Sole Trader Overdrafts
Arranged overdrafts can be ideal if you need to borrow a little extra money to tide you over every now and then.
Overdrafts are designed for short term borrowing, and they’ll cost you less if you pay them back quickly.
To be eligible to apply you must be 18+, a sole trader, and have a Monzo Business account. Ts&Cs apply.
Monzo Overdrafts
How does our overdraft compare?
Our Representative EAR is 39.0% (variable). Monzo does not apply charges for using your overdraft. The interest on your overdraft will be calculated daily on the overdrawn balance and added monthly. We offer three different rates of interest: 19.0%, 29.0%, or 39.0%. Most customers are offered 39.0%.
Limits of up to £2,000
Eligible sole traders could get an overdraft up to £2,000. This won’t apply to every business and we’re very careful about only giving sole traders what we’re confident they can safely afford to borrow.
We can only offer you one overdraft across both your Personal and Business accounts. We don’t offer overdrafts to limited companies.
You can change your limit and cancel your overdraft at any time from your app. If you want to do so you’ll need to pay the amount you borrowed back, plus any interest.
No extra fees
We won’t charge you any extra fees for going into your overdraft, and we’ll always tell you when you go into it.
What are EAR and APR?
EAR stands for effective annual rate. This is equivalent to the rate of interest you'll pay if you're overdrawn for a year. You'll pay interest on the amount you're overdrawn by, and on the interest that builds up from being overdrawn. So you'll pay less if you regularly pay off your overdraft. EAR doesn’t include other fees, like hidden or late fees – but we don’t charge these anyway.
APR stands for annual percentage rate. It is calculated in the same way as the EAR plus any additional fees (like hidden or late fees) but we don’t charge these anyway so our EAR and APR are the same.
Representative APR. You may see two types of interest, representative and personal. The representative rate is what we'd reasonably expect to offer at least 51% of people. By law, we have to show you this. But we'll always tell you the exact rate you'll pay, and what that means in pounds and pence, before you borrow from us. The rate you’re actually offered is your personal APR – this is usually based on things like your credit score.
You can use the calculator below to figure out how much you would pay depending on your personal rate.
Arranged and unarranged overdrafts
When you switch on an overdraft with Monzo Business that’s called an arranged overdraft. If you go over your arranged overdraft limit or you don’t have an arranged overdraft we’ll reject payments (for free), but there are some times when we can’t reject payments. We’ve explained how this works below.
If you go over your agreed overdraft limit
We’ll reject any payments that take you over your limit, and you won’t be able to take cash out. The only exceptions are ‘offline’ payments, like those you make to TfL (Transport for London). We can’t reject these, so you’ll go into an unarranged overdraft, but we’ll tell you as soon as this happens. We won’t charge you for unarranged usage, but you should pay this back as soon as possible. If you don’t, we may have to report that you’re in an unarranged overdraft to the credit reference agencies. This could make it harder to borrow later.
If you don’t have an arranged overdraft
If your account is empty, we’ll reject payments unless they’re payments as described. We won’t charge you for unarranged usage, but you should pay this back as soon as possible. If you don’t, we may have to report that you’re in an unarranged overdraft to the credit reference agencies. This could make it harder to borrow later.