A default is a more serious stage than a single late payment. It is reached when the conditions in your agreement for default are met — typically sustained non-payment or a breach of the agreement that is not resolved after we have tried to reach you.
Costs that can follow a default
- Continued accrual of interest or charges on the outstanding balance, on the basis your agreement sets out.
- Reasonable costs of recovering what is owed, where your agreement allows for them.
- The full outstanding balance may become due, depending on the terms.
What we do first
Default is not where we want to be. Before that point we will have contacted you, explained the position and looked for a workable way forward. Defaulting is a last resort, used when there is no engagement or no realistic route back.
How to avoid it
Engage early and stay in contact. A company that talks to us about a cash-flow problem almost always has more options than one that goes quiet. If circumstances have changed, tell us.
Context that matters
The facility is to your company, with no personal guarantee from directors, so default is dealt with at the company level. This is exempt business lending outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply — but recovery is handled fairly and within the agreement.
See also: What happens, step by step, if a payment is missed?, Will my company be charged for applying? and Arrears (glossary).