Defaulting on a Business Loan?

Getting a business loan for a dental practice is not an easy process. Those who manage to secure one need to be aware of the consequences of making late payments.

When they fail to meet their contractual obligations, such as missing loan payments or violating specific loan agreement terms, they are considered to be in default. This condition is outlined in the contract, so there’s no going back.

Following is how the lender proceeds when a default is triggered:

Communicating with the Borrower

If a business is struggling to meet loan obligations, it’s crucial to communicate with the lender as soon as possible. Hire remote bookkeeping services or an online bookkeeping service to find out how much you are spending and where. Some lenders may be willing to negotiate new terms or offer temporary relief.

Usually, when a business owner makes a late loan payment, the lender sends them an email and talks to them to find out what caused the delay.

Demand for Full Repayment

If the borrower misses several payments, the lender has the right to demand full repayment of the outstanding balance. This means the entire loan amount, including interest, becomes due immediately.

From here onwards, the lender adds predefined fees, such as attorney fees, collection fees, and a few other charges that are outlined in the agreement.

Seizing the Asset

Depending on the terms of the loan agreement, the lender may have the right to seize the business assets that were used as collateral for the loan. This could include property, equipment, or other valuable assets.

Taking Legal Action

Lenders have the option to take legal action to recover the outstanding debt. This may involve a lawsuit against the business, and the court could issue a judgment requiring debt repayment.

In some cases, the lender might settle with the business owner outside the court for a defined amount.

In conclusion, defaulting on a business loan means losing the dental practice that you worked so hard to establish. If you are having trouble managing your loan, contact Dental Bookkeeping for financial planning. To learn more about our virtual bookkeeping services, visit our website or call (720) 727-1105 to talk to an advisor.

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