Introduction

The Philippines develop fast, growing by about 6% yearly since 2010. The country has shown

the best dynamics, going by the net inflow of foreign investments among Southeast Asian

countries. According to the World Bank, the figure increase nine fold from 2010 to 2017. Yet

despite the economy growing more than twice since 2001, the high level of poverty has

remained and real wages have not changed much.

There are certain reasons for the imbalance in economic development. First, the rapid

growth of the population adversely affects Gross Domestic Product (GDP) per capital by

purchasing power parity. The World Bank put the Philippines in the 116 th place in the World in

the 2017. Secondly, there is an imbalanced development among the economic sectors.

Agriculture, with its great number of low-paid employees, has a slower progress than industry

and services. Then, the distribution of the national income measured by the Gini coefficient is

extremely uneven.

The Internal Revenue Allotment (IRA) of Matacon Polangui Albay in the year 2014 is

2,417,750 and for the past few years, its IRA increased and reached the amount of 3,661,817.

Small business takes out commercial bank loans to small for a variety of reasons. Loans came

from other sources as well. Credit union makes loans to small businesses. Loans can be made

using accounts receivable or inventory as collateral. Borrowing money is expensive for a small

business and raises its risk. In addition, to the risk of whatever enterprise you are under taking,

borrowing money introduces another level of risk to a small business. Regardless, debt is one of

the forms of financing small business operations.

 Small businesses sometimes need loans to meet their daily operations needs loans to

meet their daily operations needs until their earning assets sufficient to cover their working

capital needs. As the business grows and their own assets enable them to earn money, they can

repay the working capital loan to the lending company.

Lending also known as “financing” in its most general sense is the temporary giving of

money or property to another person with the expectation that will be repaid. In a business and

financial context, lending includes many different types of commercial loans. Lending and

borrowing are the same transaction from the two viewpoints.

These are the reasons why the researchers study the effect of money lending to the

small businesses of Matacon, Polangui, Albay. The main purpose of the study are to determine

the leading company in Matacon, Polangui, Albay, to know the small business keeps on

borrowing equity in the lending company and to identify the effects of money lending.
Statement of the problem

This study aim to know the effects of money lending to the small businesses of Matacon,

Polangui, Albay. The research wanted to answer the following questions:

1. What are the leading company in Matacon, Polangui, Albay?

2. How much is the maximum amount they loan?

3. Why are the small businesses keeps on borrowing an equity to the lending company?

4. What are the effects of money lending in the small business enterprises?

Objectives of the study

The objectives of the study was to find out the effects of the money lending in the small

businesses in Matacon, Polangui, Albay. The specific objectives of the study were as follows:

 To determine the leading lending company in Matacon, Polangui, Albay.

 To know the maximum amount of money they loan.

 To know why the small businesses keeps on borrowing equity in the lending company.

 To identify the effects of money lending.

A. Positive Effects

B. Negative Effects
Assumptions

1. The leading lending company in Matacon, Polangui, Albay are ARDCI, ASA, CARD, and

EXTENDED.

2. The maximum amount of money they loan is 50,000.

3. Small businesses sometimes need loans to meet their daily operations needs until their

earning assets are sufficient to cover their working capital.

4. The positive effects is the business owners are enable to have equity for their business and

the negative effects is as he business grows and their own assets enable them to earn money,

but the profit they receive are going to be the interest for their borrow money in the lending

company.

Significance of the study

The researchers desired that the result of the following study would be significant to the

following;

Business owners – this study serves as a guide on how to manage their money for their

business and be aware in borrowing money to the lending company.

Young Entrepreneurs – the findings of the study will provide information to the entrepreneur if

they are planning to lend money to the lending company.

Future Researchers – finding of this study will serve as a good source of accurate and useful

information for them.

Community – this study will inform them about the effects of lending company in the small

businesses in Matacon, Polangui, Albay.

Scope and Delimitation

The study focusses on assessing the effects of money lending to the small businesses

like sari-sari store, eatery, and street vendors to borrow money for the equity of their business

and also to be successful business owners.

The Big enterprise like LCC Expressmart is not include in the study because they have

their own corporation that doesn’t necessary borrow capital from lending company.

Definition of Terms

Equity

Imbalance

Parity

Gini

Inventory

Collateral

Gross Domestic Product (GDP)

Internal Revenue Allotment (IRA)

Notes/References

www.bworkldonline.com/alternative-lending-in-the-philippines

prouwdly.com/proudlyfilipino/category/albay-63227/page/4/

http://www.thebalancesmb.com/what-is-lending-what-are-lenders-398319