How Do You Get Money from a Bank or Lender? For individuals Shop around for low interest rates, but you have a better chance at an institution where you already have an account Fill out a loan application Describe how you will use the money and how you will repay it Prepare for an interview If rejected, ask the loan officer why For businesses Develop a relationship with your banker Apply for a preapproved line of credit or revolving credit agreement even if you do not need the money Supply financial statements and tax documents Prepare a convincing cover letter Copyright © Cengage Learning. All rights reserved

Effective Credit Management Immediate purchasing power that is exchanged for a promise to repay borrowed money, with or without interest, at a later date. The five Cs of credit management Character—the borrower’s attitude toward credit obligations Capacity—the borrower’s financial ability to meet credit obligations Capital—the extent of the borrower’s assets or net worth Collateral—borrower assets that can be pledged as security for the loaned amount Conditions—general economic conditions that can affect a borrower’s ability to repay the loan Copyright © Cengage Learning. All rights reserved

Effective Credit Management (cont’d) Checking credit information Credit information sources regarding businesses Global credit-reporting agencies Local credit-reporting agencies Industry associations Other firms that have given the firm credit Credit information concerning individuals Experian Trans Union Equifax Fair Credit Reporting Act Consumers have a right to know what information is in their credit bureau files Consumers have a right to request that information in their files be verified, and they can file an explanation of their side of a dispute Copyright © Cengage Learning. All rights reserved

Effective Credit Management (cont’d) Sound collection procedures Firm Fair, allowing for compromise Not harassing Techniques Subtle reminders Telephone calls Personal visits Legal action Copyright © Cengage Learning. All rights reserved