Late payments could result in consequences such as late fees, penalty interest rates or even repossession of collateral. The specific penalties would be detailed in your closing paperwork, so make sure you closely read this section prior to signing. The contract will also detail what happens if you default on your business loan. If your business survives the loan default, your business’s credit score could be damaged. If the lender required you to personally guarantee the business loan, your personal assets and credit score may be affected as well.
If any questions arise, or you don’t agree with a fee or penalty, the closing process is the time to stop and look for another lender. After you sign, you have agreed to everything in the contract — including what happens when you make late payments or default. Do your research before the closing process and compare business lenders to ensure that you’re getting the most cost-efficient terms.