ASSESSING THE EFFECT OF CREDIT BORROWING ON THE PROFITABILITY OF SELECTED MICRO ENTERPRISE IN SUSANO ROAD NOVALICHES QUEZON CITY: TOWARDS GUIDE

Abstract

Micro enterprises significantly contribute to local economic growth in the Philippines, especially in communities such as Susano Road, Novaliches, Quezon City. However, many of these small businesses struggle with financial constraints, often relying on borrowed credit to support daily operations. While credit access can enhance business sustainability and expansion, poor credit management may negatively impact overall profitability. This study investigates the effect of credit borrowing on the profitability of selected micro enterprises and aims to develop practical strategies for sound financial decision-making. A quantitative-descriptive research design was utilized in this study. Data were gathered through structured questionnaires administered to 25 purposively selected micro-entrepreneurs. To assess business profiles, borrowing practices, and the perceived impact of credit on profitability, statistical tools such as frequency, percentage, and weighted mean were used for data analysis. The results indicate that most micro-enterprises depend on informal lenders and family networks due to easier access, despite the associated high interest rates and rigid repayment terms. Credit borrowing was assessed as “effective” in supporting capitalization, loan utilization, and repayment behavior. Responsible borrowing practices contributed positively to increased sales and liquidity, thereby enhancing overall profitability. However, the study also highlights concerns regarding the long-term financial sustainability of these enterprises, primarily due to inadequate financial literacy and heavy reliance on high-interest credit sources. The study concludes that, when used strategically, credit borrowing can be an effective financial tool for micro-enterprises. To enhance overall profitability, the study recommends implementing targeted financial literacy programs, adopting flexible and inclusive lending policies, and encouraging the reinvestment of business profits. A financial literacy guide has also been developed to assist micro-entrepreneurs in making informed and responsible borrowing decisions. These insights are intended to support policymakers, financial institutions, and future researchers in strengthening the resilience and sustainability of the micro-enterprise sector.