One of our creative lenders wants to know if they can attach overdraft protection on a commercial demand deposit account. We offer a credit line protection on consumer accounts and they want to offer this for commercial customers. Is anyone doing this? Realizing any commercial signer would have the ability to advance funds to pay checks, what are your thoughts and ideas. Thanks!

Overdraft Protection is often setup as a consumer product and covered as such. Problems with this are that it is not secured and a higher rate of interest normally applies. Whereas, by using a Commercial Line of Credit, a lower rate (which is what a commercial customer like to hear) is available and possibly collateralized as well.

Thanks for all users who replied, i sent this twice by mistake. In regards to your viewpoint of charging interest, our lenders would want a competitive rate, they want to use this as opposed to overdrawing an account and having to manually prepare an advance for our loan operations department to process on a daily basis. The concept is to try to automate the process.