Practices and Procedures in Credit Granting

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Why do we need to study the practices and procedures in Credit Granting?

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To ensure that the borrower is Creditworthy and the lender is protected against losses.

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What are the learning objectives in Credit Granting?

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1. Recognize the credit qualities to investigate 2. Determine the credit application and other requirements in granting credit 3. Identify the code of ethics in exchange of credit information 4. Modify a credit interview 5. Describe how the appraisal of real and personal property is being done.

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What documentation is required for processing a loan application for an Individual/Sole Proprietorship?

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1. Certified photocopy of trade name or style 2. Mayor’s Permit 3. License to engage in business 4. Income Tax Returns for the preceding year 5. Latest audited/unaudited financial statements.

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What documentation is required for processing a loan application for a Partnership?

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1. Certified photocopy of trade name or style 2. Copy of Articles of Partnership 3. Income Tax Returns for the preceding year of each member 4. Latest audited/unaudited financial statements 5. License to engage in business 6. Resolution authorizing loan negotiation 7. Curriculum vitae or personal information.

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What documentation is required for processing a loan application for a Corporation?

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1. Certified photocopy of trade name or style 2. Copy of Articles of Incorporation and By-Laws 3. Latest audited/unaudited financial statements 4. Certified list of stockholders 5. Certified list of incumbent officers 6. License to engage in business 7. Board Resolution authorizing loan negotiation 8. Curriculum vitae or personal information 9. Alien Registration Certificate of alien officers.

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What documents are required for the appraisal of Titled Real Estate?

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1. 2 photocopies of Torrens Title 2. Location Plan 3. Tax Declaration 4. Latest realty tax receipts 5. Photograph of improvements.

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What documents are required for the appraisal of Untitled Real Estate?

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1. Tax Declaration 2. Affidavit of occupation for at least 5 years 3. Realty Tax Receipts for the last 5 years 4. Certification from the City/Municipal Treasurer 5. Certification from the Clerk of Court 6. Affidavit of 2 adjacent lot owners 7. Certification from the Bureau of Lands 8. Survey or location plan.

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What are the necessary steps in preparing for the Credit Interview?

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1. Prepare in advance 2. Know the account 3. Planning and Scheduling 4. Eliminate Interferences 5. Differences 6. Your personality 7. Time.

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What is the purpose of the Credit Interview?

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To determine the applicant's age, maturity, capability to recognize obligations, regular income, financial condition, need for an endorser or security, true identity, neighborhood reputation, and credit experience.

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What are the credit qualities to investigate for individual applicants?

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1. Income 2. Employment 3. Payment Record 4. Residence 5. Marital Status 6. Age 7. References and Reputation 8. Reserve Assets 9. Equity in Purchase 10. Collateral.