We are looking at offering overdraft privilege on our business accounts. Does anyone else off it to their business accounts? If not, why? Is there any reason that we shouldn't offer it to them?
Thanks.

If not, why? Is there any reason that we shouldn't offer it to them?

Without a corporate borrowing resolution you will never collect and you could be sued for advancing funds without one. If a business needs overdraft coverage, give them a credit line.

The "business," corporation, partnership, LLC, sole proprietorship?

If the latter, it's an individual account just like any other; the owner probably isn't any smarter about handling his business account than he is about handling his personal account.

An overdraft is a loan. Hopefully, your bank doesn't make loans to an entity without doing some reading first; things like resolutions, operating agreements, bylaws, pesky stuff like that. As suggested, if the entity is creditworthy, give it a backup line of credit for the checking account. Your bank will miss out on the opportunity to really give them the shaft with egregious fees, but you will also avoid the potential for meeting a customer who understands you simply had no right to make the loan without following processes that vary from one entity to the next based on documentation.

Would this same answer hold true even if we routinely obtain a deposit resolution at account opening that says named individual(s) have authority to open the deposit account and execute any and all documents necessary for such, and one of those necessary documents is a deposit contract that states the entity will be liable for repayment of any overdrafts incurred?

I'm curious because we've always allowed commercial accounts of all ownership types to be paid into the overdraft at the account officer's discretion, but are just now working on rolling out an automated ODP product and are reviewing which account types should be eligible.

Thanks!

One size fits all when you are contracting with individuals. You can have one adhesion contract and use it for all of them.

Legal entities are unique; e.g. our LLC's operating agreement says all members must sign for any loan in excess of $10K. If you fail to get all of those signatures, but make the loan anyway, the loan is unenforceable against the company.

So Ken, in your example, a subsequently dated LLC resolution authorizing you (alone) to execute loan documents would be ineffective? Just trying to wrap my head around this. Thanks for your help!