BUSINESS AND FINANCE

ABM12 - DIVINA
 TOPIC : QUARTER 3

Loan Requirements
of
Bank and Nonbank
Institutions
 TOPIC REVIEW
TRUE OR-FALSE
True or False
1. Cash budget is a budget that provides the number of
units that should be produced over a given period of time.

2. Production budget can be computed using the formula,

Expected sales plus Target ending inventory minus
Beginning inventory.

3. One of the most important type of budget in financial

planning is cash budget because most of its contents are
found in the financial statements particularly sales and
expenses.
 Am I familiar? Who own the slogan?

1. 2. 3.
___________________ ___________________________ _______________________
“We Find Ways”
“You’re in Good hands “Make the Best Happen”
 Quarter 3 TOPIC

BANK AND NONBANK LOAN

REQUIREMENTS
D-1

BANK LOAN REQUIREMENTS

 Quarter 3
D-1
Learning competency:
compare and contrast the loan
requirements of the different banks and
nonbank institutions and cite these
institutions in the locality
(ABM_BF12- IIIe-f-14).
Day 1: Bank loan Requirements
LEARNING OBJECTIVES:
K: Determine bank loan requirements
and procedures;
S: Distinguished the loan requirements
and procedures of different banking
institutions ; and
A: Appreciate the importance of loan
requirements of different banking
institutions .
Activity 1: Read and comprehend.
Activity notebook, choose the letter only. What I know!
(5mins)

1. What is an agreement between the borrower

and the bank that the loan will be paid back in a
specific amount of time at a specific interest rate?
A. Bank Loan
B. Checking account
C. Savings account
D. Stock market
2. Which of the following about open-end loan is
true?
A. An automobile is probably the most common
type of open-end loan;
B. The longer you use the money, the more you
pay
C. The amount owed is fixed
D. The term is fixed
3. It shows the willingness of the borrower
to repay the loan.
A. Capacity
B. Collateral
C. Capital
D. Character
4. It is the most liquid asset.
A. Cash
B. Inventory
C. Accounts receivable
D. equipment
5. This explains how much credit you are
able to handle.
A. Collateral
B. Capital
C. Capacity
D. Character
ANSWERS.

1. A. Bank Loan
2. D. Character
3. A. Cash
4. A. Cash
5. C. Capacity
ACTIVITY 2 DISCUSSION - ABSTRACTION

INSTRUCTIONS: 1. CLASS WILL BE DIVIDED INTO 2 GROUPS;

2. EACH GROUP WILL CHOOSE A
REPRESENTATIVES TO ANSWER THE QUESTIONS;
3. DEFINITIONS WILL BE PROVIDED TO EACH GROUP.
A REPRESENTATIVE WILL POST IT TO THE BOARD
CORRESPONDING TO THE CORRECT ANSWER
THEY CHOOSE.
 DISCUSSION - ABSTRACTION 20mins

Banking Institution - Banking Institution also referred to as a

universal or commercial bank can range from a large
financial institution with a highly visible brand name and an
international presence to a small organization with a local
presence. A banking institution’s financing activities generally
involve various types of lending, such as corporate finance,
housing, project finance, retail, short-term finance, small-
medium enterprises, trade, and others. Alternatively, the
focus of a banking institution may be only on specific
transactions with clients that meet certain requirements and
within certain industry sectors. Banking institutions may also
provide financial products with a focus on environmental
business opportunities.
Financial institutions - otherwise
known as banking institutions, are
corporations that provide services as
intermediaries of financial markets.
three major types of financial institutions
1. Depository institutions – deposit-taking institutions
that accept and manage deposits and
make loans, including banks, building societies,
credit unions, trust companies,
and mortgage loan companies;
2. Contractual institutions – insurance companies
and pension funds
3. Investment institutions – investment banks,
underwriters, brokerage firms.
FINANCIAL INSTITUTIONS - 2 CATEGORY ACCORDING TO OWNERSHIP

1. Commercial Banks - A commercial

bank is where most people do their
banking. Commercial banks make
money by providing and earning interest
from loans such as mortgages, auto
loans, business loans, and personal loans.
Customer deposits provide banks with
the capital to make these loans.
FINANCIAL INSTITUTIONS - 2 CATEGORY ACCORDING TO OWNERSHIP

2. Cooperative Banks - A Cooperative

Bank is one organized for the primary purpose
of providing a wide range of financial
services to cooperatives and their members.
It shall be organized only by cooperative
organizations that are duly established and
registered under the Philippine Cooperative
Code of 2008 (R.A. No. 9520)
 EXAMPLES OF BANKING/FINANCIAL INSTITUTIONS

BDO Unibank, Inc.

Metropolitan Bank and Trust Company BANCO COOPERATIVE DE ZAMBOANGA
(Metrobank) Capitol Drive, San Jose
Bank of the Philippine Islands (BPI) Balanga City, Bataan
Land Bank of the Philippines CONSOLIDATED COOPERATIVE BANK
Philippine National Bank (PNB) CBDS Building, Ramon Magsaysay St
Barangay Zone 3, Digos City, Davao del Sur
Security Bank Corporation (Security Bank)
COOPERATIVE BANK OF CEBU
China Banking Corporation (Chinabank)
EXAMPLES OF BANKING INSTITUTIONS M. Velez St.
Development Bank of the Philippines
Guadalupe, Cebu City 6000
(DBP) Cooperative Bank of Negros Oriental
Union Bank of the Philippines, Inc. CBNO Building, Libertad St., Poblacion 8,
(Unionbank) Dumaguete City, 6200 Negros Oriental,
Rizal Commercial Banking Corporation Philippines
(RCBC)
East West Banking Corporation (EastWest
Bank)

COMMERCIAL BANKS COOPERATIVE BANKS

 BANK LOAN - REQUIREMENTS
BANK LOAN:
It is the extension of money from a bank to
another party with the agreement that the money
will be repaid. Nearly all bank loans are made at
interest, meaning borrowers pay a certain
percentage of the principal amount to the lender
as compensation for borrowing. Most loans also
have a maturity date, by which time the borrower
must have repaid the loan. A bank loan
occasionally is called a bank advance.

https://financial-dictionary.thefreedictionary.com/bank+loan
 BANK LOAN - REQUIREMENTS
1. Purpose of Loan
While some lenders don’t have usage restrictions, most will want to
know how you plan to spend it. For instance, some businesses
experience resistance from banks when they apply for a loan to
reduce existing debt.
In comparison, banks usually approve of businesses using loans for
the following reasons:
• Improve Cash Flow • Purchase Inventory
• Purchase Equipment • Use as Payroll
• Pay for Expansion Projects
 BANK LOAN - REQUIREMENTS
2. Business Experience
When reviewing your loan application, banks
will consider how much experience you have.
If you’ve owned your business for years, and
have managed your finances responsibly, this
will be in your favor. In comparison, if you’ve
recently opened your business, or have
struggled financially, this could be
detrimental.
 BANK LOAN - REQUIREMENTS
3. Business Plan
When applying for a bank loan, you might
be asked to submit your business plan. It
might seem tedious, but your business plan
can help the bank determine the right loan
amount and term for you.
 BANK LOAN - REQUIREMENTS
4. Credit History
When considering your business for a loan, a bank
will conduct a credit check. They’ll do this to
determine your personal and business credit
scores. Personal credit history especially matters for
businesses that operate as proprietors or
partnerships. In both cases, the business owner
assumes partial or full financial responsibility for the
company.
 BANK LOAN - REQUIREMENTS
5. Personal Information
Even though you’ll be borrowing money for your business,
some personal information could affect your ability to
qualify. As we mentioned in the previous section, your
personal credit score will affect your eligibility. In addition,
banks usually also request the following personal
information in your application:
• Addresses
• Tax returns
• Criminal record • Financial statements
• Information on your education • Assets
• Personal Loan Balances
 BANK LOAN - REQUIREMENTS
6. Financial Statements
In addition to personal financial information, you’ll
also need to submit your business’s financial
statements. The amount of statements will vary
depending on the bank you’re applying to. Most
banks will require a balance sheet, profit and loss
statements, cash flow statements, income
statements, and other financial projections. In
addition, they may want to see your business’s
bank account balances.
 BANK LOAN - REQUIREMENTS
7. Collateral
Even if y our business or personal credit history falls
below bank loan requirements, you could still
receive financing by submitting collateral. Banks
define collateral as business or personal property
that you put up to guarantee the repayment of a
loan. Other forms of collateral include
automobiles, expensive jewelry, and high-end
antiques. The expected useful life of your collateral
must match the lifespan of the business loan.
 BANK LOAN - REQUIREMENTS
8. Cash Flow
The primary financial concern for banks when it
comes to accepting applicants involves business
cash flow. In other words, does your business
generate enough cash flow to repay a bank loan
on-time? To determine this, the bank will ask you to
present information about your primary business
cash sources. Most banks understand that
managing cash flow is a common challenge for
business owners, especially entrepreneurs that own
seasonal businesses.
BANK LOAN - REQUIREMENTS

TABLE 1: LOAN REQUIREMENT AND PROCESS

BANK LOAN - REQUIREMENTS

TABLE 1: LOAN REQUIREMENT AND PROCESS

 BANK LOAN - REQUIREMENTS
List of Requirements (Bank of the Philippine Island)

For Employed 1. Valid Philippine government-issued, photo-bearing ID with

signature
2. Latest 3 months payslips, or latest Income Tax Return (ITR) BIR
Form 2316
For Self-employed
1. Valid Philippine government-issued, photo-bearing ID with
signature
2. Audited Financial Statements (3 years), or latest Income Tax
Return
3. DTI/SEC Business Registration Certificate
 BANK LOAN - REQUIREMENTS Form
BDO Personal Loan Eligibility Requirements
• Must be 21 years old at time of application but not more than 60 years old
upon loan maturity
• Applicant must be a Filipino citizen or a foreigner who is a resident of the
Philippines
• Minimum Gross Fixed Annual Income Requirement:
◦ P15,000 for Salaried Employees
◦ P35,000 for Self-Employed / Professionals
• Regular employee or self-employed with business operating at least two (2)
years
• One (1) landline number in either residence or place of work, or mobile number
(postpaid or prepaid)
• Residence or office address must be within any area where a BDO branch is
located
 BANK LOAN - REQUIREMENTS
Eastwest Personal Loan Requirements
You must be a Filipino citizen;
You must be at least 21 years of age;
You must have a landline number and a mobile number;
Your salary must at least be 15,000 pesos per month.

Documents:
1. Application form
2. Valid ID’s
3. ITR or Payslip
4. Proof of residency
 Developing Mastery
Instructions: 1. Class will be divided into 2 groups, each group will
choose a leader but all member should participate
5 mins during the activity.
2. Each group will be given a box with answers inside.
Posted on theboard are the possible answers, but
before answering, a representative will perform the
consequence first then post the answer then
followed by another reporesentative and so on ...
3. Eight questions to be anwered.
4. Consequence will be prepared by the teacher.
 Activity 3

ANSWERS
BUSINESS EXPERIENCE PURPOSE OF LOAN

BUSINESS PLAN CREDIT HISTORY

PRSONAL INFORMATION FINANCIAL STATEMENT

COLLATERAL CASH FLOW

PRACTICAL APPLICATION INDIVIDUAL ACTVITY
INSTRUCTIONS:
1. 1 WHOLE A4 BOND PAPER
2. WRITE LIGIBLY. EXPLAIN THE IMPORTANCE OF EACH
LOAN REQUIREMENTS (CHOOSE ON 5)
3. 10 MINUTES
RUBRICS:
CONTENT: 10 PTS
IDEAS: 10 PTS
ORGANIZATION: 5 PTS
 Activity 4: BANK LOAN REQUIREMENTS
10mins
CHOOSE 5

BUSINESS EXPERIENCE PURPOSE OF LOAN

BUSINESS PLAN CREDIT HISTORY

PRSONAL INFORMATION FINANCIAL STATEMENT

COLLATERAL CASH FLOW

 GENERALIZATION
Banking institutions, often known as universal or
commercial banks, can range from a huge financial
institution with a well-known brand name and an
international presence to a tiny organization with a local
presence. Corporate finance, housing, project finance,
retail, short-term finance, small-medium companies,
commerce, and other forms of loans are typical of a
financial institution's financing activities. Alternatively, a
financial institution's concentration may be limited to certain
transactions with clients that satisfy specified standards and
fall within specific industrial sectors. Banking institutions may
also provide financial solutions with an emphasis on
environmental business potential.
 Activity 5 : EVALUATION
Activity Notebook: 5mins

1. Give atleast 3 commercial and 3

cooperative banks operationg in the
Philippines.
2. Enumerate the 8 loan requirements to be
complied when applying for a business loan.
 ASSIGNMENT

To be submitted in a 1/4 sheet of paper :

list down 5 non bank financial
institutions actively operating in Negros
Oriental.
 QUARTER 3 - TOPIC

Loan Requirements
of
Bank and Nonbank
Institutions
 TOPIC REVIEW
1. WHAT ARE THE TWO MAJOR CATEGORIES OF BANK ACCORDING TO OWNERSHIP?
_________________________ ______________________________

2. Otherwise known as banking institutions, are corporations that provide services as

intermediaries of financial markets. __________________________

3. includes the name or business name, birthdate, address, SSS no., TIN no., phone no.,
and other identifying information such as valid government-issued identification
cards. _______________________
1. COMMERCIAL, COOPERATIVE
2. FINANCIAL INSTITUTIONS
3. DEMOGRAPHIC
 What
does
these
ACTIVITY1
3 MINS
images
emplie
s?
 TOPIC: DAY 2
NON BANK INSTITUTIONS
 O
L
B
K: Identify non bank loan requirements;
E J S: Distinguished the loan requirements and
A
R
E procedures of different banking institutions ; and
C
N T
A: Appreciate the importance of loan
I
I requirements of different non banking institutions
N
G
V .
E
S
 ORAL PARTICIPATION: A LIST OF FINANCIAL INSTITUTIONS WILL
BE FLASHED ON THE SCREEN; LEARNERS WILL HEAR A MUSIC
ACTIVITY
AND INSTRUCTED TO PASS THE OBJECT GIVEN BY THE
2 5MINS
TEACHER COUNTER CLOCKWISE. ONCE THE MUSIC WILL STOP
PASSING OF THE OBJECT WILL STOP AS WELL.. LEARNER WHO
HAS THE OBJECT WILL ANSWER THE QUESTION BEING
WHAT FLASHED.
TO BE FLASHED ON SCREEN
I 1. PERPETUAL HELP CREDIT COOPERATIVE INC. (PHCCI
KNOW? 2. DUMAGUETE CITY CREDIT COOPERATIVE (DCCO)C
2. SECURITY BANK
3. PALAWAN PANSHOP
4. ASA PHILIPPINES FOUNDATION, INC. (A MICROFINANCE NGO)
WHA
T
IS
IT!
20
Nonbank Institutions
MINS
 Nonbank Institutions
WHA A non-banking financial institution (NBFI) or non-bank financial
T company (NBFC) is a financial institution that does not have a full
banking license or is not supervised by a national or international
IS banking regulatory agency. NBFC facilitate bank-related financial
IT! services, such as investment, risk pooling, contractual savings, and
market brokering. Examples of these include insurance firms,
pawn shops, cashier's check issuers, check cashing locations,
payday lending, currency exchanges, and microloan
organizations. The role of NBFIs in strengthening an economy, as
they provide "multiple alternatives to transform an economy's
savings into capital investment which act as backup facilities
should the primary form of intermediation fail.
 1. Risk pooling institutions
WHA
Insurance companies underwrite economic risks
T associated with death, illness, damage to or loss of
IS property, and other risk of loss. They provide a
IT! contingent promise of economic protection in the
case of loss. There are two main types of insurance
companies: life insurance and general insurance.
General insurance tends to be short-term, while life
insurance is a longer contract, ending at the death of
the insured. Both types of insurance, life and property,
are available to all sectors of the community.
 2. Contractual savings institutions

WHA Contractual savings institutions (also called

T institutional investors) provide the opportunity for
individuals to invest in collective investment vehicles in a
IS fiduciary rather than a principle role. Collective
IT! investment vehicles invest the pooled resources of the
individuals and firms into numerous equity, debt, and
derivatives promises.
Contractual savings institutions include national
provident funds, life insurance companies, private
pension funds, and funded social pension insurance
systems.
 3. Other nonbank financial institutions
WHA
T
o Venture capitalists
IS
o Currency exchanges
IT!
o Microloan organizations (ASA, CARD
INC, KATIPUNAN)
o Pawnshops. (PALAWAN, CEBUANA.,)
 4. Government Non-Bank Financial
Institutions
WHA As the banking system was evolving there was a parallel
development of the other financial institutions. Insurance for workers under
T the Government Service Insurance System was in operation by 1936.
IS Compulsory social security insurance in the private sector was founded in
1957 with the creation of the Social Security System. These institutions were
IT! created essentially to protect the welfare of employees. The consequence
was that they set up large funds that were generated from the insurance
premium of members and their counterpart institutions. A logical result was
the corresponding effort to administer the welfare programs to protect the
insurance funds that are generated.Among these are institutions like PAG-
IBIG fund. In conjunction with the promotion of housing, the government also
created the National Home Mortgage Financing Corporation which is
designed as a national mortgage bank that could refinance the mortgage
papers of other financial institutions.
 Component Institutions
WHA
T 1. Investment Houses. These are stock corporations engaged in the
IS underwriting of securities of other corporations on a guaranteed basis. Their
principal role is capital formation that can engage in portfolio management,
IT! stockbrokerage, financial consultancy and lending operations. As it applies
to the US financial system, the investment banking industry is part of the larger
securities sector. It is basically made up of firms engaged in issuing,
distributing and selling securities and related financial products. Investment
banks, brokerages and market- making entities comprise the securities sector.
Investment banks are global financial institutions which perform any
or all of the service functions of origination and issue, management,
underwriting and distribution.
WHA
2. Financing Companies. Organized for the purpose of
T extending credit facilities to consumers and to industrial,
IS commercial, or agricultural enterprises. They operate by
discounting or factoring commercial papers or accounts
IT! receivables, or by buying and selling contracts, leases,
chattel mortgages, or other evidences of indebtedness, or by
leasing motor vehicles, heavy equipment and industrial
machinery, business and office machines and equipment,
appliances, and other movable properties.
WHA
3. Investment Companies. Any issuer which the
T Commission, upon application by such issuer, finds
IS and by order declares to be primarily engaged in a
IT! business or businesses other than that of investing,
reinvesting, or trading in securities either directly or
(A) through majority-owned subsidiaries or (B)
through controlled companies conducting similar
types of business.
WHA
T 4. Securities Dealers and Brokers. A securities
IS dealer buys and sells shares of stock of
IT! another or acquires securities for profit. In
contrast, a securities broker facilitates
transaction between a buyer and seller of
securities for a commission
WHA
5. Venture Capital Corporations. These are
T organized jointly by private banks, the
IS National Development Corporation and the
IT! Technology Livelihood Research Center
and/or other government agencies to
develop, promote, and assist small and
medium scale enterprises through debt to
equity financing.
WHA 6. Pawnshops. Provide credit to small borrowers who
are not qualified to obtain small loans from other
T financial institutions. Cost of borrowing and terms of
IS payment are generally fair making it as one of the
IT! components of the country’s financial system that
plays a vital role in socio_x0002_economic
development. Compared with banks, pawnshops
do not impose as many documentary requirements
before releasing cash to customers. Moreover, the
latter are more accessible, as they may be found
even in remote areas where banks do not operate.
WHA 7. Lending Investors. Lending
T
investors are those who make a
IS
IT! practice of lending money for
themselves or others. They extend all
types of loans, generally short term,
often without collateral, using their
own capital.
WHA 8. Mutual Building and Loan Associations. These are
T corporations whose capital stock
IS must be subscribed by the stockholders in regular
equal installments with the purpose of
IT! accumulating the stockholders’ savings and
repaying them with their accumulated savings and
profits upon surrender of their shares in order to
encourage industry, savings, and home building
among its stockholders.
 SAMPLE APPLICATION FORM
WHA
T PHCCI LOAN REQUIREMENT
IS
IT! 1. Filled-out application loan form
2. Membership (full-fledged) of at
least 6 months
1 3. Proof of identification
4. Proof of income
5. Co-makers
WHA
T
IS
IT!

2.
3
 INSTRUCTIONS:
1. COPY AND ANSWER IN YOUR ACTIVITY NOTEBOOK
ACTIVITY 2. IDENTIFY WHAT TYPE OF FINANCIAL NON BANK FINANCIAL INSTITUTION LISTED
3 BELOW. MARK CHECK ON THE COLUMN CORRESPONDING TO YOUR ANSWER.
PAWNSHOP MICROLOAN LENDNG GOV.
ORG INVESTMENT NONBANK
LET’S FINANCIAL
TRY INST.
IT! 1. DCCO
2. LIL’S
LENDING
5 MINS 3. CEBUANA
4. ASA PHILS.
5. SSS
6.DUNGGANON
 INDIVIDUAL ACTIVITY: A4 BONDP PAPER
ACTIVITY Choose one bank, one credit cooperative and nonbank financial institution.
3
NAME OF LOAN APPLICATION LOAN APPLICATION COMPARE/CONTRAST
INSTITUTION REQUIREMENTS PROCESS
WHAT BANK
I
CAN CREDIT COPERATIVE

DO? NON BANK

10
MINS
 OUTSTANDING EFFECTIVE ADEQUATE (10 INEFFECTIVE
(20pts) (15pts) pts) (5pts)
Appropriateness: Fulfills Appropriateness: Appropriateness: Fulfills Appropriateness: Fails
Fulfills the important some of the to address the
ACTIVITY or exceeds all of the important content
R assigned content content
requirements of the requirements of the
important
requirements of the
3 U requirements. assignment.
assignment.
assignment.
Accuracy: Knowledge Accuracy:
B of the subject is
Accuracy: Know ledge of the Accuracy: Knowledge
Knowledge of the subject is generally of the subject is
R
WHAT I
accurate throughout.
Extensiveness: Exhibits
subject is accurate
throughout except
accurate, though
flaw ed.
generally inaccurate.
Extensiveness:

I
in minor details. Extensiveness: Knowledge of the
C conv incing range and Exhibits limited range
Extensiveness: subject lacks range or
quality of knowledge,
S Seems informed on or quality of quality.
CAN having done
appropriate research, if
the subject, having
done appropriate
know ledge, having
done minimal
Perspective: The
information presented
DO?
appropriate
applicable. research, if
research, if
reveals failure to
Perspective: The applicable. understand the
applicable.
Perspective: The concept.
information presented Perspective: The
information information
rev eals the presented reveals presented reveals
10 understanding of the understanding of partial
MINS concept. the concept understanding of the
concept.
G
E
N A non bank financial institution (NBFI) is a financial institution
E that lacks a full banking license and is thus unable to take
R public deposits. However, NBFIs do help to encourage
A alternative financial services including investing (both
L collective and individual), risk pooling, financial advising,
I brokering, money transfer, and check cashing. NBFIs are a
Z source of consumer financing (along with licensed banks).
A Insurance companies, venture capitalists, money
T exchanges, some microloan groups, and pawn shops are a
I few examples of non bank financial institutions. These non-
O bank financial organizations compete with banks, offer
N services that aren't always well suited for banks, and focus
on certain industries or demographics.
 A. Modified Matching Type: Classify the following and write the correct answer in the
correct
column.
ACTIVITY Purpose of Loan Personal Information Pawn Shops
3 Microloan Organizations Investment Insurance Firms
Depository Contractual Collateral
WHAT
I BANK NON BANK LOAN REQUIREMENT
HAVE 1 4 7
2 5 8
LEARNED
3 6 9
?

10
MINS