This is a very important question. One must try, at all times, to ensure they don’t default on any loan as it can have long-term repercussions on one’s credit history and thus, ability to seek further loans.

Honestly, there could be many reasons why one defaults on a business loan. Sometimes it could be just miscalculation, in most of the other cases it will be due to declining sales, sudden financial hardship or many other similar factors which will lead to have a struggle to repay debts. Defaulting on a loan is a very daunting feeling; it will lead to quite a lot of anxiety when debt collectors walk up to your door step to remind and to ensure that you make payments in a timely manner without defaulting.

The only saving grace in a situation like this is that the lender will start using your collateral assets instead of creating scenes at your door step unlike in other loans. But in this case, the safety of your assets is at risk.

You must know that there are multiple opportunities available if you are having trouble to repay your loan. It is best to avoid these situations than finding resolution for defaulted payments.

“Delinquency” is the term used by banks and NBFCs when borrowers make late payment on the outstanding loan amount. In most of the cases, banks will charge a fee on the late payment and will let go off the delinquency. Do note, however, that this is only in the scenario when late payments happen once in a while. But if you tend to keep delaying the payments often, then banks will start charging you more and more and will also add you to the list of “defaulters”.

Although in most cases, banks will categorize a borrower as defaulter only when there is delay of two weeks to make the payment. However, it is totally up to the discretion of the lender to decide when to term a borrower as a “defaulter”. While some banks consider you as defaulter right at the very first payment delay, other might give you couple of chances.

If you have missed too many loan repayment dates, then the intensity of the lender approaching you will go up. Banks have different way of approaching these delayed payments. Some will directly tag you as a defaulter, while others will appoint third-party collectors to collect money from you.