What happens if I can’t repay my loan?
Here at Let’s Do Business Finance, we understand that life can be stressful and that sometimes business loan repayments can become difficult to manage. Unexpected events such as changes in revenue, rising operational costs, or unforeseen expenses can place pressure on even the most carefully planned budgets. While falling behind on repayments can lead to complications, there are practical steps you can take to address the situation before it escalates.
Reasons businesses might struggle to repay their loan
Running a small business comes with its unique set of challenges, and sometimes, despite the best efforts, meeting loan repayments can become difficult. Recognising the common causes of repayment struggles can help you take proactive steps to address them:
Fluctuating Revenue: Unlike salaried employment, business income can vary. Seasonal downturns, unexpected market shifts, or delayed payments from clients can impact your cash flow, making it harder to meet repayment deadlines.
Unforeseen Expenses: Businesses often face unexpected costs, such as urgent repairs, equipment replacements, or compliance-related expenses. These unforeseen outlays can divert funds intended for loan repayments.
Rising Operational Costs: Increases in expenses like utilities, rent, or raw materials can erode profit margins, leaving less available to service debt.
Overextension of Credit: Taking on multiple loans or credit lines without a clear repayment strategy can lead to financial strain, especially if business performance doesn't align with projections.
Limited Time for Financial Administration: Many business owners are deeply involved in day-to-day operations and customer delivery, leaving little time for financial management. Tasks such as invoicing, reconciling accounts, or monitoring cash flow can be delayed or overlooked when time is tight.
Lack of Cash Flow Oversight: Without a clear and up-to-date picture of your finances, it can be difficult to plan or spot potential repayment issues early. Falling behind with invoicing or delaying payment chasing can quickly create a backlog, putting pressure on cash flow and making it harder to meet financial commitments.
“Sometimes businesses miss repayments because of an unexpected expense or emergency. When that happens, it’s important that you get in touch with us, so that we can work together to put you at ease. We’ll figure out a plan for repayment - what’s important is contact at an early stage between you and your lender. ”
If you recognise any of these signs in your business, it may be a good time to review your financial processes - such as invoicing, budgeting, and cash flow monitoring to spot potential issues early. Our team can help you explore practical ways to strengthen your financial management and plan with confidence, so don’t hesitate to get in touch to see how we can support you.
What to do if I can’t meet a business loan repayment:
If you think you might miss a repayment, the most important step is to let us know as soon as possible. Our lending team can discuss your situation, look at your repayment plan, and work with you to find a fair solution. Acting early gives us more options to help you avoid long-term issues.
In addition to speaking with us, there are several well-established organisations offering free, confidential, and impartial advice:
StepChange Debt Charity – One of the UK’s largest debt advice charities, offering practical debt management solutions, budgeting tools, and one-to-one advice to help you regain control of your finances.
Money Advice Trust – A national charity helping people and small businesses tackle debt through expert advice and resources.
National Debtline – Provides free telephone and online support for individuals struggling with personal debt, including how to deal with creditors and prioritise payments.
Business Debtline – Specialises in helping small business owners and self-employed people address business-related debt, offering tailored advice on cash flow, repayment planning, and negotiating with creditors.
By contacting these services early, you can get a clear picture of your options, understand your rights, and take informed steps to protect both your business and personal finances.
What Happens If I Default on Your Loan Payments?
At Let’s Do Business Finance, we follow standard market practices while taking a fair and reasonable approach to repayment difficulties.
If you miss a repayment, our first step will always be to contact you to understand the reasons behind the missed payment. From there, we’ll work with you to agree on a fair and practical plan to get things back on track. This agreement will then be confirmed in writing by email and/or letter, detailing the missed payment(s) and the steps required to resolve the situation.
If we’re unable to reach you after repeated attempts, or we cannot agree on a suitable repayment plan, we may need to take further action to recover the outstanding balance. This could include applying for a County Court Judgment (CCJ) or referring your account to an approved Debt Collection Agent.
The key point is that early, open communication gives us the best chance to work together and find a solution before things escalate.
What Happens If I Do Not Respond or Continue to Miss Payments?
If we’re unable to contact you after repeated attempts, or if you don’t stick to an agreed repayment plan, the situation may escalate. This could result in:
Applying for a County Court Judgment (CCJ): A legal ruling that you owe the money, which can impact your credit rating and future borrowing ability.
Referring your case to an approved Debt Collection Agent: An external agency that will work to recover the outstanding debt.
Ignoring the situation will not make it go away and can limit your options. The sooner you speak to us; the more choices we’ll have to resolve things fairly.
It’s important to know that missing a payment doesn’t mean legal action will happen immediately.
The first step is always to talk to us so we can understand your situation and work with you to find a solution.
By reaching out early, you can explore practical options, create a manageable plan, and get the support you need. With the right guidance, many businesses navigate temporary challenges successfully and continue to grow with confidence.