1. 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
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2. 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
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3. 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
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4. Effective Credit Management (cont’d)
Sound collection procedures
Firm
Fair, allowing for compromise
Not harassing
Techniques
Subtle reminders
Telephone calls
Personal visits
Legal action
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