Underground Lenders research

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