Knowledge base · Factoring · 6 minuten · 9 Sep 2026

An alternative to a bank overdraft facility

Your overdraft facility is fully drawn and the bank will not raise the limit. For many SMEs that is where the search begins. This article puts the three working capital forms from SOOF Finance alongside an overdraft facility and shows where the headroom comes from in each case.

A thin letter from the bank beside a far thicker stack of unpaid invoices

What an overdraft facility does

An overdraft facility is credit headroom on your business account. You may go into debit up to an agreed limit and pay interest on the amount drawn.

As an instrument it is strong. You use it only when you need it, and you do not have to submit anything for it.

The bank also remains the largest source of finance for SMEs. As at March 2026, banks in the Netherlands had around 340 billion euros outstanding to Dutch businesses, with just under half of that with SMEs.¹

The limit is the sticking point. The bank sets it on your position at the time of application: your balance sheet, your security and your track record.

Why the ceiling bites exactly when you grow

An overdraft is a fixed number in a moving business. If your turnover grows, your working capital need grows with it. The limit does not.

Then comes a new application, a new assessment and often new security. At precisely the moment you want to accelerate, you stand still.

There is a second problem that draws less attention. With an overdraft the bank usually takes a pledge over your receivables and your stock.

Those assets are then taken, even when you are not using the headroom in full. What that means for additional finance is set out in what is a pledge.

Factoring: headroom tied to your invoicing

Factoring links your funding headroom to your receivables book rather than to a limit set in the past.

You submit your invoice once you have delivered to your client. SOOF advances the percentage set out in your agreement, and the remainder follows as soon as your client has paid.

Invoice more and the available headroom moves with it. Within the agreed conditions, because each debtor carries a limit and the advance rate is fixed.

The comparison with bank credit on cost and flexibility is worked through in factoring or bank credit.

Inventory finance: headroom sitting in your warehouse

If your money is not in your receivables but in your stock, factoring is not the answer. Inventory finance frees up the capital standing still in your warehouse.

The headroom is set on the assessed value of your stock and the percentage from your agreement. You submit stock lists periodically, not daily.

Your stock position does not have to be run down for it. How that works day to day is set out in inventory finance in practice.

Business loan: freeing up your security first

Often the real problem is not the ceiling but the pledge underneath it. As long as your receivables and stock sit with the bank, another financier can do nothing with them.

A business loan from SOOF funds the buy-out of the bank. That releases those pledges so you can put them to work for finance that does move with you.

That process is precision work, with several parties and a fixed order. SOOF coordinates it and keeps control, so that you do not end up in the middle.

It is rarely all or nothing

You do not have to cancel your overdraft to create headroom. In practice bank facilities often stay in place alongside working capital finance.

The pledge is then redistributed between your bank and your financier. That takes coordination, and the coordination is the real work.

The market widening is visible in the figures too. At the three large banks, outstanding SME credit fell by 0.7 billion euros in 2024, while SME finance through Dutch fintechs grew by 27 per cent in the same year, to 3.2 billion euros.²

What it comes down to

An overdraft facility suits you as long as your need stays inside the limit. If your need moves with turnover, season or stock, you run into a fixed ceiling.

So do not start with the product. Start with the question of where your capital is locked up: in your invoices, in your warehouse, or behind a pledge that blocks everything. That trade-off is set out in which type of finance fits you.

Sources

De Nederlandsche Bank, Bijna helft van bedrijfsleningen naar mkb, rente ligt iets hoger, 13 May 2026.
De Nederlandsche Bank, Financiering via Nederlandse fintechs in drie jaar tijd meer dan verdubbeld, 6 October 2025.

About the author

Jaap van Aalst

Commercieel directeur, SOOF Finance

Jaap van Aalst started his first business almost thirty years ago, in staffing and secondment. That is where he saw for himself how many opportunities are lost when money sits too long in unpaid invoices.

Around eighteen years ago he moved into the factoring world, as commercial director. Since then he has sat across the table from countless business owners and seen at first hand what financing questions look like in practice. He looks further than the balance sheet: what the business does, where the opportunities are, and which form of finance genuinely moves it forward.

That is also the basis of his work at SOOF Finance. His starting point is simple: finance is not an end in itself, but a means by which a good entrepreneur delivers on their plans.

Ask your question

Frequently asked questions

No. Bank facilities and working capital finance often sit alongside each other. The pledge is then redistributed between your bank and your financier, and SOOF Finance coordinates that.

Yes. That is a common situation. SOOF takes over the existing pledge, after which factoring or inventory finance becomes possible after all.

No. The headroom moves with your receivables book or your stock value, within the advance rate and the debtor limits set out in your agreement.