How do deferred repayments differ from reduced instalments?

Question

Accepted Answer

Deferred Repayments Versus Reduced Instalments for SMEs

As of September 25, 35,000 small and medium enterprises (SMEs) had applied for loan repayment assistance, with 99 per cent of these bank-processed applications being approved. Of the approved applications, approximately half were for deferred repayments and the other half were for reduced monthly instalments.
Understanding Deferred Repayments

Deferred repayments, as offered by banking institutions to SMEs, involve postponing the repayment of loan instalments for a specified period. While the exact terms and conditions, such as the duration of the deferral and whether interest accrues during this period, are determined by individual banks and the specific loan agreements, the core concept is a temporary suspension of payment obligations. This allows businesses facing financial difficulties to gain breathing room without immediately defaulting on their loans.
Understanding Reduced Instalments

Reduced instalments, on the other hand, involve lowering the amount of the regular monthly loan payment. This adjustment typically aims to make the ongoing repayments more manageable for the SME's current cash flow. The mechanism for this reduction can vary, potentially impacting the overall loan term and the total interest paid over the life of the loan. Banks work with SMEs to tailor these arrangements based on their specific financial circumstances and the viability of their businesses.
Bank's Role in Providing Assistance

Banking institutions, in collaboration with Bank Negara Malaysia (BNM) and the Credit Counselling and Debt Management Agency (AKPK), have been actively engaging with SMEs to offer various forms of loan repayment assistance. This includes reaching out to businesses to understand their challenges and providing tailored solutions. As of September 25, a significant number of applications, 34,650 out of 35,000, were approved, indicating a high rate of support for viable SMEs seeking to navigate the economic impact of the pandemic.
Continued Availability of Support

The automatic loan moratorium expired on September 30, 2020, but financial institutions continue to offer loan repayment assistance to SMEs that require it. SMEs are encouraged to contact their respective banks to discuss their financial situations and explore available options, whether it be deferring payments or restructuring their monthly instalments. This ongoing support aims to help viable businesses manage their debt obligations during this challenging period.

Reading history

Hide →

This history is cleared when the page is closed.

How do deferred repayments differ from reduced instalments?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends