Banks ready to help borrowers

PETALING JAYA: Borrowers affected by the Covid-19 pandemic are preparing to tighten their pockets ahead of the loan moratorium which will cease at the end of this month.

While many of them have approached the banks for loan restructuring and rescheduling, those who are not qualified for an extension of the moratorium have been taking on additional work to stay afloat without resorting to borrowing from illegal moneylenders.

One such person is a businessman who wanted to be known as Adam.

Having owned several cafes and sports bars in Kuala Lumpur and Johor Baru with two other partners, the 42-year-old had no choice but to close down all three of his bars in June.

“Had I kept the business, I would still not be able to open.

“As for my three cafes in Kuala Lumpur, Seremban and Johor Baru, I had to diversify the business by offering more choices focusing on delivery instead of dine-in,” he said.

He noted that a loan that was taken to expand his sports bars earlier could not qualify for a moratorium extension because his business was no longer operational.

“When the automatic moratorium ends, I will have to service the monthly instalments as usual.

“But I have approached the bank to reschedule another loan for the cafe business,” he said, adding that the process was not cumbersome and he managed to lower his monthly payment by half.

Having gone through the ordeal of borrowing money from illegal moneylenders during his early years in business, Adam advised affected borrowers not to repeat his mistake.

“From my experience, banks have been helpful to individuals and businesses seeking a lifeline.

“Approach them and work out a win-win solution. Going to the ah long never helps,” he added.

Former writer Leman Abdullah, 43, who was recently retrenched, said he did the right thing by approaching the bank early last month to sort out his loan repayment.

“After showing the bank all the relevant documents and letters, I managed to lower my monthly instalment by 50%, which is a huge relief for me as I am welcoming my firstborn in two months,” he said.

Leman, who is now freelancing and is also an e-hailing driver, said he was hopeful of landing a more secure job soon.

“For now, I will just take on more jobs to make sure I still have an income,” he said, adding that his income has dropped by 60%.

Financial consultant and tax expert Koong Lin Loong said of the estimated RM100bil loan moratorium given by banks, 65% involved individual borrowers with a majority of them being housing and hire purchase loans.

“To qualify for the extension, there are criteria to fulfil for both individuals and businesses.

“As long as they can show proof that they have been affected, banks will help. The banks have also simplified the process and documentation to make it easy for borrowers,” he said, adding that borrowers who feel they were mistreated should complain to Bank Negara Malaysia.

Koong urged borrowers to never go to “loan sharks” and should act fast to discuss their issue with their banks.

“They should work out a cash flow budget for the coming three to six months so that they know their financial position; whether there is a cash flow gap and which area to reduce expenses,” he added.

Financial planner Rajen Devadason said new terms of repayment needed to be ironed out, ideally, well before Sept 23 to minimise the likelihood of unpaid loans becoming delinquent.

“Furthermore, many Malaysians seem to think that the extension of the moratorium from Oct 1 to Dec 31 is automatic.

“It isn’t. It is highly selective and is only available to individuals and businesses that can show a dramatic loss or drop of income or revenue during this pandemic,” he said.

Devadason, who is the CEO of a corporate mentoring consultancy, said borrowers should practice discipline and be budget-centric in managing their finances.

Citing his example of a 72% drop in his personal monthly active income compared with February, he said he too needs to work harder in the coming year to rebuild his income levels.

He called on Malaysians to always be prepared “for the next crisis” by building emergency buffer funds, reserve funds; investing funds beyond buffering needs diversely and be “allergic to debt even when the interest rates are low”.

“We need to take personal responsibility for our economic future,” he added.