General Mathematics

Quarter 2 – Module 11:

Business and Consumer Loans

CO_Q2_General Mathematics SHS

Module 11
General Mathematics
Alternative Delivery Mode
Quarter 2 – Module 11: Business and Consumer Loans
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist in any work of
the Government of the Philippines. However, prior approval of the government agency or office
wherein the work is created shall be necessary for exploitation of such work for profit. Such
agency or office may, among other things, impose as a condition the payment of royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
trademarks, etc.) included in this module are owned by their respective copyright holders.
Every effort has been exerted to locate and seek permission to use these materials from their
respective copyright owners. The publisher and authors do not represent nor claim ownership
over them.

Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Writer: Rey Mark R. Queaño
Editors: Elizabeth D. Lalunio, Elizabeth B. Dizon, Anicia J. Villaruel, Roy O. Natividad
Reviewers: Jerry Punongbayan, Diosmar O. Fernandez, Dexter M. Valle, Jerome
A. Chavez, Jea Airee Carimae M . De Mesa, Dr. Anicia J. Villaruel,
Marilou M. Tierra and Moahna Aura M. Mancenido
Illustrator: Hanna Lorraine Luna, Diane C. Jupiter and Michael A. Alonzo
Layout Artist: Roy O. Natividad, Sayre M. Dialola and Noel Rey T. Estuita
Management Team: Francis Cesar B. Bringas
Job S. Zape, Jr.
Ramonito Elumbaring
Reicon C. Condes
Elaine T. Balaogan
Fe M. Ong-ongowan
Hermogenes M. Panganiban
Phillip B. Gallendez
Josephine T. Natividad
Anicia J. Villaruel
Dexter M. Valle

Printed in the Philippines by ________________________

Department of Education – Region IV-A CALABARZON

Office Address: Gate 2 Karangalan Village, Barangay San Isidro

Cainta, Rizal 1800
Telefax: 02-8682-5773/8684-4914/8647-7487
E-mail Address: [email protected]
General Mathematics
Quarter 2 – Module 11:
Business and Consumer Loans
Introductory Message
This Self-Learning Module (SLM) is prepared so that you, our dear learners,
can continue your studies and learn while at home. Activities, questions, directions,
exercises, and discussions are carefully stated for you to understand each lesson.

Each SLM is composed of different parts. Each part shall guide you step-by-
step as you discover and understand the lesson prepared for you.

Pre-tests are provided to measure your prior knowledge on lessons in each

SLM. This will tell you if you need to proceed on completing this module or if you
need to ask your facilitator or your teacher’s assistance for better understanding of
the lesson. At the end of each module, you need to answer the post-test to self-check
your learning. Answer keys are provided for each activity and test. We trust that you
will be honest in using these.

In addition to the material in the main text, Notes to the Teacher are also
provided to our facilitators and parents for strategies and reminders on how they can
best help you on your home-based learning.

Please use this module with care. Do not put unnecessary marks on any part
of this SLM. Use a separate sheet of paper in answering the exercises and tests. And
read the instructions carefully before performing each task.

If you have any questions in using this SLM or any difficulty in answering the
tasks in this module, do not hesitate to consult your teacher or facilitator.

Thank you.
 What I Need to

Previously, you have learned about the difference between stocks and bonds.
We said that stocks are the ownership shares you buy from a company while
bonds are a form of long-term investment issued by a corporation or
government where the purchaser becomes a creditor of the company. You now
also have the background on how to describe different markets for stocks and
bonds as well as the skills in analyzing different market indices for stocks and
bonds.

Now, you are about to begin another module in General Mathematics. This
module was designed and was written with you in mind. It is here to help you
learn the concepts of business loans and consumer loans. The scope of this
module permits it to be used in many different learning situations. The
language used recognizes the diverse vocabulary level of students. The lessons
are arranged to follow the standard sequence of the course. But the order in
which you read them can be changed to correspond with the textbook you are
now using.

Are you ready for the new lesson? Fasten your seatbelt and focus on the
world business and consumer loans.

After going through this module, you are expected to:

1. define loan and its related terms;

2. illustrate business loan and consumer loan; and

3. distinguish business loan from consumer loan.

1
CO_Q2_General Mathematics SHS
Module 11
 Lesson Illustrating and
1 Distinguishing Business
and Consumer Loans
According to Max of the movie The Adventures of Sharkboy and
Lavagirl, “Dream a better dream, then work to make it real”. If you have a big
dream, you should have an extra bigger persistence to achieve that dream. If
you want to buy something big and expensive, you have to save for it. If you
want a car, a house, or if you want to start your own business, you have to
deal with it diligently. Right?

But in this world of modern business, you have the option to achieve
these dreams or buy what you want instantly. By just paying a certain amount
at a certain period and interest, you can have the money. Yes, you are right,
we can apply for loans.

And to know more about loans, welcome to this module. This lesson
will give you insights on the basic concepts of loans specifically on business
and consumer loans. At the end of this module, you should be able to decide
wisely on the appropriateness of business and consumer loans and its proper
utilization. Are you all ready?

What’s In

Before we dig into the main topic of this module - the business and
consumer loans, let us have first the background on the concepts of LOANS.

The basic concepts of loans are very familiar to all of us. Through loans,
any individual can receive assistance in addressing financial needs from
different lending corporations. Loans are not just limited to borrowing money
in a bank to finance business expansion, but also covers the use of credit
card, amortizing appliances and many more.

5
CO_Q2_General Mathematics SHS
Module 11
Activity:

Directions. The following statements describe the basic terms related to the
topic of this module that you are most likely familiar with. Rearrange the
jumbled letters to reveal the answer. Write your answer in the given space.

_________1. It is a financial obligation of paying someone a certain amount for

the use of his or her money. (ONAL)

_________2. It is the amount paid to borrow money (STEINERT)

_________3. It is the amount of money that the loan applicant requests to

borrow. (ALPNIRICP)

_________4. It is the payment or interest level used to determine a borrower's

monthly payment. (TEAR)

_________5. It is the maturity or length of time over which a loan extends, for

instance one year, five years, or more. (EMRT)

6
CO_Q2_General Mathematics SHS
Module 11
 What’s New

Read the story of two best friends, analyze their situation, and try to
answer the questions below.

Best Friends Forever

Bessy and Conny are childhood best friends since elementary. Even
their parents are also friends and treat each other as family. The two girls
went to same school up to college but with different courses. Conny took
up Architecture while Bessy got into Business Administration. But even
though they were not in the same college, they see to it that they still have
time to each other especially at times that they need someone to lean on
and a shoulder to cry on.
Because of their dedication, hard work and innate intelligence, there
is no doubt that both of them graduated as Cum Laude. Bessy and Conny
have big dreams. They are dreaming not only for themselves but for their
family. The Filipino culture of close family ties was very evident among
them.
One day, after graduation Bessy and Conny talk to each other and
discuss their plans.
“Hi sister, how are you today” Bessy said.
“I’m good sister, how about you? Conny asked.
“I’m also fine sis” Bessy said.
“So, what’s our plan sis? Now that we graduated from college, it’s
our turn to help our family”, Conny said.
“Yeah, I am planning to expand our family business so that I could
practice my degree at the same time I could help my parents” Bessy said.
“That’s a good plan. I also want to practice my degree in
Architecture. That’s why I want to build a new house for my family. I want
to give my parents their dream house” Conny replied.
“We really have big dreams sis, but we are just starting, how can we
do that?” Bessy asked.
“Well, my uncle is working at North-South bank and they offer loans
that we can pay while working with our plans.” Conny explained.
“I think that is a good idea sis. We will be working hard to make a
good payment for that loan at the same time we could start with what we
are dreaming of.” Bessy said.

7
CO_Q2_General Mathematics SHS
Module 11
 The next morning, Bessy and Conny went to the bank to apply for
their loans. After talking to the bank manager, accomplishing all the forms
and submitting all the requirements, their loans were approved.
“How your application sis” Bessy asked.
“It’s okay, they asked me for a collateral and I submitted an income
tax return and a bank statement. Then they give me 10 years as the term
of my loan at 6.5% annual interest” Conny explained.
“Hmm, I see. Well, I was also asked for a collateral so I gave the title
of our house. They also require the owners of our business who happened
to be my parents as guarantors. I was also asked to submit credit report,
income tax returns and our business’ financial statement. They only give
me 5 years to pay my loan at 10% interest rate.” Bessy also explained.
Even though they applied for different loans, good thing that it was
both approved. And the two promised to make the best out of the money
lent to them to start their dreams.

Questions:
1. Who among them applied for a loan easier? Why do you say so?
2. What were the requirements asked for the approval of their loans?
3. In what way do you think Bessy’s loan is different from Conny’s
loan?
4. Do you think applying for a loan is good or bad?
5. If you will apply for a loan, what will be your plan so that you will
never fail in paying it?

8
CO_Q2_General Mathematics SHS
Module 11
 What is It

The story of Bessy and Conny aside from it’s a story of best friends, it
is also a story of two different kinds of loans - the business loan and
consumer loan.
A business loan is what Bessy applied for. A business loan is money
lent specifically for a business purpose. It may be used to start a business or
to have a business expansion. The business loan includes microloans, invoice
financing, mezzanine financing, bank loans, asset-based financing, cash flow
loans, as well as business cash advances. On the other hand, Conny applied
for a consumer loan which is money lent to an individual for personal or
family purposes. Consumer loan includes credit cards, mortgages, home
equity lines of credit, refinances, auto loans, student loans, as well as personal
loans.
While reading the story, you also encountered the following terms:
• Collateral – assets used to secure the loan. It may be real estate or other
investments
• Term of the loan – time to pay the entire loan
• Guarantor – a person who guarantees to pay for someone else’s financial
obligation if the borrowers fail to do so.

Business Loan versus Consumer Loan

Term of Business Loan Consumer Loan
Reference
Collateral May require collateral (real May also require a
estate, other investment, collateral
equipment, fixtures or
furniture)
Guarantor Require the business owner Does not usually
to sign as guarantor require a guarantor
Documents The lendee has to submit a The lendee may require
credit report, income tax a credit report, bank
returns and the company's statements, and
financial statement. income tax return. If
he/she is employed, a
certificate of
employment and
employee pay slips will
be submitted.
Term of the Loan Shorter-term Longer-Term
Interest rate Higher interest Lower interest rate

9
CO_Q2_General Mathematics SHS
Module 11
Examples:

1. Andrea, a hardworking transwoman who recently finished her short course

on hair and makeup is planning to put up her small salon. She was advised
by her friends to apply for a bank loan. Which loan will she apply? A
business loan or a consumer loan?

Answer: Andrea needs a business loan since she is planning to use the

money to start her salon business.

2. Mr. Zion is an environmentalist who is planning to conduct a mangrove

planting at Brgy. Barra. He wants to cover all the expenses for this activity,
but he realized that his money is not enough. Hence, he needs to borrow
money to finance his advocacy. Is he going to apply for a business loan or
a consumer loan?

Answer: Mr. Zion will apply for a consumer loan since the money that he

will borrow is for the finances of his activity.

10
CO_Q2_General Mathematics SHS
Module 11
EXm

What’s More

Activity 1.1
Directions. Identify whether the following statements are TRUE or FALSE.
Write T if the underlined word/s is/are correct for the statement, otherwise
write the correct word/s to make the statement correct.

______________1. Business loans are money used to finance a business or to

start a new business.
______________2. Credit cards and car loans are example of business loans.
______________3. Guarantors are the assets used to secure a loan which
include real-states or investments.
______________4. Consumer loan has higher interest rate than business loan.
______________5. Consumer loan has longer term of payment than business
loan.

Activity 1.2
Directions. Identify whether the following illustrates a business loan or a
consumer loan. Write BL if the situation shows business loan and CL if it
states a consumer loan.

1. Mr. Manzano plans to have a barbershop. He wants to borrow some money

from the bank to buy the equipment and furniture for the
barbershop.
Answer: __________________

2. Margareth is planning to take up Engineering as her college course. To

support her, Mr. And Mrs. Alvar, her parents, borrowed money from the
bank for her financial needs.
Answer: __________________

3. Because of his love for our country, Mr. Razo always conduct an
Independence Day presentation to his barangay. However, because of
COVID - 19, he got a problem with his business and need extra money to
finance his advocacy. He realized that he needs to borrow money from the
bank to continue his annual Independence Day activity.
Answer: __________________

4. Mr. Bonifacio wants to renovate their 100-year old ancestral house in

Sariaya, Quezon which was also identified as a historical house in the
province. He wants to repair the ceiling in preparation for the rainy season.
He will borrow some money from the bank to finance this plan.
Answer: __________________

11
CO_Q2_General Mathematics SHS
Module 11
5. Mr. Santiago owns the Kakanin food cart business. He wants to put another
food cart on a new mall in Tayabas City. He decided to have a loan
amounting to ₱100,000.00 to establish the new business.
Answer: __________________

6. In preparation for the online learning of her children due to the COVID-19
pandemic, Mrs. Castro decided to buy laptops for them and got an internet
connection. But because of short in budget, she needed to borrow money
amounting to ₱80,000.00 for this school preparation.
Answer: __________________

7. Instead of working as a Manager in a certain company, Mr. De Guzman

decided to leave his job and put up an internet cafe instead. To finance his
business, he borrowed money from a Kabayan Bank.
Answer: __________________

8. Because Anna believed that Filipinos are truly honest, she decided to put
up an Honesty Bookstore in front of Excellence National High School.
Everyone can get what they need and pay for it without anyone in the
cashier. But before she can own this shop, she borrowed ₱1,000,000.00
from the bank to finance the expenses in putting up this bookstore.
Answer: __________________

9. Yzzyr excelled in Science and even won various competitions relative to

Applied Science. At the back of her achievements are her supportive
parents. Before she invented the COVID-19 scanning robot, her parents
need to finance her project with a big amount. To help her, they even
borrowed money from the bank just for her to finish her invention.
Answer: __________________

10. Xandria really loves her family. They supported her in all her endeavors.
As return of gratitude, she promised them that they will make a tour to
great places in the world. To realize her promise, and to help her finance
their tour, she applied for a personal loan amounting to ₱200,000.00 to
Bank XY.
Answer: __________________

12
CO_Q2_General Mathematics SHS
Module 11
 What I Have Learned

A. Directions. Using your own words, please complete the following

statements to reveal what you have learned to the topic. Write your
answers on the given space.
1. Business loan is a money
______________________________________________________________________
_____________________________________________________________________.

2. Consumer loan is intended for

______________________________________________________________________
_____________________________________________________________________.

3. Collateral is
______________________________________________________________________
_____________________________________________________________________.

4. Guarantor is the person

______________________________________________________________________
_____________________________________________________________________.

5. Term of loan is about

__________________________________________________.
B. Directions. Using the Venn Diagram, write words or statements that will
compare
business from consumer loans.

Business Loan Consumer Loan

13
CO_Q2_General Mathematics SHS
Module 11