Secured Bank Overdraft Clause Samples

A Secured Bank Overdraft clause establishes the terms under which a borrower may access funds from a bank in excess of their account balance, with the overdraft being backed by specific collateral. Typically, this clause outlines the maximum overdraft limit, the nature of the security provided (such as inventory, receivables, or other assets), and the conditions for repayment and interest. Its core practical function is to provide the lender with assurance of repayment by securing the overdraft against assets, thereby reducing the bank's risk and enabling the borrower to access flexible short-term financing.