You get a business loan when the cash was tight and you planned to repay it soon, but suddenly you start falling behind the loan payments. Or perhaps it isn’t expected you’ll be able to get tied up on those loan payments shortly. Non-payment of a loan can have serious impacts on your business whether it’s a traditional loan or a business loan from an alternative lender.
Every lender has different procedures for a non-payment. Some lenders act as you fail to pay one payment and some wait few weeks or months. As soon as you start falling behind, lenders will start contacting and the communication turns antagonistic as the time passes. After a month goes by, a lender may perhaps contact the credit bureaus, which will cause a drop in your credit score.
Business Loans Scenario
In case of a secured loan, if you default on payments lender can possibly hold on to your provided collateral. For lenders, recouping the loan and interest is usually made by seizing the collateral. Merchant Advisors is the only flagship platform that doesn’t require collateral for a small business loan. This means your personal property and personal assets are safe while borrowing.
In case of an unsecured loan, if you default on payments lenders start adding increasing rate of interest and fees. The loan might be assigned to the collection agency If it is considered default. If the collection agency is unable to recover a loan, the matter is usually taken to the court. The major impact is on the borrower’s credit score which will seize him to acquire working capital in the future.
Business Cash Advance Scenario
In case of Business Cash Advance funding, if the repayment is an excess baggage, you can discuss the lender for fairer terms. If there’s a business closure, the payments end as there are no future receivables to collect from the borrower.
How To Avoid A Loan Default?
Once you are aware of your financial situation, work proactively and discuss with your lender before the position get worse. Every lender goal is to be repaid even if it takes much time to recover the loan. A lender may be willing to prearrange a payment plan that works with your finances. Another better option is to get a business credit line from an alternative lender like Merchant Advisors to fulfill your cash flow needs.
What If You Default on Merchant Advisors Loan?
At Merchant Advisors, we have a team of dedicated financial advisors with years of experience in the financial industry to get you the innovative financial solutions. We all know we have to repay the loan in full, however if you have a financial hiccup; we can help scrutinize your financial condition and get you a financial solution in form of a financial relief. After you realize you are in financial trauma, it’s best to discuss experts like us to avoid any collection agency pursuit.
Non-payment of a loan will have severe impacts on your credit score and your chances of securing credit in the future. Practicing effective money management can helps in meeting all your debts in a timely manner. If you work proactively, you can save yourself without hurting your current credit standings. The most important aspect when reviewing different loan options is to assess the likelihood of non-payment, and how you will cope with it before signing a contract.