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Getting Started
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Be prepared for a credit investigation. |
The credit investigation report generally covers the following:
- The company's background and history, covering the date of registration/incorporation, the type of business organization, records of registration, names of incorporators, and a summary of operating records.
- Financial condition. The current breakdown of financial statements reflecting the results of operation for the past three years. It also includes schedules, explanations of extraordinary items, breakdown of merchandise and receivables and full explanation of all inter-company loans and merchandise transactions.
- Dealings with government agencies. The lending bank checks on the credit availed of by the applicant from lending government agencies, the nature of the loan, collateral offered, and installment payments, including arrearages, if any.
- Bank's experience with the borrower, if the applicant is an old client.
- Court cases: The bank checks on civil or criminal cases involving the applicant. It also obtains information of the applicant from competitors.
After the credit investigation and supporting documents have been accomplished and evaluated, a recommendation for approval is prepared and the release of the loan is facilitated.
Borrowing from a bank can be a long and tedious process which may take anywhere from a few days to a few months. Being sure that you understand all the above procedures and requirements will definitely help shorten the process.
Remember too, that officers from special lending programs will monitor your business even long after the loan has been released. They check on your books and records. For loans on a letter of credit or purchase order, they monitor your production activities to see to it that deliveries and shipments are made on time. They do so in order to confirm that the loan is being utilized for the purpose you have indicated and to help ensure that your business stays viable and capable of keeping up with loan repayments.
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