POCKET GUIDE – POST MORATORIUM: WHAT CAN I DO WITH MY LOAN?

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Due to the severity of the COVID-19 outbreak in Malaysia, Government has extended a three-month moratorium starting from September 30, 2020, for those affected by the current pandemic (Bank Negara Malaysia, 2020). According to Bank Islam, approximately 10,000 applicants have applied for the moratorium extension. People, especially those who lost their jobs, have storm targeted institutions to extend their moratorium period. However, there are individuals and SME's who are still unaware of how to manage their financial commitment.

Thus, the financial institutions have taken the initiative to provide financial assistance such as financing/loan facilities and restructuring facilities in the form of Rescheduling and Restructuring (R & R) program to help small-medium enterprises ease their burden managing their finances.

What is Rescheduling and Restructuring (R&R)

Rescheduling is a process of extending or lengthening your financing or loan tenure without significantly changing the terms and conditions of your previous loan contract. This will result in a revision of payment instalment, which helps to lower your monthly commitments. For example, if your current monthly loan is RM700, you can lower your monthly loan payment to RM500 with the help of rescheduling throughout the extended period given.

On the other hand, restructuring is a modification of your loan contract's terms and conditions at a lower interest rate, with an example of converting overdraft facilities to terms loan. This will help to improve your current cash flow.

The banks have been engaging with customers regarding the relief measures in place. Here are some tips you should consider to obtain R&R successfully.

Tips to obtain Rescheduling and Restructuring

1. Ensuring business sustainability

• You need to convince the bank that your existing business model, plan, and strategies such as past audited account or management account are sustainable.
• Explicitly share your current/real problem to the bank as well as providing your mitigation or contingency plan to address your issues.

2. Cash Flow Management/Projection

• Providing your cash flow projection with supporting documents such as revenue forecast as proof that you are able to settle your current instalment.
• Another factor to consider is your future cash availability to determine the proposed monthly instalment.

3. Other considerations

• Any supporting evidence on settlement arrangement will prevent yourself from involving in any legal action by the bank.

Click here for more information regarding the Repayment Assistance Clinics:

• Bank Islam
• Maybank
• Public Bank
• RHB Bank
• Hong Leong Bank
• OCBC Bank
• CIMB Bank
• HSBC

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