Introduction

Payment deferrals allow you to provide temporary payment relief for borrowers experiencing hardship while maintaining their repayment commitment. When deferring payments, the selected obligations are moved to the loan's maturity date as a balloon payment, with the borrower's delinquency status updated accordingly.

Use Cases

Temporary Hardship Relief

A restaurant chain waiting for insurance reimbursement can defer their current payment while maintaining their long-term commitment. The deferred amount becomes due at loan maturity, giving them time to recover without impacting their credit standing.

Enhance Customer Retention

Offer flexible repayment options to borrowers navigating financial difficulties by deferring their future payment due dates, via deferral periods, to loan maturity avoiding the risk of default, while increasing customer loyalty and retention.

Delinquency Management

When a borrower falls behind on payments, deferring past due obligations to maturity can help them return to current status immediately. This allows you to proactively work with borrowers showing early signs of distress.

How It Works: Equipment Lease Example

Let's examine a $60,000 equipment lease with monthly payments and some interest to understand payment deferrals:

Original 6-Month Schedule

After Deferring March Payment to Maturity

Key Features

• Defer current, past due, or future obligations to maturity.
  • Deferring future dated due dates generate deferral periods on the loan, ensuring any due balances between the oldest and newest due dates in the request are deferred to maturity.
• Automatic status adjustment from delinquent account status to non-delinquent.
• Interest continues to accrue on deferred amounts.
• Payment schedule API surfaces deferred amounts from past and current periods.

CanopyOS

The following is an example of a payment schedule with deferrals within CanopyOS.

• Deferred dates will have an updated icon to communicate that either the full or partial balance for that payment schedule date has been deferred.
• Hovering over this icon will display a tooltip with the deferred balance amount.
• The deferred balances will be reflected as due on the due date to which they have been deferred, in this example, the maturity date.

Impacts of Deferred Obligations within Payment Pouring

When an obligation is deferred, it is deprioritized in payment pouring operations. All non-deferred obligations are targeted first when pouring payments on the account/loan. In the event that a payment clears all past due and current obligations, the remaining overpayment will pay down deferred obligations, with the oldest aged deferral taking priority while continuing to follow the standard pouring priority of fee, interest, then principal.

Example

Let's review a simple example to quickly highlight this behavior. Assume a deferrals have been made for the first two due dates for the following loan. We've added the Deferred and Remaining Obligation as visual aids for inspecting changes.

The borrower then makes a timely payment for their balance due on Mar 1, 2025 for the sum of $1000.00.

The borrower then decides to make an additional payment of $1000.00 later in the day. This will be applied to the deferred obligation for Jan 1, 2025.

Usage

Deferrals is available to use through our REST API. For more detail see API reference for scheduling the deferral of a payment obligation, or follow along in the recipe .