In the SME landscape, it is not uncommon for delays in repayments which could be due to many factors. While delays don't necessarily mean default, we still take measures to pursue any missed instalments to ensure these are repaid to investors the soonest possible.
Late interest charges:
All borrowers are given 7 days grace period from the date the repayment is due. If the borrower fails to make the full repayment within 7 calendar days, a late interest of 0.1% of the outstanding principal per day (from due date) is applied and distributed back to investors for the delay. We also charge a late penalty fee to deter borrowers from paying any later than 7 days from the due date.
E.g. You invest $1,000 at 12% p.a. into a 4 month loan, due on 1st of the month but the borrower only repays on the 12th of the month, you will receive $250 in principal, $10 in interest and $2.75 in late interest (0.1% x 11 days x $250)
How we collect it:
For term loans, all borrowers must complete a General Interbank Recurring Order (GIRO) form, which is set up to debit the monthly instalments directly from their operational business bank account either on the 1st or the 15th of the month, depending on the due date of each term loan. For invoice financing, GIRO is not used.
If a GIRO deduction fails and no alternative payment is received by the due date, our Account Managers and/or Credit Officers will contact the borrower on the next business day to inform that the GIRO did not go through and to make arrangements to pay by cheque or do a bank transfer instead.
If no payments are received in the following 7 days grace period from the due date, we will commence our collections process. We don't publish the details of our collections process, so that the borrower is kept uninformed and to preserve our collections efforts. However, we do provide periodic repayment updates on our website. You can access this on the "Portfolio" tab and scroll down to "Loan Details". On the right most column you will see "Notes", and just click on the icon to see the most updated Repayment Notes.
In some cases, we ask the borrower for bank statements, contracts and purchase orders to verify the borrower's incoming and outgoing funds or future receivables that can justify any extension given for payment, or sometimes break down the instalment into smaller, weekly payments.
Most borrowers pay on time, with a handful that face delays but are cooperative and ensure that the outstanding amounts are settled as soon as possible.
In very rare cases where the borrowers are facing serious financial difficulties, or have been uncooperative in committing to a repayment plan, we may assign the loan to a debt collector to pursue the amounts owed with a firmer stance. Debt collectors will visit both the business premises and the residences of the personal guarantors to issue Notices of Collections and follow up with persistent phone calls.
While we understand the challenges that SME business owners face and how that can affect their ability to repay on time, we remain committed to ensuring that investors receive all repayments as timely as possible.
If all else fails, we will execute recourse on your behalf.