A default occurs when a lender decides to formally default and terminate the loan contract because you have missed payments, or breached the loan contract in another way. This could happen to an account you have with a bank, mobile phone company or utility supplier as well as any personal or business loans. A default can occur regardless of how much money you owe, and the reasons for default can vary depending on the lender’s terms.
As Funding Circle is a platform that matches businesses with investors, you hold a contract with the investors that funded your loan. This contract sets out that we may default a loan if it falls four full payments in arrears (i.e. 90 days late from the date of your first missed repayment), or if other terms of our loan contract have been breached. However, we are able to default the loan earlier than 90 days if we believe it is in the best interests of investors to do so. Defaulting a loan is always a last resort for us, as it will adversely affect the business’ credit rating.