How do you classify a loan as being doubtful and what is the next course of action taken against me, the Issuer (SME)?

How do you classify a loan as being doubtful and what is the next course of action taken against me, the Issuer (SME)?

A note is considered doubtful if an Issuer does not make any repayment for a period of 120 consecutive days or more and/or when the Personal Guarantor(s) of the Promissory Note has been declared a bankrupt.

Technically, an event of default may be considered if an issuer fails to repay on due date under section 9 of the Investors’ and Issuers’ Standard Terms on Conditions to Promissory Note.

The broad definition of what constitutes a default event is structured such that investors hold the rights to take effective measures against an errant Issuer, if the need arises. This is to enforce expectations of prompt repayment by issuers and legally safeguard the interest of investors.

As provided in the same Terms and Conditions, in our sole and absolute discretion, both investors and issuers authorize us to take remedial actions as may be deemed appropriate. This enables a more efficient and effective management of recovery and collection efforts for the benefit of investors.

In our management of the recovery process, we are guided by the principle to optimize the interests of investors towards having their funds successfully repaid, premised upon values of pragmatism, assertiveness and results oriented.

A note will move into 'doubtful' classification from on the 120 days and/or outstanding credit facility is questionable and the prospect of a loss is high.

‘Doubtful’ is a classification status applied when a note has not paid for 120 days, while ‘default’  is an event, as opposed to a status.

The value of outstanding amounts owed in notes that are in ‘doubtful’ and ‘loss’ statuses are used to compute the default rate.

MoolahSense may initiate legal actions (e.g. bankruptcy application against the Personal Guarantor(s), winding up application against the Business) against you and/or your Business to recover the monies owed to the affected Investors.

MoolahSense shall also report the event to the credit bureaus which will be detrimental to the business’s credit standing. Financial indicators on the MoolahSense Dashboard (privately accessible to investors) will be adjusted accordingly as well to reflect the status of the business.