What happens if I default on a business loan?

Last updated May 2026 · Reviewed by David Chen
Quick Answer

If you default on a business loan: the lender reports to business credit bureaus, your personal guarantee makes you personally liable, the lender may seize collateral or file UCC liens against assets, lawsuits can result in judgments and garnishment. Communicate with lender early — many will negotiate before default.

Key Details

  • Reported to business credit bureaus
  • Personal guarantee triggers personal liability
  • Collateral seized (equipment, inventory, etc.)
  • UCC liens filed against business assets
  • Lawsuits can result in judgments
  • Workout: negotiate before default
Answer by David Chen — Senior Business Funding Editor
12+ years in alternative lending. $200M+ underwritten.

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