A business loan write-off happens when a lender, like a bank, decides that a business debt is unlikely to be repaid and removes it from their records as a loss. This typically occurs after prolonged non-payment by the business despite efforts to collect. While the debt is no longer actively pursued by the lender, the business remains responsible for it. This can adversely affect the business’s financial health and credit rating, and it may still face attempts from collection agencies to recover the debt.