What if I can’t repay my business loan?

2 min read

Talk earlyBest outcomes come from early contact

Company debtNo personal guarantee with Credicorp

Tell your lender before you miss a payment

The worst thing you can do is go quiet. Lenders deal with cash-flow wobbles constantly, and a director who gets in touch early is treated very differently from one who simply stops paying. If you can see a problem coming — a late-paying customer, a seasonal dip, an unexpected cost — raise it before the due date. At that point a lender can usually offer practical options: a short deferral, a temporary reduction, or a longer term with smaller instalments. Waiting until you are already in arrears narrows what can realistically be arranged.

Understand what late or missed payments cost

A missed payment normally triggers additional interest or a late-payment charge, and continued arrears increase the total you owe over time. The specifics are set out in your loan agreement, so read it and ask your lender to confirm the figures for your situation. The point is simple: the cost of a missed payment is almost always higher than the cost of arranging a plan in advance. For more detail, see what happens if you repay late.

What a company-only loan means for you personally

Credicorp lends to the limited company, not to you as an individual, and we do not take a personal guarantee. That matters most when things are difficult: the debt sits with the company, so your home and personal savings are not security for the loan. This is genuinely protective, but it does not make the debt disappear — the company still owes the money, and a director must still act responsibly. If the company is solvent but stretched, a sensible repayment plan is the route. See borrowing without a personal guarantee.

If the company can’t recover

Sometimes the underlying problem is bigger than a single loan. If the company is no longer viable, you have duties as a director and should take advice early — from your accountant or a licensed insolvency practitioner — rather than trading on in difficulty. A lender will engage with a formal process if one becomes necessary. The earlier you seek proper advice, the more control you keep over the outcome. See what happens to a business loan if the company closes.

Frequently asked questions

Will I lose my house if my company can’t repay?

Not on a Credicorp loan, because we lend to the limited company without a personal guarantee, so your home is not security for the debt. The position can differ where another lender has taken a personal guarantee, so always check the specific agreement.

Can I get a payment holiday?

Often yes, if you ask early and the company’s situation supports it. A short deferral or a temporary reduction is a common arrangement, but it has to be agreed with the lender in advance rather than taken unilaterally.

Does missing a payment affect future borrowing?

Arrears can affect how lenders view the company in future, which is another reason to agree a plan rather than default. A managed, communicated arrangement looks far better on the record than a silent missed payment.