As you are aware, Funding Societies takes credit assessment and defaults very seriously. To us, safe growth is more important than fast growth. This is evident from our default rate of 1.8% (as of June 2016), which is much lower than that of comparable platforms. It is a principle shared by our Board of Directors, management and team.
Our principle was put to test a few weeks ago. The loan SB-1605024 for S$300,000 was creditworthy and fully subscribed by investors. The borrower has millions in revenue, excellent margin and overall good profile. Typical before disbursement, we conducted a second check and found that a new credit litigation for S$ 150,000 has been filed against the borrower in the span of days. Should we disburse the loan?
After a serious deliberation, we decided to cancel the loan and release the committed funds back to investors. It was a costly decision. However, as the clearance of litigation takes time, the borrower’s creditworthiness might quickly change. We believe it was the right thing to do but are terribly sorry to our investors for the idle funds and inconvenience caused.
To our surprise, we received numerous positive responses:
“Thank you, I am impressed with your diligence in this matter.”
“Thanks for the update. I am glad that there is an existing process for secondary check prior to disbursement of fund. Much appreciated that you also took the difficult decision to cancel a fully funded facility in order to protect investors’interest.”
“Thanks for keeping [us] informed. Appreciate your proactive step to verify borrower and stop the disbursement.”
“Team FS, thank you for update. Better be safe than sorry; so far FS approach is working… Keep it up!”
We would like to extend our gratitude to all the investors who have been so appreciative of the extra miles we’ve gone for investor protection.
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