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Introduction

Lending money to those who need it can be a profitable business. With


the proper management of your funds and control of risks involves in extending
credits to borrowers, running such venture can give you favorable return of
capital or investment. You can expect more people wanting to borrow money,
amidst the economic crisis our nation is now facing. The credit industry has many
players, such as banks, financing companies and other financial institutions.
However, there are still specific markets which you can successfully target to
extend your fund for lending. You just need to be strategic and prudent enough to
ensure that your loans and receivables are reasonably collectible.

As mostly people who are willingly to quit an employee life, have a sincere
desire to build a better life for themselves. They know that the loans offer an
important opportunity and they are committed to making the most of them. Most
of our kababayans were already involved in some kind of small enterprise, like
vending on the street. Therefore, they have a good business sense. The loans
allow them to diversify, be creative, and buy products in bulk.

Running a successful business and making good on a loan creates a


more powerful and independent person.

Objective of the Study

To be able to identify the effectiveness of the proposed business in the


market by catering their financial needs.

To be able to formulate the most effective management techniques in


operating the business.

To find out how the business be practically put into effect.

To be able to find effective strategies of increasing the profit of the


business while underrating the cost.

Importance of the Study

It is a challenge for everyone to put up a business. Many factors will be


considered therefore, this study will be a great help to the society most especially
to those whose interests are in venturing their money in lending business. This
will serve as a guiding tool in making the business in reality and minimize or
eliminate the underground lending such as Bombay lending also known as 5-6
and short-time lending that offers an unreasonable interest rate.

Furthermore, this paper can broaden the thinking of the researchers with
regard to the challenge in the business world and urge them to be informative on
how lending business accompany and fight those challenges.

Scopes and Limitations of the Study

Definition of Terms

1. Borrowers individuals, organization or company that is using funds on credit.


2. Interest Income an income gained from lending of money.
3. Interest Rate an amount charged, expressed as a percentage of principal, by
a lender to a borrower.
4. Lending an activity to give or allow the use of temporarily on the condition
that the same or its equivalent will be returned with interest.
5. Lending Company a company which makes loans to individuals and/or
business to gain interest.
6. Loans the act of giving money to another party in exchange for future
repayment of the principal amount along with interest.
7. Penalty Fees fees being collected for late repayments of loan.
8. Republic Act 9497 also known as Lending Company Regulation Act of 2007.
An Act Governing the Establishment, Operation and Regulation of Lending
Companies in the Philippines.

9. Term period over which a loan agreement is in force, and before or at the
end of which the loan should either be repaid or renegotiated for another term.
10. Underground Lending informal engaging in lending activities, usually offers
higher interest rate.