdrew My Overdraft Facility

Similar to an IVA, we can negotiate with your creditors to accept a DMP proposal, which would reduce your monthly repayments until your financial situation was improved. 

The key difference between an IVA and DMP i- no set time period for a DMP, and no debt written off. 

Therefore, a DMP lets you keep up with repayments after a time of reduced payments.

Do other options exist?

The bank ,however, may accept a reduced amount of the total debt as a Full and Final Settlement.However you could apply for bankruptcy, or if you have very little assets or disposable income, you could apply for a Debt Relief Order. If you declare bankruptcy or obtain a Debt Relief Order, your debts will be written off after twelve months. However, it is likely that you would also need to close your sole trader business.

Bounce Back Loan advice for Company Directors

Directors should seek professional advice if they have Bounce Back Loan worries regarding repayments. The UK government introduced the COVID-19 support scheme to support businesses through the pandemic. However, repaying the loans has been difficult. So ensure you seek advice sooner than later.
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