Underground Lenders research

Topics: Usury, Debt, Bangko Sentral ng Pilipinas Pages: 9 (5725 words) Published: October 24, 2014
THE PROBLEM AND ITS BACKGROUND Introduction Underground lending company is common not only in the Philippines but all over the world. Underground lending company is not officially registered in government, they have no DTI registration. It is a basis of person to person without documentation and it has no formal corporate names. Many entrepreneurs prefer to borrow from underground lending company in spite of the fact that underground lending company charge high interest on loans. According to Ito (2003), borrowers are not the usual suspects, such as gamblers, impulsive shoppers and the like. Nowadays, with the official unemployment rate topping 5, and the peoples salaries being cut as the economic slump continues, many people in urgent need of extra money are small entrepreneurs. These people are often unable to obtain loans through traditional channels like banks because banks have lot of requirements. The researchers want to find out the problems encountered by selected customers in availing services and loans from underground lending company. It is hoped that through this study the government and financial institutions will have an idea to make a new policy about lending, so that small entrepreneurs will prefer to borrow from a credible lending institution. Statement of the Problem This study attempts to find out the problems encountered by selected customers in availing services and loans from underground lending company. Specifically, it seeks answer to the following questions What is the profile of respondents in terms of Gender Age Civil status Monthly Income What factors are considered by the respondents in availing services and loans from underground lending company What are the problems encountered by the respondents in availing services and loans from underground lending company How can the result of the study help in preparing an action plan for underground lending company Assumptions The researchers assume that most of the problems encountered by the respondents in availing services and loans from underground lending company are high interest rate and short periods of repayment, slow processing of requirements, too many documents to submit, collateral requirements, and limited loan windows (business loans). Significance of the Study This study dealt with the problems encountered by selected customers in availing services and loans from underground lending company. Hopefully, this study will be beneficial to the following Government/Policy Makers The result of the research study will give them feedback on the problems encountered by selected customers in availing services and loans from underground lending company and they will be able to review the policy on acquiring loans to ease the burden of the customers. Financial Managers The research will help them to have an idea on how to attract small entrepreneurs to borrow from them instead of borrowing from underground lending company. Small Entrepreneurs/Customers This research will serve as their guide in availing the services and loans from underground lending company. It will also help them to choose the best way of financing their business. Future Entrepreneurs This study will serve as guide for them in starting new business, primarily on how they are going to finance their planned business. The Researchers The findings of the study would widen their perspective and inform them largely on how they will finance not only their planned business but also those other things which are in need of financing. Future Researchers This study may also help the researchers for their future studies related to this study. Underground Lending Company The research will serve as their guide in how they will more attract customers by maintaining the factors the customers usually considered and solving the problems that the customers encountered in availing services and loans from them. Scope and Delimitation The research study focuses on the problems encountered by selected...
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