Republic of the Philippines

DEPARTMENT OF EDUCATION
NORTHERN MINDANAO COLLEGES, INC.
Atega Street, Barangay 11 Poblacion, Cabadbaran City
8605 Agusan del Norte, Philippines

TEACHING GUIDE
BUSINESS FINANCE
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Subject

SEPTEMBER 20-OCTOBER 3, 2019

_________________________________________________
Date

A. CONTENT / TOPIC : SOURCES AND USES OF SHORT-TERM AND LONG-TERM FUNDS Pt.
3

I.CONTENT STANDARD : The learners demonstrate an understanding of the sources and uses of
short-term and long-term funds, and the
requirements, procedure, obligation to creditor and reportorial necessities
II.PERFORMANCE STANDARD : The learners shall be able to identify the bank and non-bank institutions in the vicinity that are possible
sources of funds.
III. LEARNING COMPETENCIES : The learners will be able to:
• Show the steps in loan application

(ABM_BF12-IIIe-f-15)
• Compare and contrast the loan requirements of the different bank and nonbank institutions (ABM_BF12-IIIe-f-14)
• List down obligations of entrepreneurs to creditors (ABM_BF12-IIIe-f-16)
B. PRESENTATION OF LESSON

LESSON PROPER DAY 1 DAY 2 DAY 3 DAY 4

1. INTRODUCTION 1. Review the previous topic
by asking question related to
the topic
2. Present the learning
objective of the day
1. Review the previous
topic by asking question
related to the topic
2. Present the learning
objective of the day
1. Review the previous topic by
asking question related to the
topic
2. Present the learning
objective of the day
1. Review the previous
topic by asking question
related to the topic
2. Present the learning
objective of the day

2. MOTIVATION Ask whether the learners have
family businesses and whether
they have witnessed the
application
for loans of their respective
businesses/families from
financial institutions.
• In addition, inquire whether
they are aware of business
partnerships. Their respective
family
businesses might have
experiences of equity infusion
from investors or business
partners.
Remind the learners of an
example discussed
previously regarding the
restaurant
expansion worth PHP8
million.
• Financing a long-term
investment through a
short-term loan. Let us
say you are a restaurant
owner
and you are planning to
open another branch
which will cost you PHP8
million. The returns on this
investment will be realised
over a number of years.
Therefore, financing it
through a short-term
Share the importance of the
banking industry.
• Provision of Credit and
Liquidity – Banks provide credit
facilities to borrowers which
allow them to address their
liquidity concerns.
• Risk Management Services –
Banks provide advisory service
on asset-liability management
and can also provide
recommendations regarding
the appropriate financing
schemes for a company’s
funding requirement.
• Money Remittance – Banks
can act as conduits or
intermediaries for money
remittances.
 loan, say one year, will • Economic Development
give you too much • Channel for Saving and
pressure to pay the loan Investment
because the new branch • Promotion of
may Entrepreneurship
not have generated
enough cash flow within
the year to cover the
PHP8 million.
• Pose this question to the
learners: How do you plan
to finance the PHP 8
million?
• Answer Key: Since this
is a long-term investment
where the expected
benefits are going to be
realized over a couple of
years, this investment
should be financed by
long-term sources.
Assuming
that both long-term debt
and equities are
accessible, part of the
requirements must be
financed by
long-term debt. The
question is how do you
obtain long-term debt.

3.INSTRUCTION/DELIVERY Discuss the importance of
Know-Your-Customer (KYC)
initiatives. Banks are required
to verify the
identity of their customers to
ensure that the funds will not
be used for illegal activities
Discuss the following
example/case:
Mr. Joe Salazar applied
for a PHP1.5 million loan
in behalf of his business,
“Joe’s Restaurant”, for
additional capital in 2015.
Discuss the duties of the Borrower to Creditors.
• Pay the creditors based on the payment schedule agreed
upon. If you cannot pay on time, notify the creditors ahead
of time. But as much as
possible, pay on time.
 such as, but
not limited to, money
laundering and terrorist
financing.
3. Explain the 5C’s of Credit -
the institution’s primary
consideration in approving
loan applications.
• Character –the willingness of
the borrower to repay the loan
• Capacity – a customer’s
ability to generate cash flows
• Collateral – security pledged
for payment of the loan
• Capital – a customer’s
financial resources
• Condition – current economic
or business conditions
4-5.
He is the Chairman of the
Board of Joe’s
Restaurant. In their
meeting, the
Board decided to open an
additional branch for the
restaurant. Joe’s
Restaurant currently has 3
branches in Metro Manila
and would like to open up
a small branch in Quezon
City. Joe’s Restaurant
has been in the business
for 12 fruitful years and
has been a previous
borrower of the bank. The
company had previous
late payments before but
the reasons are usually
justifiable, and the
balance of
the loan, along with any
penalties, if any, is paid.
The three branches earn a
net income of
PHP900,000/
year. The lot where the
main restaurant is located
is pledged as collateral to
the bank. This property is
valued at PHP2 million.
Shown below is an
excerpt from Joe’s
Restaurant’s 2014
consolidated audited
financial statements.
Recap the output of their Ask the learners to discuss the Let the learners
 PRACTICE/ENRICHMENT reports about loan general steps on Loan enumerate the different
products conducted a Application. Make them prepare requirements for a sole
week before the exam. a flowchart proprietorship,
Ask the learners some consumption loans,
questions about and loans to corporations,
requirements, and loan as well as the
services the banks requirements for non-
offered. bank financial institutions.

6. EVALUATION Self-Test Questions: Why is it important for banks to

1. Enumerate the 5C’s of collect all the loan
credit requirements? Which
2. What do you think is the requirements are meant to
most important consideration be used to evaluate each of the
of banks in approving a loan? 5C’s of credit?

Prepared by:
Submitted to:

BRIAN REYES GANGCA ENGR.

EVA M. OLOFERNES
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Subject Teacher
Basic Education Principal