Overdraft, Credit Lines, and Account Credit Limits in Kazakhstan: What They Are and How They Differ

Both individuals and entrepreneurs may face situations where they lack sufficient personal funds for specific needs — for example, purchasing home appliances or raw materials for production. In such cases, the optimal solution is to apply for a bank loan. However, alongside standard loan products, banks in Kazakhstan also offer tools such as an overdraft, a credit line, and an account credit limit.

What Is an Overdraft for Businesses and Individuals in Kazakhstan?

Simply put, an overdraft is a form of short-term lending.

Understanding Overdrafts

The word *overdraft* comes from English and literally means “overspending,” which reflects the concept: it refers to funds a bank provides to the borrower in excess of the current account balance. For example, an overdraft allows a business to make ongoing payments, and individuals to make purchases, even when there are insufficient funds in the account. For businesses, this tool helps replenish working capital — ensuring timely salary payments, tax obligations, settlements with suppliers, and more. In other words, overdraft funds allow the company to operate steadily even when experiencing a temporary cash shortfall.

To apply for an overdraft at Bank CenterCredit, entrepreneurs need only a minimal set of documents. No collateral is required, and early repayment can be made without penalties. The overdraft amount may not exceed 40% of the company’s average monthly income, and the financing period is 28 days. Overdrafts are available in both KZT and USD. Note that Bank CenterCredit charges two types of fees: the first is a one-time setup fee — 0.35% for medium and large businesses, and 0.5% for individual entrepreneurs and small businesses; the second is an annual renewal fee of 0.5%.

How Is an Overdraft Different from a Loan?

Although an overdraft is a type of credit, it differs significantly from standard loan products:

1. Term.

Conventional loans are typically long-term (up to 2–3 years or more). Overdrafts are much shorter in duration — usually, the debt must be repaid within one month (maximum — two months).

2. Repayment method.

When taking out a loan, the borrower receives a repayment schedule and must make regular payments accordingly. With an overdraft, the amount is debited automatically on the due date, as per a fixed schedule — saving the borrower time.

3. Amount.

Loans allow borrowers to access substantial amounts (up to KZT 500,000,000). Overdrafts are much smaller — typically ranging from 40% to 70% of the average monthly account inflows. But the purpose is different: overdrafts are intended to cover immediate, short-term needs rather than large-scale business investments.

4. Interest.

With a loan, interest is charged on the entire borrowed amount. With an overdraft, interest is charged only on the portion of the funds that the borrower actually spends.

5. Application process.

Standard loans usually require a large package of documents and often collateral or a guarantor. Overdrafts, on the other hand, can be arranged once with minimal documentation — no guarantor or collateral required.

These differences make overdrafts a more accessible and cost-effective financing option due to their flexible interest structure and simplified application process.

Do Not Confuse It: What Is Overnight Lending?

An overdraft should not be confused with the similar-sounding term "overnight" (from English *overnight* — "for the night"). This is a type of loan where a company borrows money from a bank for a very short period (e.g., overnight or over the weekend) and then repays it with interest. This kind of lending is ideal when there’s an urgent need to make a payment — for example, settling with a supplier.

Credit Lines: Revolving and Non-Revolving

Businesses can also meet their financial needs through a credit line (CL). In this case, the borrower opens a credit line once and can receive loans in portions (called tranches) throughout the term of the credit line. The total amount is limited by the credit limit stated in the agreement.

There are several types of credit lines, but in corporate lending, the most common are revolving and non-revolving credit lines.

What Is a Revolving Credit Line (RCL)?

A revolving credit line allows the borrower to reuse the same limit multiple times. Suppose a business owner has KZT 50 million available — they spend part of it and then repay the debt. At the beginning of a new period, the full KZT 50 million becomes available again — this is how an RCL works.

Such programs are usually non-targeted, meaning the entrepreneur can address various needs related to working capital, such as purchasing raw materials or paying salaries.

How to Open a Revolving Credit Line for Business

You can open a revolving credit line for business to replenish working capital at Bank CenterCredit. Only a minimal set of documents is required to apply. Bank specialists review applications quickly, and a tranche within an active credit line can be issued in just 30 minutes. To speed up the process, we conduct a simplified financial analysis.

The loan amount can reach up to KZT 500,000,000, and tranches can be issued in tenge, US dollars, or euros. The maximum term of a tranche is 18 months, and the overall credit line can last up to 84 months.

When opening a credit line with a disbursement limit, Bank CenterCredit charges no fee for application review and offers a minimal arrangement fee of 0.5% of the loan amount.

What Is a Non-Revolving Credit Line (NRCL)?

In simple terms, a non-revolving credit line (NRCL) is a form of financing where the borrower can use the loan only once or in parts. Once the limit is reached, it is not renewed. This type of line is typically used for long-term business investment goals, where the funds are utilized according to a specific schedule.

For example, a business owner has KZT 50 million in loan funds. In one period, they spend KZT 20 million to purchase a building. The remaining KZT 30 million will be used later for renovations, in portions, until the full credit amount is used. Once the line is fully spent, access to the NRCL is closed.

NRCL vs. RCL

Revolving credit lines are ideal for regularly recurring needs, while non-revolving credit lines (NRCL) are more suitable for one-time projects. For example, a business owner may need to purchase equipment once, repay the loan, and no longer require access to the credit line.

Credit Limit for an Account (CLA): What Is It?

In addition to overdrafts and credit lines, entrepreneurs can also consider using a credit limit for an account (CLA) from Bank CenterCredit. This financing option is ideal for covering short-term business needs, such as temporary cash flow gaps. The loan term does not exceed 30 days, and the limit can be as high as KZT 250,000,000. Moreover, the limit can be reviewed monthly. Another advantage is the minimal documentation required.

Key benefits of the CLA include:

1. Like an overdraft, it is an unsecured product.
2. It can be issued in just 20 minutes without the need for financial documents.
3. The limit is available 24/7, and no repayment schedules need to be signed in the mobile app.
4. Welcome limits of up to KZT 1 million are available to new clients.

Applying for a CLA is simple: you need to open an account with Bank CenterCredit (this can be done at a branch, through the mobile app, or via internet banking) and sign the agreement at a bank office. You can then manage your borrowed funds via the bcc business mobile app — a convenient and time-saving solution.

If you no longer plan to use borrowed funds, the credit limit with Bank CenterCredit should be closed. To do this, visit a bank office and submit a closure request.

These financial instruments help businesses maintain operational stability during periods of temporary financial shortage. All products can be issued quickly and offer high limits, enabling you to effectively cover urgent needs.

This article has been translated from its original language using neural network-based translation technology.