CREDIT

APPLICATION AND
OTHER
REQUIREMENTS

Allan Cris D. Ricafort | 19 Mar 2022

CREDIT APPLICATION

FMGT 60 - RICAFORT 2
CREDIT APPLICATION
 Credit Application is the first activity in the
Credit Department as it starts the actual
operation of its function.
 No credit extension should be approved and
released unless the customer /client has at least
filled up a credit application form

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FMGT 60 - RICAFORT 4
CREDIT APPLICATION
Credit application provides the credit department with
the following:
1. Initial credit information on which to base its
credit decision, if credit decision is to be made,
without further credit investigation;
2. Information on which to further interview the
applicant;
3. With some “leads” on which to start credit
investigation process.
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DOCUMENTARY
REQUIREMENTS

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DOCUMENTATION REQUIRED FOR
PROCESSING OF LOAN APPLICATION
Individual/ Single Proprietorship

a. A certified photocopy of its trade name or style

registered with the Department of Trade and Industry
b. Mayor’s Permit
c. Business Permit issued by the City or Municipality
d. Income Tax Return for the preceding year and official
receipt of payment
e. Latest audited/ unaudited financial statements.
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FMGT 60 - RICAFORT 10
DOCUMENTATION REQUIRED FOR
PROCESSING OF LOAN APPLICATION
Partnership
a. A certified photocopy of its trade name or style
registered with the Department of Trade and Industry
b. Copy of Articles of Partnership, duly registered with the
Securities & Exchange Commission (SEC)
c. Latest audited/ unaudited financial statements of the
partnership
d. Income Tax Returns for the preceding year of each
member of the partnership
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FMGT 60 - RICAFORT 12
DOCUMENTATION REQUIRED FOR
PROCESSING OF LOAN APPLICATION

e. Permit issued by the City or Municipality

f. Resolution of the partnership authorizing the
negotiation of the loan and authorizing the partner to
sign for and in behalf of the partnership
g. Curriculum Vitae or personal information

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FMGT 60 - RICAFORT 14
DOCUMENTATION REQUIRED FOR
PROCESSING OF LOAN APPLICATION
Corporation
a. A certified photocopy of its trade name or style
registered with the SEC
b. Copy of Articles of Incorporation and By-Laws,
duly registered with the SEC
c. Latest audited financial statements

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DOCUMENTATION REQUIRED FOR
PROCESSING OF LOAN APPLICATION

d. Certified list of stockholders of the company as of

date of application, to include the following:
o Name of its stockholders
o Nationality
o Number of shares subscribed
o Amount subscribed
o Amount paid on subscription
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FMGT 60 - RICAFORT 18
DOCUMENTATION REQUIRED FOR
PROCESSING OF LOAN APPLICATION
e. Certified list of incumbent officers
f. Curriculum vitae or personal information sheet of the
officers
g. Board Resolution authorizing the filing of the
application and authorizing the person to undertake the
application
h. Business Permit issued by the City or Municipality
i. Alien Registration Certificate of alien officers of the
company, if any.
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FMGT 60 - RICAFORT 20
CREDIT INSPECTION AND
APPRAISAL

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INSPECTION AND APPRAISAL OF
COLLATERAL
Commonly used and accepted loan collaterals:
1. Real estate
2. Chattel
3. Shares of Stocks / Bonds
4. Cash Deposit

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INSPECTION AND APPRAISAL OF
COLLATERAL (REAL ESTATE)
1. Titled Real Estate
a. Two Xerox copies of Torrens Title
b. Location plan
c. Tax Declaration
d. Latest realty tax receipts
e. Photograph of improvements, if any
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Torrens title is the certificate of ownership issued
by the land Register of Deeds, naming and declaring
the owner of the real property described therein,
free from all liens and encumbrances except such as
may be expressly noted thereon or otherwise
reserved by law.

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INSPECTION AND APPRAISAL OF
COLLATERAL (REAL ESTATE)
2. Untitled Real Estate
a. Tax Declaration
b. Affidavit that applicant has been occupying
openly, peacefully, continuously and adversely
against the whole world for at least five years,
the property he offers as security

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INSPECTION AND APPRAISAL OF
COLLATERAL (REAL ESTATE)
c. Realty Tax Receipts for the last five years
d. Certification from the Clerk of Court of the place
where offered collateral is located that same is not
subject of any litigation or land registration
proceedings
e. Affidavit of two adjacent lot owners confirming that
applicant has been in continuous possession of the
lot for the last five years.
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INSPECTION AND APPRAISAL OF
COLLATERAL (REAL ESTATE)

f. Certification from the Land Management Bureau

g. Survey or location plan of lot showing names of
streets and distance of same to the nearest
intersection or any landmark
h. Photograph of improvements

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INSPECTION AND APPRAISAL OF
COLLATERAL (REAL ESTATE)
3. For Properties Under Administration
a. Letter of Administration
b. Court Order authorizing the guardian to
mortgage the property of the minors

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INSPECTION AND APPRAISAL OF
COLLATERAL (REAL ESTATE)
4. For Intestate Estate
a. Appointment order of the Administrator of the
Estate of the Deceased and follow procedure for
properties under administration
b. Effect of extrajudicial partition of the estate and
have properties transferred in the name of the
heirs.
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INSPECTION AND APPRAISAL OF
COLLATERAL (CHATTEL)

Chattel Mortgage – is a legal term used to

describe a loan arrangement in which an item
of movable personal property is used as
security for the loan.

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INSPECTION AND APPRAISAL OF
COLLATERAL (CHATTEL)
Machineries and Equipment Office Furniture and Equipment
o Number of units o Number of units
o Location o Location
o Brief description of each o Brief description of each piece
machinery or equipment of furniture and equipment
o Receipts or other evidences of o Serial number, if any
ownership o Other evidences of ownership

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INSPECTION AND APPRAISAL OF
COLLATERAL (CHATTEL)
Motor Vehicle Merchandise Inventory
oLand Transportation oDescription
Office Registration and oNumber of units
Official Receipt of
oPrice of each item
payment

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INSPECTION AND APPRAISAL OF
COLLATERAL (STOCKS / BONDS)

Pledge on Shares of Stocks/ Marketable Bonds

o Stock Certificate/ Bond or photocopies thereof
o Audited Financial Statements of issuing
company

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INSPECTION AND APPRAISAL OF
COLLATERAL (CASH DEPOSIT)

Assignments on Cash Deposits

o Savings Account/Certificate of Time
Deposits/ Banker’s Acceptances
o Letter of Credit

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SHOULD EVERY CUSTOMER BE
INVESTIGATED?
1. Is there a problem? Or, rather, does a problem really exist?
And, if so, what should be done about it?
2. Are you able to solve problem? If so, what is the best way to
solve it? And what do you need to do the job?
3. Do you have all the facts? You never have all the facts, but do
you have enough? You must take risks.
4. Can you make a decision now? It’s easy to say no, but is that
the solution?
5. What additional facts do you need?

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SHOULD EVERY CUSTOMER BE
INVESTIGATED?
6. How or where do you obtain the missing facts? From
trade groups? From friends? Studies? Your own
records? Customer contact? Telephone confirmation?
7. Then ask yourself if an investigation is in fact needed.
If so, how extensive?

Decide on the complete investigation only when

the pros outweighs the cons.
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CREDIT INTERVIEW

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PREPARING FOR THE
INTERVIEW
 Prepare in Advance – Know what you are looking
for before you start searching
 Know the Account – Before you take any action
with the client himself, be sure you know the
account
 Planning and Scheduling – make sure you have
the materials you need
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PREPARING FOR THE
INTERVIEW

 Eliminate Interferences – Devote full time

and full attention to the man in front of you
 Differences – There are always variations in
conducting an interview, depending on the
interviewee.

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PREPARING FOR THE
INTERVIEW

 Your Personality – Recognize what you are

before you evaluate others.
 Time – highlights the needs, the must, of
knowing the account and its requirements
before interviewing a requesting client.

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IMPORTANCE OF THE INTERVIEW

 Interview is usually conducted with an

individual who has applied for a credit
installment.
 The credit investigator holds the key to
competent selections of credit risks, as well as
customers satisfaction.

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IMPORTANCE OF THE INTERVIEW
Credit Investigator must have:
 The ability to meet and talk graciously with
every type of applicant
 Makes a neat appearance
 A disposition agreeable, independent, and
pleasant under all conditions.

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PURPOSE OF THE INTERVIEW
The interview is conducted to obtain, confirm,
and verify information about the applicant
which is sufficiently reliable, acceptable and
complete to facilitate sound credit decisions.

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PURPOSE OF THE INTERVIEW
Credit investigator should seek to determine:
1. Whether the applicant is old enough to qualify
for a loan
2. Whether mature enough to appreciate the
responsibility it would entail
3. Whether capable of recognizing the seriousness
of creating such an obligation
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PURPOSE OF THE INTERVIEW
Credit investigator should seek to determine:
4. Whether has sufficient regular income from
which repayment likely to continue during the
life of the credit extension
5. Whether financial condition will permit making
the payments
6. Whether financial condition requires an
endorser or security
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PURPOSE OF THE INTERVIEW
Credit investigator should seek to determine:

7. True identity and status of the applicant

8. Neighborhood reputation of the applicant
9. Credit experience of the applicant with other
banks/companies

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END OF THIS MODULE.