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A Forbearance Agreement lets a lender temporarily pause their right to take action when a borrower can't make their loan payments. It's commonly used in Singapore's banking sector when businesses or individuals face short-term financial difficulties but show potential for recovery.

Under Singapore's Banking Act, these agreements help prevent immediate defaults while giving borrowers breathing room to get back on track. The lender typically sets specific conditions, like partial payments or a revised payment schedule, and the borrower must meet these terms to maintain the agreement's protection. This approach benefits both parties by avoiding costly legal proceedings and maintaining business relationships.

Consider a Forbearance Agreement when your business faces temporary financial challenges but needs time to recover. This tool proves especially valuable during economic downturns or unexpected market disruptions, helping Singapore companies maintain their banking relationships while working through cash flow problems.

The agreement makes sense when you can demonstrate a clear path to financial recovery and need protection from immediate legal action. For example, if your company has secured new contracts or funding but requires a few months to stabilize operations, a Forbearance Agreement can provide that crucial buffer period. Just ensure you can meet the modified payment terms to maintain the agreement's protection.

• Payment Modification Forbearance: Adjusts loan repayment terms, offering reduced monthly payments or interest-only periods, common in Singapore's mortgage sector
• Temporary Suspension Forbearance: Completely pauses payments for a fixed period, typically used during severe business disruptions
• Conditional Performance Forbearance: Links continued forbearance to specific business milestones or financial targets
• Rolling Forbearance: Provides short-term relief that can be extended based on regular performance reviews, popular with SME loans

• Licensed Banks: Create and enforce Forbearance Agreements, typically through their credit risk or loan restructuring departments
• Corporate Borrowers: Singapore businesses facing temporary financial difficulties who need time to restructure their debt obligations
• Legal Counsel: Draft and review agreements to ensure compliance with MAS guidelines and Singapore banking regulations
• Financial Advisors: Help assess feasibility of proposed payment terms and develop recovery plans
• Company Directors: Sign and personally guarantee the agreements, taking responsibility for meeting modified terms

• Loan Details: Gather original loan agreement, current balance, payment history, and default status
• Financial Assessment: Document current financial position, cash flow projections, and realistic repayment capacity
• Recovery Plan: Outline specific steps for financial improvement and proposed modified payment terms
• Security Details: Review existing collateral and any additional security offered under Singapore law
• Documentation: Use our platform to generate a customized Forbearance Agreement that includes all required elements under MAS guidelines
• Internal Approval: Secure necessary authorizations from key stakeholders before finalizing terms

• Identification Details: Full legal names of lender and borrower, reference to original loan agreement
• Default Acknowledgment: Clear statement of existing default and current outstanding amounts
• Modified Terms: Detailed new payment schedule, interest rates, and forbearance period
• Conditions Precedent: Specific requirements borrower must meet to maintain forbearance protection
• Representations: Updated financial statements and recovery plan commitments
• Default Triggers: Events that terminate the forbearance protection
• Governing Law: Explicit reference to Singapore law and jurisdiction
• Execution Block: Proper signature sections for all parties, including witnesses

A Forbearance Agreement differs significantly from a Amendment Agreement, though both modify existing loan terms. While they may seem similar at first glance, their purposes and legal effects are quite distinct in Singapore's banking landscape.

• Legal Effect: Forbearance temporarily suspends enforcement rights without permanently changing the original agreement, while an Amendment Agreement permanently modifies the original contract terms
• Duration: Forbearance is typically temporary with specific end conditions, whereas amendments create permanent changes
• Trigger Events: Forbearance responds to default or financial distress, while amendments often address business needs or mutual desires to update terms
• Recovery Focus: Forbearance includes specific recovery milestones and monitoring requirements, unlike amendments which simply update terms
• Default Status: Forbearance acknowledges an existing default but provides protection, while amendments typically prevent defaults by adjusting terms proactively