SMEs Should Seek Advice From Banks Before Moratorium Ends

The Association of Banks in Malaysia (ABM) has advised small and medium enterprises (SMEs) and those who are facing problems in repaying their loans once the moratorium expires on Sept 30, 2020 to consult with and seek guidance from their banks.

ABM's representative, Mohd Zaini Aris stated that the borrowers must prepare a strong loan repayment strategy from now to lessen their burden of obligation and to aggravate loan repayment failure.

“Borrowers must be prepared in terms of financial and mental obligation and must not wait to seek advice from their banks. If they are not prepared they might face difficulty in preparing the documentation (needed) to discuss with banks as it takes times,” he said.

On Rescheduling and Restructuring (R&R) of loans, Mohd Zaini, who is also Malayan Banking Bhd (Maybank) head of consumer finance, said the goal is to assist borrowers to resume their businesses.

“More often than not banks will try to help if the track record is good and the business is still running. As long as there is no legal action taken, they will try to help but subject to eligibility,” he said.

Mohd Zaini disregarded the public opinion that it is hard to get new loans once one undertakes an R&R. He said for performing loans, R&R would not affect the Central Credit Reference Information System (CCRIS) as they would be regularised and restructured.

ABM has urged SMEs facing difficulties in repaying their loans once the moratorium ends on Sept 30 to seek advice from their banks

Though for non-performing loans, once the loans were restructured, a six-month observation term would be used before the CCRIS were untagged, he said.

“Borrowers should not fear to discuss with their banks and must look into the long term. Even if R&R being rejected, we still have many ways to help our customers and will look into it on a case-by-case (basis) and not across the board.

“Come and talk to us as we could advise the best way to manage your cash flow so that you could plan the best way to move forward,” Mohd Zaini said.

Association of Bumiputera Women in Business and Profession (Peniagawati) president Datuk Azlin Ahmad Shaharbi said many micro and SMEs were hit by the Movement Control Order (MCO). She said the staggered opening of businesses had made it challenging for businessmen to apply for R&R and state their case.

“To succeed in R&R there must be sustainability and cash flow. But logically, for entrepreneurs they cannot answer these two questions because there are still uncertainties at the moment,” she said.

Azlin said Peniagawati expected that banks would be able to make a comprehensive evaluation in order to help micro-entrepreneurs and SMEs facing loan repayment difficulties once the moratorium period ends.

She described the MCO implementation to contain the pandemic as a wake-up call for all entrepreneurs who were not serious with business documentation and good governance.

“Many had missed the benefits such as loans and grants under PRIHATIN (Prihatin Rakyat Economic Stimulus Package) as they were not registered with the Inland Revenue Board of Malaysia and Social Security Organisation (SOCSO).

“It is good that we learned our lesson the hard way. But as we are going in the right direction towards becoming a developed nation, we cannot be having entrepreneurs who cannot even furnish banks with financial documents. We need to go on to educate them together,” she said.

She also urged banks to consider postponing legal suits for the time to assist entrepreneurs who were having a difficult time.

“We also hope that the Covid-19 Act could come (into force) and give temporary relief to those affected by the pandemic and cannot fulfil their contracts. That would help a lot,” she said.

Until June 19, 2020, the value of moratorium on repayment of loans to financial institutions under the Prihatin package was estimated at RM47.5 billion. Of the amount, RM16.6 billion was made use of by the business sector, while RM30.9 billion was utilised by the rakyat through financing facilities that qualified for the moratorium.

Source: Malay Mail

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