Missing a payment is stressful, and not knowing what happens next makes it worse. So here is the honest, step-by-step version — what we charge, what we do not, and how to stop it early. The short answer: there is no penalty spiral, and talking to us is always the best move.
1. The payment doesn't arrive
If a scheduled payment fails — most often a Direct Debit that bounces — we will let you know. A failed Direct Debit on its own is common and fixable; see what happens if my Direct Debit fails. The best thing you can do at this stage is contact us, ideally before the due date if you already know it will be tight.
2. A single late fee may apply — and nothing compounds
If a payment is genuinely missed, a single late fee may be added for that missed payment. Crucially, that is it: there is no penalty-rate uplift, and interest does not jump or compound because you fell behind. Default interest, where it applies, is charged at the same headline rate as the normal loan and stops once the balance is cleared. See will I be charged a fee if I miss a payment for the detail.
3. The 100% cost cap still protects you
No matter what happens with missed payments, the total cost of a single loan is capped at 100% of what you borrowed. You will never repay more than double the amount borrowed on one loan — the cap holds through arrears, not just when everything goes to plan. This is deliberate: many high-cost lenders let default charges balloon past the principal, and we do not.
4. We try to agree a plan, not escalate
If a payment is missed and stays unpaid, we will try to reach you to understand what is going on and agree a way forward. We would much rather set up a repayment arrangement than let an account drift into deeper arrears. If your difficulty is more than a one-off, an arrangement or a hardship variation can reshape the payments around what the business can manage.
5. Extra protection if you have told us you need care
If you have told us you need extra support, that changes how we behave: we will not pass your account to a third-party debt collector while the flag is active, and freezes and reduced-payment plans become available without the usual checks. See how to tell us you need extra support.
The one thing that always helps
Tell us early. Asking for help, or telling us a payment will be late, is not reported to credit reference agencies as a default, and there is no penalty just for asking. Persistent arrears can be reported against the company to business credit reference agencies, which is one more reason to sort it out early. Free, independent advice is available from Business Debtline (0800 197 6026). Start any of this from our Forms & Requests page.