SOURCES AND USES OF

SHORT-TERM AND LONG

TERM FUNDS
LEARNING OUTCOMES:
1. Cite bank and nonbank institutions in the
locality that would serve as possible sources of
funds for business operations.
2. Compare and contrast the loan requirements of
the different bank and nonbank institutions.
3. Draw a slow chart on the steps in loan
application.
4. List down obligation of entrepreneurs to
creditors.
5. Identify uses of funds.
BANKS AND NONBANK
INSTITUTIONS
 Banks are financial establishments where money
deposited by customers earns interest and can be
withdrawn anytime when ordered by the signatories.
 To be able to pay for the interest for the money entrusted
by depositors, banks invest it to financial
 Nonbank financial institutions (NBFI) are also
financial institutions that can provide fund requirements
of businesses. But its operations are not supervised by a
national or international banking regulatory agency or
they have no full banking license.
EXAMPLES OF BANKS IN THE
LOCALITY
 1. Banco de Oro Universal Bank
 2. Metropolitan Bank and Trust Company
 3. Bank of the Philippine Islands
 4. Philippine National Bank
 5. Rizal Commercial Banking Corporation
 6. UnionBank of the Philippines
 7. China Banking Corporation
 8. Citibank
 9. East West Bank
 10. Philippine Savings Bank
 11. Philtrust Bank (Philippine Trust Company)
 12. Security Bank
 13. United Coconut Planters Bank
 14. Allied Bank Corporation
 15. Philippine Bank of Communications
 16. Asia United Bank
EXAMPLE OF NON-BANKS

 1. Pawnshops
 2. Government non-bank financial institutions

 3. Lending companies

 4. Insurance

 5. Ventures
• According to Banko Sentral ng Pilipinas records as of end-
December 2016, the banking sector consists of 42 commercial
banks, 60 thrift banks, and 500 rural and cooperative banks,
with combined assets of approximately PhP 13,591 billion.
• The record indicates that there are twenty-one commercial
banks with an "expanded" commercial banking license.
These banks are referred to as "universal banks" which
perform the functions of an investment house (such as
securities underwriting) and invest in non-allied undertakings,
aside from their regular commercial banking activities.
Twenty-six banks (22 commercial banks and four thrift banks)
are licensed to engage in derivative activities.
• Twenty-five (25) banks broken down to 20 foreign branch
banks and fivemajority foreign-owned, domestically-
incorporated subsidiaries are foreign-controlled.
UNIVERSAL BANKS - A UNIVERSAL BANK PARTICIPATES IN
MANY KINDS OF BANKING ACTIVITIES AND IS BOTH A
COMMERCIAL BANK AND AN INVESTMENT BANK AS WELL
AS PROVIDING OTHER FINANCIAL SERVICES SUCH AS
INSURANCE.
 1. Al-Amanah Islamic Investment Bank of the Philippines

 2. ANZ Banking Group Ltd.

 3. Asia United Bank Corp. (AUB)
 4. Bank of the Philippine Islands (BPI)
 5. BDO Unibank, Inc. (BDO)
 6. China Banking Corp. (Chinabank)
 7. Deutsche Bank AG
 8. Development Bank of the Philippines (DBP)
 9. East West Banking Corp. (Eastwest)
 10. The Hongkong & Shanghai Banking Corp. (HSBC)
 11. ING Bank NV
 12. Land Bank of the Philippines (Landbank)
 13. Metropolitan Bank & Trust Co. (Metrobank)
 14. Mizuho Bank, Ltd. – Manila Branch
 15. Philippine National Bank (PNB)
 COMMERCIAL BANK - A COMMERCIAL BANK IS A FINANCIAL
INSTITUTION WHICH ACCEPTS DEPOSITS FROM THE PUBLIC AND GIVES LOANS
FOR THE PURPOSES OF CONSUMPTION AND INVESTMENT TO MAKE PROFIT.

 Asia United Bank Corp.

 Bangkok Bank Public Co. Ltd.
 Bank of America, N.A.
 Bank of China Ltd. – Manila
 Bank of Commerce
 Bank of Tokyo-Mitsubishi UFJ, Ltd.
 BDO Private Bank, Inc.
 Chinatrust (Phils.) Commercial Bank Corp.
 Citibank, N.A.
 JP Morgan Chase Bank, N.A.
 Korea Exchange Bank
 Maybank Philippines, Inc.
 Mega International Commercial Bank Co., Ltd.
 Philippine Bank of Communications
 Philippine Veterans Bank
 Robinsons Bank Corp.
THRIFT BANK - A SAVINGS AND LOAN
ASSOCIATION, OR THRIFT INSTITUTION, IS A
FINANCIAL INSTITUTION THAT SPECIALIZES IN
ACCEPTING SAVINGS DEPOSITS AND MAKING
MORTGAGE
 1. 1st Valley Bank,AND OTHER Bank
Inc. A Development LOANS.
 2. AllBank (A Thrift Bank), Inc.
 3. Bangko Kabayan, Inc. (A Private Development Bank)
 4. Bank of Makati (A Savings Bank), Inc.
 5. Bank One Savings Corporation
 6. BPI Direct BanKO, Inc., A Savings Bank
 7. BPI Family Savings Bank, Inc.
 8. CARD SME Bank, Inc. A Thrift Bank
 9. Century Savings Bank Corporation
 10. China Bank Savings, Inc.
 11. City Savings Bank, Inc.
 12. Citystate Savings Bank, Inc.
 13. Dumaguete City Development Bank, Inc.
 14. Enterprise Bank, Inc. (A Thrift Bank)
 15 Equicom Savings Bank, Inc.
RURAL AND COOPERATIVE - RURAL BANKS ARE OWNED
AND MANAGED BY PRIVATE ENTITIES OR
INDIVIDUALS. COOPERATIVE BANKS ARE OWNED,
ORGANIZED AND MANAGED BY COOPERATIVES OR
FEDERATION OF COOPERATIVES.
 1. Agribusiness Rural Bank, Inc.

 2. Agricultural Bank of the Philippines, Inc. (A Rural Bank)

 3. Aliaga Farmers Rural Bank, Inc.

 4. Aspac Rural Bank, Inc.

 5. Balanga Rural Bank, Inc.

 6. Banco de Mindoro, Inc. (A Rural Bank)

 7. Banco Laguna, Inc. (A Rural Bank Since 1965)

 8. Banco Maximo, Inc. (A Rural Bank)

 9. Banco Mexico, Inc. (A Rural Bank)

 10. Bangko Mabuhay (A Rural Bank), Inc.

 11. Bank of Ormoc, Inc. (A Rural Bank)

 12. Bankways, Inc. (A Rural Bank)

 13. Batangas Rural Bank for Cooperatives, Inc.

 14. BDO Network Bank, Inc. (A Rural Bank)

LOAN AND ITS REQUIREMENTS

 A loan is a financial arrangement where a borrower who

receives money from a lender agrees to repay the
principal (the amount borrowed) along with interest
(add-on rate) within a specific period of time.
 The loan interest rates vary significantly based on the
type of loan, loan repayment terms, and the borrower's
background.
1. PERSONAL LOAN

 A Personal Loan is a type of loan from banks that may or

may not require any form of collateral as security of
payment. This is sometimes called "character loan"
 Which requires the consideration of the personality of
the borrowers by the lenders either as one of the valued
customers or being a good payor.
 Banks may also grant personal loan equal to or less than
the deposits of the borrowers as an example of any form
of collateral.
1.1. TYPES OF PERSONAL LOAN

 Secured - A secured loan requires the borrower to have

some sort of collateral as payment security for loan
lenders.
 In cases of non-payment of the loan amount by the
borrowers, payment will be recovered from the collateral
either by using or selling it.

 Unsecured loan refers to a personal loan without

collateral, but this often comes with a higher interest
rate. It is also considered risky due to absence of any
form of security.
1.2. WHAT ARE THE REQUIREMENTS
AND ELIGIBILITY FOR PERSONAL
LOANS?
 a. Must be a resident of the Philippines with a valid
Philippine billing address
 b. Must be at least 21 years of age or older

 c. Must have an annual income that meets the

requirements of the chosen personal loan provider
 d. Must have a landline or a post-paid mobile phone
under the account of the
 borrower

 e. Must have at least two valid identification cards issued

by government agencies or by the employer.
1.3. PERSONAL LOANS INTEREST RATES
AND FEES
 Depending on the bank or financial institution you apply
with, interest rates may range from 1% to 3%. Moreover,
some banks charge an additional fee for the processing
of your application. The processing fee varies from
P1,000 to P2,000, depending on the lender.
1.4. PERSONAL LOANS CHARGES AND
PAYMENTS
 Banks and financial institutions offer flexible payment
terms to attract more borrowers but subject to what will
be agreed upon by both parties.
 The payment terms may vary within the range of 3
months to one year and may be extended for the period
of 5 years.
 A penalty or late payment fee is being charged by
lenders for non-payment on time or in case of payment
beyond agreed due date.
 Usually, banks charge around 3% to 4% per month aside
from compounded interest rate.
2. HOUSING LOAN

 Another type of financing offered by a bank or a

financial institution to a borrower is housing loan. This
housing loan is availed either for buying a real estate for
dwelling purposes or for house construction or
renovation purposes.
 This can also be used for refinancing an existing housing
loan.
 Housing loans generally involve large sum of money
which necessitate a form of payment security. Ordinarily,
banks will hold the mortgage property as collateral until
payments are made in full.
1.1. ELIGIBILITY REQUIREMENTS
 a. Must be a Filipino citizen. For foreigners they are allowed
to apply as long as they submit acceptable visa like working
visa issued by embassy officials, quota/non quota immigrant
visa or sec 13A visa
 b. At least 21 years old without going over 65 years old upon
loan maturity
 c. Must have a minimum monthly salary of P50,000.00
 d. Must have a source of income either from employment or
business
 e. For employed applicant, must have a regular working status
with at least 2 years of tenure.
 f. For self-employed, must own a business for at least 2 years
of successful and profitable operation
1.2. DOCUMENTS REQUIRED
 a. Completed and signed housing application form
 b. Clear copy of at least 2 valid ID with photo such as company ID, SSS ID,
PRC ID, passport, driver's license
 c. For employed applicant: photocopy of latest ITR or income tax return,
original copy of certificate of employment, copy of at least 2 month payslip
 d. For self-employed applicant: validated photocopy of DTI or SEC
registration, audited financial statements for the past 2 years, and other
proof of sources of income from self-employment.
 e. For foreigners: validated photocopy of Alien Certificate of Registration
(ACR) indicating Visa status as Permanent Immigrant, or Alien
Employment Permit (AEP), or Visa ID
1.3. HOUSING LOAN RATES, TERMS, AND
CHARGES
 The terms or period can be arranged by the borrowers
from lenders but subject to what will be agreed upon by
both parties. The payment term for housing loan in the
Philippines usually ranges from a minimum of years 5
up to a maximum of 25 years or even 30 years.
 In addition to interest, borrowers are charged a fee for
the processing of loan application aside from an
appraisal fee regardless of whether it will be approved or
not.
3. AUTO LOAN

 A car loan allows an individual to buy a vehicle that is more

expensive than what could be afforded in a lump sum, or cash
purchase. A person can acquire a vehicle at more affordable
payment terms, which is usually in an installment basis either
through in house financing (financing offered by car dealers)
or with the help of financial institutions like banks.
 The auto loan is easily approved if the potential buyer has a
proof of good credit score from a bank or preferred financial
institutions. A good credit score will show the capability of the
borrower to pay on schedule based on previous loan records.
Interest rates and the monthly installment payments will be
dependent on the amount of the required initial security
deposit and payment terms.
THERE ARE MANY WAYS BY WHICH CONSUMERS
CAN MAKE USE OF AN AUTO LOAN:
 a. Purchase a new or used vehicle through bank
financing and pay it back for a specific period of time,
which is usually in equal monthly amortization of
principal and interest.
 b. Reimburse the cost of a brand new vehicle within 30
days from purchase
 c. Get cash loan by using your existing car as collateral

 d. Refinance an existing auto loan

3.1. DOCUMENTS REQUIRED

 a. Completely filled auto loan application form

 b. Photocopy of any valid ID (Passport, Driver's License,
TIN ID, Voter's ID, SSS ID, GSIS ID, PRC ID)
 c. For employed applicants, submission of original copy
of COE or Certificate of Employment, photocopy of at
least 2 month payslip, copy of ITR or Income Tax
Return for the latest year forwarded to the BIR.
 d. For self-employed applicants, submission of
photocopy of latest ITR with BIR stamp, photocopy of
Business Registration from DTI or SEC, and copy of
Audited Financial Statements for at least 2 years
OBLIGATIONS
OF ENTREPRENEURS TO CREDITORS
 1. General - Obligation based on moral duty (whether of
necessity or of one's own choosing) that ties two or more
parties together.
 2. Accounting - Duty to make future payment when a
purchase order is placed, or upon incurring an obligation
for borrowing a certain sum of money.
 3. Legal - Liability or duty based on what is agreed upon
like the provisions or terms as stated in a contract, such
as the obligation of a borrower (the obligor) to pay
back the lender (the obligee) under the terms of the loan
agreement. Other provisions include penalties for non-
fulfilment of what is agreed upon.
The planning will require the application of strategic
company management that is influenced or determined by
four major factors:
 the external environment,

 the internal environment,

 organizational culture

 resource (especially funds) availability.

The success or failure of the plan is determined by the

interaction of these four factors which create the following
four inter-related components:
 a) competitive environment

 b) strategic thrust

 c) product/market dynamics

 d) competitive cost position and restructuring.