illustrating and
distinguishing business &
consumer loans
ELIZABETH OLIDELES QUARTER 2 | MODULE 9
NADIN DELA CRUZ
Introduction
•WHETHER YOU ARE LOOKING FOR FUNDS TO
FINANCE YOUR NEW CAR, HOME RENOVATION, NEW
BUSINESS VENTURE OR THINKING ABOUT ITS
EXPANSION, YOU HAVE OPPTIONS. THIS MODULE IS
DESIGNED TO HELP YOU ILLUSTRATE AND
DISTINGUISH BUSINESS AND CONSUMER LOANS.
VOCABULARY LIST
1. BUSINESS LOAN
•MONEY LENT SPECIFICALLY FOR
A BUSINESS PURPOSE. IT MAY BE
USED TO START A
BUSINESS OR TO HAVE A
BUSINESS EXPANSION
2. CONSUMER LOAN
•MONEY LENT TO
AN INDIVIDUAL
FOR
PERSONAL OR
FAMILY PURPOSE
3. COLLATERAL
•ASSETS USED TO
SECURE THE
LOAN. IT MAY BE
REAL-ESTATE OR
OTHER
INVESTMENT
4. TERM OF THE LOAN
•TIME TO PAY
THE ENTIRE
LOAN.
LEARNING ACTIVITIES
A Consumer loan refers to the money lent to an individual for personal or family
Purpose.
A consumer loan can get you a new house or car. Whenwe refer to the money lent
specifically for a business purpose, it is a business loan. These loans can be used to just
about anything a small or large business might need to continue its operation or to improve
its facilities
LET US CHECK THE NATURE OF THE LOANS IN THE FOLLOWING EXAMPLES.
TELL WHETHER THE
FOLLOWING ILLUSTRATES A BUSINESS LOAN OR A CONSUMER LOAN.
EXAMPLE 1: MS. KATH PLANS TO OPEN A PASTRY SHOP. SHE
WANTS TO BORROW MONEY FROM ABC
BANK TO PURCHASE BAKING TOOLS AND EQUIPMENT.
ANSWER: BUSINESS LOAN
EXAMPLE 2: MR. VON AND HIS FAMILY ARE PLANNING TO SPEND THEIR
VACATION IN A FARM RESORT. HIS
SAVINGS IS NOT ENOUGH SO HE PLANS TO BORROW MONEY FROM DEF
BANK.
ANSWER: CONSUMER LOAN
EXAMPLE 3: AFTER 15 YEARS OF STAYING IN HER ACQUIRED CONDOMINIUM UNIT, MS.
MELODY PLANS TO RENOVATE HER PLACE. SHE WANTS TO BORROW MONEY FROM GHI
BANK TO FINANCE THE COST OF UPGRADING HER UNIT.
ANSWER: CONSUMER LOAN
EXAMPLE 4: MR. EDDIE IS A CERTIFIED PALAY SEED DEALER. HE IS PLANNING
TO EXPAND HIS BUSINESS
BY SELLING MORE AGRICULTURAL PRODUCTS. HE WANTS TO BORROW
MONEY FROM JKL BANK FOR HIS
BUSINESS.
ANSWER: BUSINESS LOAN
EXAMPLE 5: MS. SHIE IS PLANNING TO PURSUE HER PHD STUDIES AFTER
FINISHING HER MASTER’S DEGREE IN PHYSICAL EDUCATION. SHE WANTS TO
BORROW MONEY FROM MNO BANK TO PAY FOR HER TUITION FEES.
ANSWER: CONSUMER LOAN
