Borrowers typically make their loan repayments on the due date and at times, the next day. This is the nature of the SME environment where cash is managed to the day. In exceptional situations, loan repayments may be made before the due date.
When a loan repayment is not made on the due date, Minterest will actively engage the borrower to encourage them to make the payment as soon as possible. There are a number of reasons why a loan repayment may not be made on the due date. The main causes are as follows:
Late repayments due to technicalities
These situations typically arise when a debt repayment date falls a non-banking day or the day immediately after a non-banking day. As a result, cheques or bank instructions are not processed on those days resulting in funds not being cleared in time for repayment into Participating Members’ wallet. Generally, a couple of working days delay will be encountered. We do not consider this to be a late payment for purposes of the Platform Terms.
Late repayments due to delayed receipts of accounts receivables
There may be times when a borrower’s debt repayment is predicated on the receipt of account receivables from a customer. Sometimes, the delay could be a couple of days. At times, this could be longer. Where debt repayments are made within a few working days (typically, 5 working days) of the scheduled repayment date, we do not consider this as a late payment. Beyond that, the borrower will be considered to have entered into the 1st Grace Period where late fees are imposed on the borrower and interest continues to be charged.
Late repayments due to poor business performance
Our loans are often to small and medium sized companies. There will be times when business performance of a borrower takes a hit due to various factors, including a weakening economy, school holidays or festivals. This may result in a borrower delaying repaying its debts for a period of time. In such circumstances, late fees and late interest will be imposed.
What does the Platform Terms say when a borrower is late in making its debt repayments?
At Minterest, we understand the various challenges faced by small and medium sized enterprises. Our priority is to ensure that debt payments are made on time and our portfolio management team keeps track of upcoming repayments with active borrower engagement on such matters. However, we also recognise that there will be situations where debt repayments cannot be made on time. In summary, our Platform Terms provide for 3 possible grace periods for debt repayments to be made. The late fees imposed increases from the 1st to the 3rd grace periods. You may wish to read and understand the specific terms governing late payments. These terms can be found in paragraph 11, Appendix 3 (Loan Terms) at page 33. Click here to read the Platform Terms.
Participating Members’ Updates from Minterest
Minterest will update Participating Members when a loan repayment is late and have entered into its 1st Grace Period. Members will be informed when such an update takes place and can download the document from their Dashboard. Further updates will be provided when there is a development in respect of the late payment e.g. the repayment was made and Participating Members’ wallet have been credited with funds. Otherwise, an update will be provided if the repayment goes into its 2nd Grace Period and so on.