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What restructuring a loan means
Restructuring a business loan means formally amending the existing agreement with the lender's consent. Common changes include extending the repayment term to reduce monthly outgoings, switching from monthly to quarterly payments, agreeing a temporary payment holiday, or converting a portion of the outstanding balance to a different product. A restructure does not erase debt — it reorganises how and when it is repaid.
The lender must agree to any change. A unilateral decision by the borrower to pay less or pay later is a breach of contract, not a restructure.
Reasons lenders agree to restructure
A commercial lender generally prefers restructuring to default or enforcement. Enforcement — appointing receivers, liquidating assets — is costly, time-consuming, and uncertain. If the company can demonstrate that the business is viable but facing a temporary or structural cash flow challenge, most lenders will engage in restructure discussions rather than escalate.
The strongest position for a restructure request is one backed by up-to-date management accounts, a clear explanation of what has changed, and a realistic revised repayment proposal. Vague requests without supporting numbers are less likely to be approved quickly.
The restructure process
Contact your relationship manager or the lender's collections team in writing, setting out the request and the supporting rationale. The lender will typically request recent financial information — management accounts, bank statements, aged debtor lists — before agreeing any modification. Once terms are agreed, the change is documented in a formal variation agreement or deed of amendment, which both parties sign. Existing security generally remains in place; in some cases, the lender may request additional security as a condition of restructuring.
A restructure fee is common — typically a percentage of the outstanding balance or a flat administration charge. Factor this into your decision. See also What fees should I expect on a business loan?
Refinancing as an alternative
If the existing lender is unwilling to restructure, or the terms offered are unattractive, refinancing with a new lender is an alternative. This involves taking a new facility to repay the existing loan and restructuring the combined position under different terms. Early repayment charges on the existing facility must be weighed against any potential saving from the new arrangement. See Will I pay a charge to repay early? for ERC considerations.
Frequently asked questions
Does restructuring a loan damage the company's credit file?
A consensual restructure agreed before the loan enters formal default is generally recorded as a modification rather than a negative event. How it is reported depends on the lender and the credit reference agency. A restructure that follows a missed payment or default notice is more likely to carry a negative marker. Acting early — before the account falls into arrears — significantly reduces credit file risk.
Can I restructure more than once?
There is no automatic limit, but repeated restructures signal increasing credit risk to the lender. Each request will be assessed on its merits. A lender that has already restructured a facility once and is asked again within a short period will scrutinise the request more carefully and may impose stricter conditions or additional security.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.