Documente Academic
Documente Profesional
Documente Cultură
FINANCING COMPANIES
SUBMITTED TO:
Prof. Bernadette M. Panibo, MBA
SUBMITTED BY:
CALABUNG, ROSELYN
TABIRARA, CHARLIE
UNCIANO, ABIGAIL
VILLANUEVA, MICHAEL VAN A.
VIRREY, ANTHONY CARL
BSBA FM 2-2
2019
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 2
TABLE OF CONTENTS
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Personal Loans
One of the most common functions for finance companies is the distribution of
personal or individual loans. These are loans to individuals not affiliated with any
business, and designated for personal uses. The most common type of individual
loan is the home loan or mortgage, but smaller loans, such as auto loans, are also
popular.
Business Loans
Business or commercial loans are granted to businesses for use in an
enterprise. There are many types of business loans, and finance companies may
handle any of them. Some businesses may want money to buy assets like property or
equipment, while others want a loan for their first major supply purchase, or a bond
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 5
payout they cannot currently afford. Business loans are often larger than individual
loans and make the finance company more money on interest.
Funding Activities
Since finance companies do not receive their money from deposits the way
that banks do, they need another way to come up with the money that they loan out.
One of the main functions of a finance company is borrowing these funds from banks
themselves, or acquiring the funds from money market activities.
Capital Financing
Capital financing is a special type of financing that is conducted by finance
companies owned by parent companies that sell products or services. These finance
companies work with the customers of the parent company, loaning them money so
that they can purchase parent company goods. The parent company benefits from
the decrease in inventory and the interest that the loan will generate.
maximum interest rates that they can charge and on the measures they can take to
collect loans that are past due.
make loans. Both are heavily regulated, and both can fail if they run out of money or
fall victim to mismanagement or fraud.
Finance companies provide many of the some of the same services as banks,
including auto financing and home loans, retirement planning and underwriting. But
they don’t generally accept deposits.
Risk Level
Banks and finance companies are both considered “direct lenders,” meaning
their analysts review your loan application, then decide whether to approve it.
However, some finance companies are generally willing to accept a higher level of
risk, meaning they are more likely to approve loans for customers who may have had
past credit issues.
This doesn’t mean finance companies are reckless or poorly managed. It just
means they are comfortable with a higher level of risk, which allows them to serve a
larger market.
Specialization
A key advantage to partnering with a finance company is that it is more likely
to be specialized. Most banks serve a wide range of customers, businesses, and
other interests.
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Section 1. This Act shall be known as the "Financing Company Act of 1998."
"(b) 'Securities and Exchange Commission' shall mean the office of the Securities
and Exchange Commission of the Philippines;
"(c) 'Credit' shall mean any loan, mortgage, financial lease, deed of trust, advance
or discount, any conditional sales contract, contract to sell, or sale or contract of
sale of property or service, either for present or future delivery, under which, part of
all or the price is payable subsequent to the making of such sale or contract; any
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 10
contract, any option, demand, lien or pledge, or to the other claims against, or for
the delivery of, property or money, any purchase, or other acquisition of or any
credit upon the security of, any obligation or claim arising out of the foregoing, and
any transaction or series of transactions having similar purpose or effect;
"(e) 'Purchase discount' is the difference between the value of the receivable
purchased or credit assigned, and the net amount paid by the finance company for
such purchases or assignment, exclusive of fees, services, charges, interest and
other charges incident to the extension of credit.
"(f) 'Lease rentals' shall refer to the periodic payments made by the lessee to the
lessor under Sec. 3(d), above."
"Sec. 5. Limitation on purchase discounts, lease rentals, fees, service and other
charges. — The Monetary Board of the Bangko Sentral ng Pilipinas is hereby
empowered to prescribe, in consultation with financing companies and the
Securities and Exchange Commission, the maximum rate or rates of purchase
discounts, lease rentals, fees, service and other charges of financing companies,
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"Sec. 7. Requirement for registration. — Aside from requiring compliance with the
provisions of the Corporation Code, the Securities and Exchange Commission
shall not register the articles of incorporation of any financing company unless its
office is satisfied on the evidence submitted to it, that:
"(a) All the requirements of existing laws to engage in the business for which the
applicant is proposed to be incorporated or organized have been complied with;
"(b) The organization, direction and administration, as well as the integrity and
responsibility of the organizers and administrators reasonably assure the
protection of the interest of the general public;
"(c) All the requirements of this Act have been complied with: Provided, That
financing companies duly incorporated or registered prior to the approval of this
Act, and which are actually existing and operating as such, shall file an information
sheet with the Securities and Exchange Commission in the form to be prescribed
by the Securities and Exchange Commission within sixty (60) days after notice
from the said Commission. No person, association, partnership, or corporation
shall hold itself out as doing business as a 'financing company' or 'finance and
investment company' or any other title or name tending to give the public the
impression that it is engaged in the operations and activities of a financing
company, unless so authorized under this Act."
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Sec. 10. There is hereby inserted after Sec. 8 as renumbered, new Sec.s 9, 10,
11, 12 and 13 to read as follows:
"Sec. 9. Rights and powers. — Financing companies shall have the following
powers, in addition to those granted by this Act and by other laws:
"(a) Engage in quasi-banking and money market operations with the prior approval
of the Bangko Sentral ng Pilipinas;
"(b) Engage in trust operations subject to the provisions of the General Banking
Act upon prior approval by the Bangko Sentral ng Pilipinas;
"(c) Issue bonds and other capital instruments subject to pertinent rules and
regulations of the Bangko Sentral ng Pilipinas;
"(f) Provide foreign currency loans and leases to enterprises who earn foreign
currency by exports or other means, subject to existing laws and rules and
regulations promulgated by the Bangko Sentral ng Pilipinas.
"Sec. 11. Parity clause. — When providing medium and long-term credit to small
and medium enterprises, financing companies shall enjoy such other rights,
powers, benefits and privileges as may be granted by the law or regulation to other
non-bank financial institutions when they provide similar credit to such
enterprises."
"Sec. 12. Liability of lessors. — Financing companies shall not be liable for loss,
damage or injury caused by a motor vehicle, aircraft, vessel, equipment,
machinery or other property leased to a third person or entity except when the
motor vehicle, aircraft, vessel, equipment or other property is operated by the
financing company, its employees or agents at the time of the loss, damage or
injury.
"Sec. 13. Registry of financial lease. — The Register of Deeds shall open and
maintain a register of financial leases, as an adjunct to the chattel mortgage
registry.
"(a) Engage in the business of a financing company without authority from the
Securities and Exchange Commission;
"(c) Make use of trade or firm name containing the words 'Financing Company' or
'Leasing Company' or 'Finance and Leasing Company or 'Finance and Investment
Company' or any other designation that would give the public the impression that it
is engaged in the business of a financing company or leasing company as defined
in this Act without authority; and
"(a) Knowingly and willingly make any statement in any application, report or
document required to be filed under this Act, which statement is false or
misleading with respect to any material fact; or
"(b) Overvalue or aid in overvaluing any securities for the purpose of influencing in
any way the action of the company on any loan, or discounting line.
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Sec. 12. Sec.s 11 and 12 of the same Act are hereby renumbered as Sec.s 15 and
18, respectively.
Sec. 13. Effectivity. — This Act shall take effect fifteen (15) days following the
completion of its publication in the Official Gazette or in two newspapers of general
circulation.
Rights and Power – Financing companies shall have the following powers:
1. Engage in quasi-banking and money market operations with the prior approval
of the Bangko Sentral ng Pilipinas;
3. Issue bonds and other capital instruments subject to the pertinent laws, rules
and regulations;
6. Provide foreign currency loans and leases to enterprises that earn foreign
currency by exports or other means, subject to existing laws and regulations
promulgated by the Bangko Sentral ng Pilipinas.
1. Ten Million Pesos (PHP10,000,000.00) for the head office in Metro Manila and
other first class cities.
1. One Million Pesos (PHP1,000,000.00) : Metro Manila and other first class
cities;
For a financing company granted with special rights and powers mentioned in Rights
and Powers hereof additional capital required shall be based on letter (c) above or on
the capitalization requirement under the rules and regulations promulgated by the
appropriate government agency, whichever is higher.
Corporate Name
The corporate name of financing companies shall contain the term” Finance
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A financing company may give loans in such amounts and reasonable interest
rates and charges as may be agreed upon between the lending company and the
debtor: Provided, That the agreement shall be in compliance with the provisions of
Republic Act No. 3765, otherwise known as the “Truth in Lending Act” and Republic
Act 7394, otherwise known as the “Consumer Act of the Philippines”. As of August
19, 2013 there are no usury laws which limit the interest rate a lending investor my
charge loan recipients. The Supreme Court has reduced the interest rate, in some
cases as being excessive, iniquitous, unconscionable and exorbitant, hence, contrary
to morals (“contra bonos mores”), if not against the law.
In accordance with the Truth in Lending Act and prior to the consummation of
the transaction, a financing company shall furnish each debtor a disclosure
statement, setting forth, to the extent applicable, the following information:
1. Amortization schedule;
1. Cover Sheet
2. Application Form
3. Information Sheet
Initial Application Fees shall be paid to SEC at the time of filing of application
1) Head Office –
A fee of 1/8 of 1% of the paid-up capital of the financing company + LRF of 1%
(minimum of P10.00) shall be paid for the issuance of a Certificate of Authority to
Operate as a Financing Company.
Annual fee –
An annual fee shall be paid not later than forty five (45) days before the anniversary
date of the CA.
Annual fee of 1/8 of 1% of the paid-up capital of the financing company + LRF of 1%
(minimum of P10.00)
Annual fee of 1/8 of 1% of the minimum assigned capital of the financing company +
LRF of 1% (minimum of P10.00)
Commencement of Operations
1 1 2 3 FINANCE CORPORATION
5 24 - 25 FINANCE CORP.
9 7R FINANCE CORP.
27 AG FINANCE, INCORPORATED
549 RIGHT CHOICE FINANCE CORP. (FORMERLY: RIGHT CHOICE LENDING CORP.)
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BIBLIOGRAPHY