Defaults Classifications

Understanding the probability of Notes Recovery

Melissa avatar
Written by Melissa
Updated over a week ago

The business landscape is often times unpredictable. Delays in receivables, loss of revenue and other factors that may be outside of the Issuer’s control can result in delays in payments and even defaults. By communicating the status of defaulted Notes (especially the ones in recovery), investors will know that a default doesn’t mean a complete loss of their investment and that there are chances of recovery of their defaulted principal.

As such we are pleased to announce a new attribute to better help Investors filter and classify their Defaulted Notes according to their status. Thus, also allowing Investors to track how much of their money is recoverable and how much isn't.

The Dashboard section will display the new term as follows:

For better understanding on the terms used, please find the following explanation:


All investments, where Funding Societies did not receive full principal and returns payments, are deemed as defaults unless otherwise stated. We define defaults as:

  • Any investment payment that is more than 90 days past due for Business Term Financing, or

  • Any payment that is more than 60 days past due for Accounts Receivable Financing & Accounts Payable Financing

In Recovery:

The Issuers of the Defaulted Note under recovery are usually still contactable and operational. Defaults are considered under-recovery when;

  • Any Default that is currently undergoing an internal or external collections process, and/or in a legal process

  • Any Note that has passed through a legal process and Funding Societies has been awarded judgment for payments.

“In Recovery” status means that our team is still trying to recover the debt and are of the opinion that there is still a chance to recover (partially or fully). However, the success of the recovery of debt is still not guaranteed.

Low or No Recovery:

Default - Low or No Recovery is set when Funding Societies is no longer actively pursuing collections or legal efforts, or those efforts are prolonged with a low or uncertain chance of recovery due to:

  • Company and/or personal guarantor(s) being wound up, or declared bankrupt

  • The outstanding amount does not warrant the cost of continued efforts, as there is a low chance of recovery and/or the outstanding amount is insignificant

  • Settlements, where the agreed settlement amount with SME is less than the supposed payments from SME, resulting in unrecovered residual outstanding balance amount after settlement (e.g. Settlement through recorded consent judgment)

  • Prolonged legal action or long term restructuring where recovery is low or uncertain

What is Funding Societies default rate?

Our default rate is published in our Statistics page

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