FAQs on the Bayanihan Act, Payment Extension, & Interest Application

Learn more about our answers to questions regarding the Bayanihan Act, Payment Extension, and Interest Application. Updated: May 14, 2020

How does Section 4 (aa) of the Republic Act No. 11469, otherwise known as the Bayanihan toHeal as One Act (the “Bayanihan Act”), affect my loans with First Circle?

The Bayanihan Act states that financing companies, banks, and other financing institutions are required to give their borrowers a mandatory payment extension of thirty (30) days from the due date of the loan (the “Payment Extension”), if such due date falls during the Enhanced Community Quarantine (March 17 to May 31, or as may be extended) (the “ECQ Period”).

Which loans are qualified for the Payment Extension?

The Payment Extension is applicable to all loans that fall due during the ECQ Period, including overdue loans, loans under rescheduling programs, and loans governed by compromise agreements.

How does the Payment Extension work at First Circle?

The payment date of any of your loans with First Circle will be moved to 30 days later. For example, if your loan is due on 18 March 2020, your new payment date will be 18 April 2020. If your loan was overdue before the ECQ Period and you arranged for a rescheduled payment date for 29 March 2020, your new payment date will be 29 April 2020.

How do I avail myself of the Payment Extension?

You don’t need to do anything. The Payment Extension is automatically granted to you under the Bayanihan Act. We may reach out to you to confirm if you want the Payment Extension to applyto one, some or all of your loans with us. You can also contact us if you want to pay one, someor all of your loans at any time, even during the ECQ Period.

Are you allowed to charge interest during the Payment Extension?

The Bayanihan Act states that the Payment Extension will be granted to borrowers without incurring interests, penalties, fees or other charges.

However, the Bangko Sentral ng Pilipinas (BSP) clarified in the Implementing Rules and Regulations (the “IRR”) of the Bayanihan Act that financial institutions shall not charge interest on interest, fees, and other charges during the Payment Extension, but interest may be accrued and paid by the Borrower either as bullet payment or staggered throughout the life of the loan.

The Securities and Exchange Commission (SEC) made the same interpretation in its issuances. Therefore, as clarified by both BSP and SEC, the law prohibits only interest on interest, late fees,and other charges during the Payment Extension. But simple interest may still be charged andaccrued, payable after the Payment Extension.

Is the Payment Extension interest-free?

Only some days of the Payment Extension are interest-free. First Circle gave its customers an interest-free Payment Extension up to the 1​st​ extension of the ECQ Period, or from 17 March 2020 until 30 April 2020. Loans unpaid after 30 April 2020 will begin to earn interest on 1 May 2020, whether or not these loans are on their first or second extension, as applicable.

How much interest will I be charged now?

Beginning on 1 May 2020, loan(s) under Payment Extension shall earn interest at the rate indicated in their individual loan contracts. For example, if your original due date was 18 March 2020 and it was moved to 18 April 2020, that whole period will be interest-free. Since 18 April 2020 still falls within the ECQ Period, it will be moved again to 18 May 2020. With the further extension of the ECQ Period in Metro Manila until 31 May 2020, your payment date will be moved once more to 18 June 2020.

The period from May 1 to June 18 will earn interest in accordance with your loan contract, but you can opt to pay earlier to avoid incurring interest.

To know the interest rate applicable to your particular loan, please check your copy of the loan contract sent to your registered email account. You may also reach out to your Relationship Manager or our Customer Support Team through ​support@firstcircle.com​ for further assistance.

Why is First Circle charging some customers some interest during the Payment Extension?

We want to offer as much flexibility to the customer as possible in these difficult times, which is why we are offering all our customers multiple repayment options and have extended payment due dates for as long as possible. However, we too have obligations to our stakeholders and employees  and are trying our best to support all our SME customers despite the lockdown.

Will my loan(s) earn late fees and other charges during the Payment Extension?

No. The law prohibits the imposition of these amounts.

The ECQ Period was extended twice. What happens if it is extended again?

You will be given a fresh period of 30 days from your previous payment date for each loan.

I want to pay my loan(s) now to avoid incurring interest. What should I do?

We crafted flexible payment options to make it easier for you to manage your cash flow against your outstanding obligations. Contact your Relationship Manager or get in touch with our Customer Support Team through ​support@firstcircle.com​ if you want to discuss these options.

What happens if my Payment Extension expires?

If your loan is not paid on your new payment date (the end of your Payment Extension) and the ECQ Period is not extended further, each outstanding loan will incur late fees and interest in accordance with your loan contract.

Sources

(1) SEC Notice on the Extension of the Mandatory Grace Period for Loans during the Extended Enhanced Community Quarantine Period, 29 April 2020.  View the source here.

(2) Republic Act No. 11469, otherwise known as the Bayanihan to Heal as One Act. View the source here.

(3) BSP IRR dated 1 April 2020. View the source here.

(4) SEC FAQ dated 23 April 2020.  View the source here.

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