Business and Consumer Loan

GENERAL MATHEMATICS
Second Quarter
LEARNING ACTIVITY SHEET #2.4
BUSINESS AND CONSUMER LOANS
Name: Grade & Section:
Objective:
 Understand the differences between business and consumer loans.

 Identify types of loans, their purposes, and risks.
 Learn to calculate interest on loans.
 Apply this knowledge through real-life scenarios.
Loans are classified broadly into two categories:
 Business Loans: Borrowed by businesses to fund operations, growth, or investments.

 Consumer Loans: Borrowed by individuals for personal needs, such as buying a car, home, or
covering education expenses.
Activity 1:
Identify if it’s business loan or consumer loan.
1. Mark is an entrepreneur planning to expand his local coffee shop to a second location in a
nearby city. He needs funds for leasing the new space, purchasing additional equipment, and
hiring staff.
2. Lisa wants to buy a car to commute to her new job across town. She is considering a loan to
make the purchase affordable, as she will be paying it off over the next five years.
3. The Johnson family wants to renovate their home by adding a new bedroom and updating the
kitchen. They need financial assistance to cover the renovation costs.
4. A small clothing retailer is preparing for a busy holiday season and needs to purchase extra
inventory. The business owner is looking for a loan to help with the upfront costs of stocking the
store.
5. Jenna, a recent college graduate, is considering a loan to help pay for a master’s degree program
that will enhance her career prospects. She needs a low-interest loan to cover tuition costs.
Key Terms to remember:
Collateral – assets used to secure the loan
Term of the loan – time to pay the entire loan
Guarantor – It is a person who guarantees to pay for someone else’s financial obligation if the borrower
fails to do so.
Amortization – a payment scheme wherein the loan is repaid through regular equal payments
Mortgage – a business loan or a consumer loan that is secured with a collateral
Chattel Mortgage – a mortgage on a movable property.
Outstanding balance - It is the remaining unpaid amount of loan or financial obligation as of a particular
date. It can be computed using Prospective Method or Retrospective method.
Types of Business and Consumer Loans
Types of Business Loans:
1. Term Loans: For purchasing assets or funding specific projects.

2. Working Capital Loans: For covering daily operational expenses.
3. SBA Loans (Small Business Administration Loans): Government-backed loans for small
businesses.
4. Equipment Financing: Loans specifically to purchase machinery or equipment.
Types of Consumer Loans:
1. Personal Loans: Unsecured loans for personal expenses.

2. Auto Loans: For purchasing vehicles.
3. Home Mortgages: For purchasing real estate.
4. Student Loans: For covering educational expenses.
Understanding Interest Rates and Loan Terms
Key Concepts:
 Principal: The amount borrowed.

 Interest Rate: The percentage charged on the principal.
 Loan Term: The period over which the loan will be repaid.
PV ∙ i
Monthly (Regular) Payment Calculation Formula: R=
1−¿ ¿
Where;
PV = present loan principal i = interest rate; r/m n = number of payments; (t)(m)
Example: If you take a $10,000 personal loan at an annual interest rate of 6% for 5 years, what is your
monthly payment?
Given: PV = 10,000 i = 0.06/12=0.005 n = (5)(12)=60
Substitute to the formula:

PV ∙ i
R=
1−¿ ¿
(10000)(0.005)
R=
1−¿ ¿
50
R=
1−¿ ¿
50
R=
1−(0.74137220)
50
R=
0.25862780
R=$ 193.33
Therefore, my monthly payment is $193.33
Activity 2:
Calculate the monthly payment for the following loans:
1. A $5,000 consumer loan at an annual interest rate of 5% for 2 years.

2. A $50,000 business loan at an annual interest rate of 7% for 10 years.
Solving Mortgage
Example1: For a purchase of a house and lot worth ₱3,800,000 the bank requires 20% down payment,
find the mortgaged amount.
Solutions:
Down payment = down payment rate x cash price
= (0.2)(3,800,000)
= ₱760,000
Amount of the loan= 3,800,000 - ₱760,000
= ₱3,040,000
Therefore, the mortgage amount is ₱3,040,000.
Activity 3:
Calculate the mortgage for the following loans;
1. If a house is sold ₱3,000,000 and the bank requires 20% down payment, find the amount of
mortgage.
2. Example 2: Mr. S. Abad borrowed ₱1,100,000 to buy a house and lot. Find the total amount of
interest he will pay if his monthly payment for a 20-year mortgage is ₱9,500.00
Activity 4: Reflect:
 Write a short summary of what you learned about business and consumer loans.
 Discuss which type of loan you think would be more beneficial for long-term financial stability
and why.
Performance Task ; Loan Plan
Instructions: In a short bond paper, based on what you've learned, choose a scenario in your life where
you might need a loan. Write a plan describing:
1. The type of loan you would consider.

2. Why you need the loan and how it would help.
3. How you would plan to repay it
Rubric in scoring:
Criteria Excellent Proficient Basic Needs

Improvement
Summary of Provides a detailed, Provides an accurate Provides a brief Summary is
Learning accurate summary summary of key summary with some incomplete or
of key concepts concepts with minor key concepts inaccurate, lacking
about business and details missing. missing; shows key concepts and
consumer loans, limited understanding.
demonstrating deep understanding.
understanding.
Comparison of Loan Thoroughly Discusses which loan Provides a brief or Lacks discussion or
Types discusses which loan type may be more unclear preference does not clearly
type (business or beneficial with some with minimal identify a preferred
consumer) is more reasoning and reasoning or loan type; no
beneficial for long- examples. examples. reasoning provided.
term financial
stability and
provides well-
reasoned, specific
examples.
Final Activity: Loan Clearly identifies a Identifies an Mentions a loan Loan type chosen
Type Selection realistic loan type appropriate loan type but lacks clear does not fit the
needed in a specific type for the explanation or scenario or lacks
scenario, with scenario, with some relevance to the clarity.
strong relevance to relevance to the scenario.
the situation. situation.
Explanation of Loan Provides a clear, Explains why the Explains why the Explanation of loan
Need specific explanation loan is needed with loan is needed but need is vague,
of why the loan is some specific details lacks specific details unclear, or missing.
needed and how it on how it will be on how it will help.
will help achieve a helpful.
goal or fulfill a need.
Repayment Plan Develops a detailed, Provides a Brief repayment Repayment plan is
realistic repayment repayment plan with plan is provided, but incomplete,
plan, considering some consideration lacks specific details. unrealistic, or
income, expenses, of income and missing.
and loan term. expenses.

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GENERAL MATHEMATICS

LEARNING ACTIVITY SHEET #2.4

BUSINESS AND CONSUMER LOANS

Name: Grade & Section:

 Understand the differences between business and consumer loans.

Loans are classified broadly into two categories:

 Business Loans: Borrowed by businesses to fund operations, growth, or investments.

Key Terms to remember:

Collateral – assets used to secure the loan

Term of the loan – time to pay the entire loan

Mortgage – a business loan or a consumer loan that is secured with a collateral

Chattel Mortgage – a mortgage on a movable property.

Types of Business and Consumer Loans

Types of Business Loans:

1. Term Loans: For purchasing assets or funding specific projects.

Types of Consumer Loans:

1. Personal Loans: Unsecured loans for personal expenses.

Understanding Interest Rates and Loan Terms

 Principal: The amount borrowed.

Given: PV = 10,000 i = 0.06/12=0.005 n = (5)(12)=60

Substitute to the formula:

Therefore, my monthly payment is $193.33

1. A $5,000 consumer loan at an annual interest rate of 5% for 2 years.

Performance Task ; Loan Plan

1. The type of loan you would consider.

Criteria Excellent Proficient Basic Needs

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