What happens if I can’t repay my business loan?

If you are having difficulty meeting the repayments on a business loan, the first thing you should do is talk to the lender. You will often find them willing to help you out if you explain your circumstances. Options could include restructuring the loan over a longer term to reduce the payments or even providing a short repayment holiday during which you will only need to cover the interest.

Should the situation be more serious, the lender could start to commence default procedures. There will normally be a series of letters in the lead up to this so the lender's action shouldn't come as a surprise when it happens. The lender will firstly transfer the debt to its specialist recoveries department who will try and find an alternative way for you to repay your loan. If this fails, they have the option of formally calling up the loan and proceeding to realise any security. The courts and/or a receiver could become involved at this point if steps are needed to realise security or wind your business up.

If you have a loan that you can't repay, we recommend seeking professional advice from an accountant or insolvency practitioner at the earliest stage. Very difficult situations can be resolved if the right advice is taken early enough.

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