Bank calling in a Business Loan

Finding the perfect solution when a bank calls in a business loan: Know your options

As the director of a business facing a bank’s decision to recall a commercial loan, you might be curious about their reasons for sacrificing interest income. 

Additionally, this action likely places your company in a financially vulnerable position, leaving you with unanswered questions. 

How can you quickly gather the funds to settle the remaining principal? 

If you already had the money, you wouldn’t have needed the loan in the first place, would you?

The insolvency specialists at Vanguard Insolvency can assist you in comprehending the reasons behind banks recalling loans while providing solutions that could potentially rescue your business. 

If you’re concerned about formal insolvency processes, there’s a solution to your worries. Allow us to assist you in discovering the best option tailored to your requirements.

If your bank has recalled a business loan, you’re likely wondering the reasons behind their decision, especially considering the interest they’ve been profiting from. Additionally, you may be questioning whether the company can withstand such a significant financial demand.

Settling a commercial loan entirely and with minimal notice puts immense pressure on you as a director and can raise doubts about your company’s future. Unfortunately, this scenario is commonplace, and it’s one we have considerable experience in handling.

Our specialists at Vanguard Insolvency can explain why banks are recalling business loans, even in cases where borrowers haven’t defaulted on payments. 

Most importantly, we can outline the steps you can take to address the situation and avert business closure.

What is the new regulatory framework for lenders? 

After the economic downturn of 2008, banking practices came under intense regulatory scrutiny, prompting the Basel Committee on Banking Supervision to implement new strategies aimed at enhancing transparency and more effectively managing risk.

An international regulatory framework was established, encompassing Basel I, Basel II, and Basel III, which introduced standards that banks must comply with within specified deadlines. The assessment of banks’ ability to withstand the impact of a financial crisis was emphasised, with significant attention given to capital and liquidity.

Why are banks more frequently recalling commercial loans?

The rise in the required amount of liquid capital for financial institutions, as mandated by Basel III, has prompted banks to scrutinise companies they’ve financed more closely for signs of financial distress.

This extends beyond identifying late payments or defaults; banking institutions are monitoring business accounts overall for indications of distress, categorising certain loans as bad debts, and subsequently recalling them to enhance their liquidity and comply with the new requirements.

How might this impact your business?

The new regulatory requirements on banks and other major lending institutions put UK businesses at risk of insolvency if a commercial loan is recalled. 

Bank lending is vital for numerous businesses, and its withdrawal can severely limit growth. However, being granted a loan only to have it withdrawn creates significant financial strain that is hard to overcome

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Seek professional assistance if the bank has called in your loan

Seeking professional insolvency assistance helps clarify your options and offers a fresh perspective on the situation. Vanguard Insolvency is comprised of insolvency specialists with vast experience across various industries.

Firstly, we will review the terms and conditions of the original loan contract to verify the legality of the bank’s actions in recalling the loan. 

It’s important to note that certain banks may be open to negotiating a settlement for less than the total outstanding amount. Our licensed insolvency practitioners at Vanguard Insolvency have a track record of successfully negotiating settlements with lenders for over 20 years.

To learn more about what steps to take if your bank has recalled a loan, please get in touch with one of our team members to schedule a free same-day consultation. We operate extensively across the UK and can provide professional support no matter where you are situated.

David Jackson MD
Senior Partner at Vanguard Insolvency Practitioners | Website

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.