Default is a formal step taken only after arrears have built up and gone unaddressed, despite attempts to reach the borrower. It is not automatic.
In practice
Default marks a serious escalation, but it comes only after we have tried to contact a company and agree a way forward. Because the loan is to the company with no personal guarantee, a default sits against the business, not the director personally. Engaging with us and keeping to an arrangement is what keeps a company out of default.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: What does default mean on a business loan?, The difference between arrears and default, What recovery steps can we take, and in what order?.