BUSINESS

FINANCE
CLASSROOM RULES

• For our class today, I will be expecting these rules

throughout the class session.
• Raise your hand when you have concerns, questions and
clarifications.
• Listen to others and participate in class discussions.
• Stay on task.
• Maintain orderliness.
• Listen and follow directions and instructions.
• Cooperate with during the discussion.
• Always do your best and enjoy.
REVIEW

• In loan application, when co-maker

is required?
REVIEW

• In loan application, when co-maker

is required?
• Enumerate the five C’s
OBJECTIVES
a. distinguish debt and equity
b. determine the sources and uses
of short-term and long-term
funds , and the requirements
procedure , obligation to
creditor, and reportorial
necessities
c. identify bank and nonbank
institutions 6
THE SOURCES AND USES OF
SHORT-TERM & LONG-TERM F

Capital Structure Equity Debt

Refers to how To be able to acquire
much of your total assets assets, our funds must have
has financed by debt and come somewhere. If it
how much has financed by has bought using cash from
equity. our pockets, it has financed
by equity.
if we used money from our
borrowings, the asset
bought has financed by
debt
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 Hello there!

DEBT vs EQUITY
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Debt Financing
is being done through borrowing, whether short-term or long-term, and it
usually comes with interest. This, together with other charges, is referred to as
the cost of borrowing or cost of debt. Arrangements include bank loans,
issuance of debt instruments like bonds, financing from nonbank institutions
like lending companies and cooperatives, assignment of accounts receivable,
and selling of notes receivables. In here, there exists a borrower-lender
relationship. In the case of banks and other nonbank institutions, borrowing
entails compliance of certain requirements.

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 Equity Financing

refers to the sale of In here, there exists an

ownership interest, investee-investor
most often represented relationship.
by shares, to raise fund
for business purposes
Short-term Financing
is debt scheduled to pay within
a year

Long-term Financing
is debt paid in more than a year.

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 SOURCES OF FUNDS
Bank
- supervised and regulated by
the Bangko Sentral ng Pilipinas
(BSP)
- deposit, custody, and issue
of money
- universal and commercial
banks, thrift banks, and
rural and cooperative banks
Credit Cooperatives Commercial finance
companies
- helping improve the
quality of life of its they are organizations
members without a bank charter
that advances funds to
- provide goods and
businesses by discounting
services to its members
notes receivable, making
- promote and
loans secured by mortgage
undertake savings and
lending services among its
members generates a
common pool of funds
Loan Applications
Loan Application process

“
Requirements
Demographics –includes the
name or business name,
birthdate, address, SSS
Receipt of application form and
no., TIN no., phone no., and
required documents;
other identifying information
such as valid government-
issued identification cards

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Loan Applications
Loan Application process

“
Requirements
Income or revenue refers to
current personal income and Verification of information in
employer, employment and the application form and
salary history, and business required documents may
revenue, if there is already an include interview;
existing business.

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Loan Applications
Loan Application process

“
Requirements
Assets and Liabilities-
applicants may ask to disclose Checking credit history
their checking savings and
investment accounts and their Writing credit report with
outstanding loans and credit appropriate recommendations
cards, if there are any.

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Loan Applications
Loan Application process
Requirements

“
Attest and authorization
require affixing applicant’s
signature on the credit
application stating that
everything on the application If rejected, rejection letter
is true and correct and sent to applicant
authorizing the lender to verify
the information provided with
the identified contacts and
references.
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 “
Loan Applications
Loan Application process
Requirements
The credit department
evaluates on the basis of
If rejected, rejection letter
Character, Capacity, collateral,
sent to applicant
capital and conditions or 5C’s
of credit

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“

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 Hello there!
Make a Venn diagram between DEBT vs
EQUITY (at least 3 each)
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“

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