Cap on late payment interest or charges for specific contracts
Many contracts contain clauses which impose interest or other charges for late payment. Sometimes, the interest rates or charges stipulated can be high. The COVID-19 pandemic has had a drastic effect across all segments of the economy, and many Singaporeans and local businesses have missed some payments as a result.
To help Singaporeans and businesses who are struggling because of COVID-19 with temporary cash flow relief, the COVID-19 (Temporary Measures) Act (the “Act”) provided businesses and individuals who are unable to meet certain payment obligations because of COVID-19 a temporary moratorium from enforcement actions during the prescribed period (until 19 October 2020). However, during this time, payments and interest thereon continue to accrue.
Once the COVID-19 (Temporary Measures) (Amendment) Act is brought into force, there will be a cap on late payment interest and charges for arrears that arise due to COVID-19 under prescribed contracts.
This will help some businesses who are struggling to avoid a crippling debt load, and to make a quicker eventual recovery.
Further details, such as the contracts that will be covered by this measure and the prescribed interest rates, will be announced at a later date.