In the case of default, the asset securing the loan would be repossessed and either sold or re-leased if it was under a lease contract.
Our default procedures are detailed within our procedures and explained in the terms and conditions. However, we do take a more holistic approach to defaults than may be prevalent at other platforms.
Where an asset can be repossessed and sold to cover the loan outstanding we will do so. However, when lending to small business there can be situations where other approaches are taken.
We will always act in the best interests of lenders and in some cases moving immediately to legal action and repossession would impact the lender from a timing point of view (i.e where interest payments are not being made) and a costs perspective (administration costs are paid out of recovered funds).
In circumstances where we believe that an alternative approach to administration is best for lenders, we will look to work with the business in the first instance to either extend or restructure the loan. If restructuring is not possible (i.e where the company would still not be able to service the loan) then Ablrate will evaluate alternative routes. These can include (but are not limited to);
When a loan is restructured you are able to sell your loans in the secondary market if you do not want to see out the term of the loan (subject to demand from other lenders).
In all circumstances, we will evaluate the best outcome and report this to lenders, execute the plan and report back during the process. This has resulted in a high recovery rate for defaulted loans.
It is important to remember that lending money to businesses is risky and your capital and future interest payments are at risk. Security from charges over assets reduces the risk to a certain extent but it does not guarantee the return of your capital.