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BusinessFinance12 - Q1 - Mod3 - Short Term and Long Term Funds V5
BusinessFinance12 - Q1 - Mod3 - Short Term and Long Term Funds V5
BUSINESS FINANCE
Quarter 1– Module 3
Short Term and Long Term
Funds
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Business Finance
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Module 3 - Quarter 1: Short Term and Long Term Funds
Second Edition, 2021
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II
12
BUSINESS FINANCE
Quarter 1– Module 3
Short Term and Long Term
Funds
III
TABLE OF CONTENTS
Page No.
Table of Contents V
Overview VI
General Instructions VI
What I Know 1
What’s In? 2
What’s New? 2
What is it? 3
What’s More? 4
Assessment 6
Answer Key 7
References 8
IV
OVERVIEW
Financing is an important part of every business because it provides funds
for business activities, acquire purchases or investing. Financial institutions, such
as banks, cooperatives and other financial companies are the one that will provide
loans for their capital to help them achieve their business goals.
This module focuses on the two-common source of financing, the debt and
Equity financing. Financing can be either Long-term or short-term funds. Short-
term is debt scheduled to be paid within a year while long-term is debt to be paid in
more than a year. The goal of this module is have the knowledge on how to avail
and process the sources of funds when there is cash needed within the business
and also helps the students to identify directly what types of sources of funds
available in their respective community.
GENERAL INSTRUCTIONS
V
Lesson
THE SOURCES AND USES OF SHORT-
3 TERM & LONG-TERM FUNDS
2. Identify the Bank and Nonbank institutions in the vicinity that are possible
sources of funds and enumerate their requirements and process for loan
application.
What I Know
Let us determine how much you already know about the sources and uses of short-
term & Long-term funds
_____1. Cooperative banks and credit cooperative are just the same.
_____2. All cooperative in the Philippines regulated and supervised by the
Cooperative Development Authority.
_____3. By resorting to debt financing, business ownership has kept and
maintained.
_____4.One of the aims of cooperatives is to provide goods and services to its
members to enable them to attain increase, savings, investments,
productivity, and purchasing powered income, and promote among
themselves equitable distribution of net surplus through maximum
utilization of economies of scale, cost sharing and risk sharing.
_____5. Capacity refers to the applicant’s net worth, which can be arrived at by
deducting total liabilities from total assets.
1
What’s In
What’s New
Question: What comes to your mind when you hear the words debt financing and
equity financing based on your knowledge and understanding in the previous
lesson? Copy the rectangular box and write your answers in your notebook.
2
What is it?
https://www.credibly.com/incredibly/trending/debt-vs-equity-financing/
Equity Financing, on the other hand, refers to the sale of ownership interest,
most often represented by shares, to raise fund for business purposes. To
compensate for the use of funds from equity financing, dividends or profits shares
has declared, set aside, and paid by the business. Common Equity financing
arrangements include funds raise by the entrepreneur or business owner from
friends and family, capital infusion through direct sale of shares or through initial
public offerings, and financing by private companies. In here, there exists an
investee-investor relationship.
3
What’s more?
Direction: List the sources of funds that are found in your community and
describe. Copy the table below and write your answer in your notebook.
Sources of fund Describe
Example: Bank of the Philippine Island A bank is a financial institution
(BPI) involved in borrowing and lending
money. Banks take customer
deposits in return for paying
customers an annual interest
payment.
1.
2.
3.
4.
5.
4
What are the usual loan requirements and application? See table below.
Note: Loan application requirements and process vary among banks, credit
cooperatives and commercial finance companies.
Direction: Copy the process questions below in your notebook and answer directly.
1. In loan application, when is a co-maker required?
2. What is the importance of affixing applicant’s signature on the loan
application?
3. Enumerate the five C’s of credit and describe each.
5
What I Have Learned
Direction: Complete the sentence stem below. Write your answers on a separate
sheet of paper.
1. Sources of funds is important because:
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
What I Can Do
Direction: Choose one bank, one credit cooperative and one commercial finance
company. Research on the following: compare the loan application requirements
and loan application process.
Assessment
Activity/Need Answer
1.Acquisition of equipment
2.Franchise of a fast-food outlet
3.Purchase of inventory for a clothing shop
4.Loan for agricultural needs
(ex. Palay production)
5.Loan for purchase of a commercial space
6.Auto-loan
7.Housing loan
8.Emergency loans
9.Development of a subdivision
6
10.Loan for sari-sari store supplies
Congratulations!
You have completed your
journey in this subject. Great job!
Answer Key
10. Short-term
9. Long-term
8. Short-term
7. Long-term
6. Long-term
F 5. 5. Long-term
T 4. 4. Short-term
T 3. 3. Short-term
T 2. 2. Long-term
F 1. 1. Long-term
7
References
Book:
Vibal group Inc. and Florenz C. Tugas, Aeson Luiz C. Dela Cruz, Alloysius Joshua
S. Paril, and Alger C. Tang. Business Finance, Araneta Avenue, Quezon City
Internet link:
Image:https://gbr.pepperdine.edu/2017/12/religious-beliefs-influence-financial-decision-making/
Image:https://smallbiztrends.com/2016/01/small-business-finance-basics.html
Image:https://www.dmu.ac.uk/study/courses/postgraduate-courses/international-business-and-
ifinance-msc-degree/international-business-and-finance-msc.aspx
Image:https://www.credibly.com/incredibly/trending/debt-vs-equity-financing/
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