Defaulting on a business loan can have serious consequences for your business and personal finances. When you default on a loan, you are essentially failing to make the agreed-upon payments as outlined in your loan agreement. This can result in several negative consequences, including:
- Damage to your credit score: When you default on a business loan, it can negatively impact your credit score. This can make it more difficult to obtain future financing and may result in higher interest rates.
- Legal action: Lenders may take legal action against you to recover the money owed, which can result in costly legal fees and court costs.
- Seizure of collateral: If your business loan was secured by collateral, such as equipment or property, the lender may seize that collateral to satisfy the outstanding debt.
- Personal liability: If you signed a personal guarantee for the loan, you may be personally liable for the outstanding debt, which can impact your personal finances and credit score.
Unexpected circumstances can sometimes make it difficult to make loan payments. That's one of the reasons why choosing the right lender is critical. The right lender is a partner who should be able to work with you to modify your loan terms or create a repayment plan that works for your business. Contact us today to learn more.
