Both overdrafts and business loans are financial tools that help businesses manage cash flow, fund operations, and support growth. While they serve different purposes, they are integral to a company's financial strategy. An overdraft is a short-term financing option that allows businesses to withdraw more money from their bank account than is currently available, up to an agreed limit. A business loan is a lump sum of money provided by a lender to a business, which must be repaid with interest over a specified period.