What information should a business credit application ask for?

Obtaining a signed credit application is an integral part of extending credit to a customer. The application provides the information necessary to help determining the credit risk and to establish a credit limit. It also authorizes you to contact the bank and trade references and agree to your terms.

A credit application should include the following information. It can be changed to meet your company’s requirements as necessary.

-Customer Information
-Legal name of business
-Business and billing address
-Business phone number, fax and email address
-Date of incorporation and length of time in business
-Names of owner(s) or principal(s)
-Financial information

-Credit limit requested

-Bank information

           -Name and location of bank
-Account number
-Bank contact person and phone number
-Trade references (at least three)
-Name, address, phone and fax numbers
-Current audited financial statement when justified by the requested credit limit
-Signature block

        Owner or authorized party must sign and date application
-Terms and Conditions (Language must include):

-Declaration that the information provided is correct
-Authorization to contact references
-Acceptance of your terms & conditions
-costs and expenses if terms are in default
-venue and jurisdiction

-A Personal Guaranty should also be signed by a principal of the company when applicable. Even if a corporation is creditworthy, a creditor may require the personal guarantees of the partners, directors or officers of a business, and the shareholders of a closely held corporation.

Now that you have permission to contact their references, you need to do so.

A trade reference request should include the following questions.

-Date account opened
-Credit Limit
-Recent High Credit
-Current balance
-Past due balance
-Terms
-Days beyond terms
-Average days to pay
-Date of last sale
-Pay habits (within terms, slow, etc.)

-Comments
It is also necessary to verify that the business name on the submitted credit application is their correct legal name and that they are in good standing with the Corporation Commission or Secretary of State’s Office.