What if my overdraft never goes back to zero?
An overdraft that never clears is usually a sign the facility is funding something structural rather than a short timing gap. Lenders read it the same way. The limit was designed to swing between zero and the cap across a trading cycle, so sitting hard against it month after month tends to get noticed. It rarely causes an immediate problem. It does shape what happens at the next annual review.
What a hardcore balance signals
Lenders look at the low point of your overdraft across a year, not the average. If the balance never drops below a certain level, that portion is effectively a term loan sitting inside a revolving facility. Common causes are stock that keeps growing, debtors stretching out, a loss carried from an earlier year or drawings taken ahead of profit. None of those are fixed by a bigger limit. At review a lender may ask you to term out the hardcore portion, reduce the limit or explain how the balance comes down.
How to sort the structure out
Work out what the money is actually funding first, then match the facility to it. Stock and debtors often suit invoice finance or a dedicated stock line, which frees the overdraft for genuine timing swings. A permanent working capital need can be termed out over a few years so it amortises rather than sitting there. Your accountant is the right person to help pin down where the cash has gone. Doing this before the lender raises it at review usually leaves you with better options and a shorter conversation.
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Last updated 15th July 2026. Reviewed by Authorised Credit Representative 554584 of Australian Credit Licence 414426.