The following applies to each bank account for which you have requested and we have approved a Small Business Overdraft:
Small Business Overdraft Fees and Interest
A monthly administration fee is charged for each bank account that is approved for a Small Business Overdraft. The current monthly fee is $9.50, and is subject to change by CIBC. This fee is charged whether or not you use the overdraft in any particular month and is in addition to any other charges or fees.
Interest is charged on the amount of your overdraft, up to the approved overdraft limit for the account, based on the interest rate specified in your agreement with CIBC. Current interest rates (subject to credit approval) are as follows:
- Canadian dollar borrowings - CIBC Prime Rate11 +0.5% per year
- U.S. dollar borrowings - CIBC U.S. Base Rate12 +0.5% per year
- Canadian dollar borrowings - CIBC Prime Rate11 +5% per year
- U.S. dollar borrowings - CIBC U.S. Base Rate12 +5% per year
There are two types of overdrafts, secured and unsecured. For a secured Small Business Overdraft, either you or a guarantor may pledge a cash equivalent as security. To do so, you or the guarantor must sign CIBC’s standard Securities Pledge Agreement (in Quebec: a moveable hypothec). Costs incurred by CIBC with respect to the pledge will be charged to you or the guarantor.
How overdraft interest is calculated
Interest on your Small Business Overdraft is calculated based on the final daily overdraft balance in your account (up to the approved limit for that account) and charged monthly. Any overdraft balance in excess of your approved Small Business Overdraft limit will be charged interest as indicated under “CIBC Discretionary Business Overdraft” below. Interest that is charged to you, and is unpaid, compounds monthly and continues to compound whether or not CIBC has demanded payment from you, starts a legal action or gets judgment against you.