Delinquency: Before a business loan falls into default, it is typically considered delinquent. Delinquency occurs when you miss a payment. The exact time frame for delinquency can vary, but it often happens after just one missed payment. Some lenders may offer a grace period during which you can avoid late fees by making a payment
Default: If you continue to miss payments, your loan may eventually fall into default. Generally, this occurs after you’ve missed multiple payments, such as three to six months’ worth. When a loan is in default, the lender will take steps to collect the debt. Consequences of default can include losing collateral (if the loan is secured) and potentially facing bankruptcy
Remember that communication with your lender is crucial. If you’re having trouble making payments, reach out to discuss options and avoid defaulting on your business loan.
