The Use of C’s of Credit in Extending Bank Loans to Micro and Small Food Enterprises

Abstract

The study intended to determine the effectiveness of the use of the C’s of credit of banks in extending loans to micro and small food enterprises in Quezon City. A descriptive survey method was employed in this study. Respondents were composed of 320 business owners of a food business / food establishment located in Quezon City. Based on the study, the effectiveness of theuse of “C’s” of credit in extending bank to micro and small food enterprises in terms of Character, Capacity, Capital, Collateral, and Condition was assessed “Effective”. There were no significant differences in the respondents’ assessment when grouped byage, highest educational attainment, nature of business and number of years in operation. However, when respondents were grouped by sex, capitalization and numbers of employees, their assessments were statistically different. The researcher recommended that the banks should come up with an incentive or reward program to encourage the branch managers and sales managers to visit the micro and small food enterprises, most often aside from their big clients. Moreover, banks should consider putting up a branch or Automated Teller Machines (ATM) near the food business area to cater the financial needs of the market. In addition, the banks, as financial institution, should help in educating the food enterprises on financial matters such as the benefits of maintaining deposit accounts, difference of lending through banks vs. 5-6 type of lending, simple bookkeeping, pricing strategies, among others. Finally, the researcher also recommended that it is beneficial for the future researchers to conduct a study on micro and small food enterprises with loan experience.