Customer Credit Application Personal Guaranty: Fill & Download for Free

5 Step Guide- How to Get a Business LoanMoney is the lifeline of any business, so whether you’re starting a business or running an existing one, securing financing is a major factor, especially for small businesses. Many budding entrepreneurs find the task daunting and don’t even know where to begin.Here’s a simple yet practical guide on how to go about preparing to apply for a small business loan.1. What criteria do banks look for in making small business loans?Different banks or lending institutions may have different standards, but in general, in order to consider your application for a small business loan, banks will require:The loan must be for a sound business purpose. For SBA-guaranteed loans, the business must be eligible based on size, use of loan proceeds and the nature of the business (no lending, speculating, passive investment, pyramid sales, gambling, etc.)You and your partner(s) are of good character, have experience and good personal and/or business credit historyAbility to pay back the loan- reasonable to strong collateral (personal and business assets) is very important. SBA expects the loan to be fully secured, but we will not decline a request to guaranty a loan if the onlyunfavorable factor is insufficient collateral. And of course, owners must have personal equity investment in the business/skin in the game.2. What information will you need?Different lenders may require more or fewer documents, but in general, you will need:Personal and business credit historyPersonal and business financial statements for existing and startup businesses and as well as a projected financial statementsStrong, detailed business plan (including personal information such as bios, education, etc.)Cash flow projections for at least a year, andPersonal guaranties from all principal owners of the business3. How can you set yourself up from the beginning to make the process easier? (i.e. accounting systems, etc.)Be prepared; be thorough; be truthful.Choose your lending institution carefully. Larger banks tend to shy away from small loans as they are less profitable and take the same amount of underwriting and servicing. That doesn’t mean large banks do not make small loans; it is just more difficult.Approach banks or lending institutions you have worked with or are a customer ofExplore community banks and Credit UnionsTalk to a lending officer and find out exactly what documentation they requireBe thorough, bring everything they ask. Many loan applications are denied or face unnecessary hurdles because of incomplete applications.Even before you start gathering and organizing the information required by lenders to consider your application, you should educate yourself regarding business loans so you can understand and discuss intelligently with the lending officers when the time comes.4. What is the typical size of a small business loan?Small businesses come in many sizes, from a start-up of a one-person company to hundreds of employees, and their financial needs vary accordingly, so “typical” also varies. That said, in the banking industry the median small business loan is about $130,000 - $140,000 with highest around $250,000. SBA small business loans range from about $5,000 (microloans) to $5 million (largest guaranteed) with the average loan around $371,000.5. How can you get financing to start a business since many banks want to fund growth?Start-ups are probably the most difficult ventures when it comes to securing financing. Many start-up businesses seek financing from family, friends and credit cards. If the credit is sound, the business plan strong and you have enough personal resources to invest and collateral to guarantee, smaller, community banks and other community financial institutions and Credit Unions may consider lending you money.

You still consider this to be the issuance of trade credit (or, setting up a trade account for a customer). But, I’ve been in a position in which this was done very informally, largely relying upon my experience, intuition, basic understanding of who a customer is, maybe some checking around, but sometimes — “just winging it”.In this example, I ran a concrete plant, but I was the CFO of the mother corporation as well, so I was well-acquainted with our capital structure, how our cash flows worked in theory and how I expected cash flows to work in the short-term at that particular moment. It’s a good position to be in if you both control the operations of a business (in this case, a subsidiary of a larger corporation) and you have unlimited access to the mother corporation’s and all other subsidiaries’ financials, so that you can take into account the big picture when you make the “just winging it” types of trade credit issuance decisions.Someone reading this would need to take it as a given that the operations manager/CFO knows how to read financial statements and to do pretty basic financial analyses, especially those related to Aging Accounts Payable and Receivable, and risk-reward and cost-benefit. Hidden within that assumption, again, is another assumption, which is that some qualified bookkeeper is keeping up with this transactional information so that the various financial statements you want are accessible to you in a timely fashion and that they have been created using accurate information.You also need good cooperation and frequent conversation with all managers that spend money and bring it in. As an example, your cash flow analysis doesn’t mean anything if, tomorrow, the mechanic goes and buys a five-figure ($) replacement engine for some truck, and you knew nothing about this, because the President of the corporation authorized that purchased, and it never went across your desk. — Big businesses surely have centralized purchasing departments, but small businesses may either lack them completely, or they may exist but just not work very efficiently.In this case, I was a person who could authorize large purchases, and that was twofold, because I could do so on behalf of the plant, for my own business needs, or for any other operations manager, in my role as CFO.Two other people, technically, had similar authority, but large purchases would need to be run by one of two people; of course, I was only one person. The other person was the President. — Almost by definition, the executive in control of everything could authorize anybody to do anything, so if he decided to purchase a fixed asset on a whim, without telling me first, then my cash flow analyses wouldn’t be worth anything.As an example, he might be on an online equipment auction and see something we needed (even that I needed for the plant!); it’d be selling for a good price, so he’d put in a bid, and when he won, he’d call me up and tell me how much money I needed to find and where to wire it to at the bank (and by what deadline). — While I might be happy that we were getting something new, or that some deferred repairs and maintenance was finally getting addressed, if he’d been unable or unwilling to tell me about the upcoming purchase first, my decision-making could’ve been off, then, when it made sense before.You probably should expect this type of thing to happen at smaller-sized businesses. — For what it’s worth, it’s not like my own decisions, as CFO, vis-a-vis when to pay bills, wouldn’t surprise, from time to time, the President that we had less cash on the books than he’d expected, so he’d need to orchestrate his crews to finish jobs so that he could collect money due to us, that way he could get done what he needed to get done going forward. My assistants would make lists, or I might email a memo over, but if he hadn’t looked at the bill lists (with due dates) on his desk, or read my cash flow memo, then they were worthless.Okay. So, on to the question of bizarre requests from customers. I wouldn’t consider these as bizarre, to me, but they would’ve been if I’d tried to do the same thing with my suppliers (in the beginning).Let’s just take concrete manufacturing, where your #1 component of cost of goods sold for concrete will be Portland cement.You can approach a supplier and say, “Hi. I’m XYZ Concrete. I need a load of cement. I’m willing to prepay for it, so just give me your wiring information, and the funds will leave our accounts today, and I’ll need that cement delivered two mornings from now.”No big deal, right — to the supplier? You’re offering to prepay for what you need, just like you would the milk and flour you need for a cake.Now, hopefully more realistically, you call the supplier up and say, “Hey, I’m Jared of XYZ Concrete. We’re a ready-mix concrete supplier in the ABC area, and we like your company, from what we’ve heard, so I need to set up a credit account.” — Immediately, you’re going to get a credit application sent over.You’ll have to fill out all of your identifying information; your tax resale number; your FEIN (Federal Employer Identification Number [think: Social Security Number for a business]); how many years you’ve been in business; how the company is structured (sole proprietorship, corporation, etc.); what your bank’s name is; what your banker’s name is, and his or her title with the bank; perhaps, a copy of a canceled check from that/those account(s); who will be authorized purchasers on this account; what your desired credit limit will be; and, usually, the last thing will be your option to sign a Personal Guaranty, which means — if the business goes belly up, you’ve just committed to paying these people for what the business bought — yourself.It would not be uncommon for some of these applications to require you to enclose your most recent financial statements, like Profit and Loss, Balance Sheet, etc. Tax returns. — While trade credit accounts do not charge you interest, or directly affect your credit score (if applicable), applying for them is very much like applying for a bank loan in most circumstances.So, quite a bit of stuff to collect and turn in; then, their credit department will do some due diligence on you, like making sure you have no obvious civil cases filed against you; verify your credit references; more stuff than I care to list here. — Then, you will get a letter approving or denying you, and if you’re approved, you’ll be told what your credit limit is.It would not be uncommon for a relatively small business to get approved to have $50,000 due to the cement corporation at any one time. — However, to have gotten that much of a credit limit, which probably is flexible if you keep in touch with your salesperson, you had to submit a lot of personal information. That information was checked, probably using LexisNexis (that’s what attorneys and collection agencies use to track you down!), and no doubt the credit references you listed were called.What I’ve encountered that’s bizarre is that, in the concrete manufacturing business, a man (usually, they’ve been men; no offense to anybody) walks into your office and sits down and says he wants a bid for, let’s say, $75,000 worth of concrete, and he’ll pay you what he owes you as soon as he gets paid. Then, he just leaves his specs with you and walks out. — You might only know him by his first name!First of all, what is different? → You, the supplier, are told the credit terms. You don’t run a detailed credit check. Yes, you probably send over to his office a sheet to be filled out which gets the identifying information, like where and how to send bills, but the buyer assumes that you will extend to him, for whatever period of time he needs (e.g., based on the weather; based on his customer’s and subcontractor’s schedules; based on when his customer pays him for his work), large sums of product on credit. That’s the same thing as large sums of money on credit.Surely, if you’re not doing this for practice and are in it to make a profit, the $75,000 you bill the customer will not represent $75,000 worth of expenses you currently bear, but it’s funny how that can be true, because what if the $75,000 part is just Phase I?Based on your performance in it, you might then get Phase II, which is $1MM ($1,000,000) in contract value. — In that case, you very much may find yourself having given out loans, effective in value, to $75,000 or more. Because work continues; orders keep coming in. But, no money is coming in. Payroll is still cash going out for you. Materials costs are still going out for you.Your suppliers and your employees and your bankers and your insurers — they all care!Does your customer care? — Not one bit.If you can make it to the end of the project, and your bids were good, then you should recover all of your cash-out, and the net results should be a profit for the corporation.It’s risky, though. — If this barge-in customer screws up whatever he is supposed to do to transform your product into what the ultimate end-user wants, he won’t get paid, and neither will you.During the first few years in that role, if I got solicited to bid on big projects like what I’ve been talking about, I just told them to call my competitor because we could not do the job. And, sometimes, the potential customer (you know, the voice on the phone) would get angry that we would not even give a bid.I knew that, in order to fulfill their wishes, I’d have to go to the bank and take out working capital loan that could only be collateralized using real property (i.e., land) and improvements in a commercial real estate portfolio that we kept separate from the construction business. — All of the financial analyses failed, so I turned them down.Over the years, I grew the plant’s operations and reformulated its capital structure, largely by entering into trade credit agreements and keeping good relationships with my salespeople (I mean, one woman — she knew my voice and I knew hers, and we didn’t have to introduce ourselves when a call was made; same went for our trucking contractor). Also, profits rose. By definition, profits have another name: “net cash inflows from operations/operational activities”. — Having those allowed me to take on more risk.Finance is the study of risk. A stock portfolio manager deals with money, but really he’s a risk mitigator. An insurance agent CSR deals with money, but really, they are insuring against risks. Bankers lend out money, but really, they are judging your riskiness and your risk ratio as a part of their larger at-risk portfolio.Money is, usually, at most peripheral to a financier’s primary function. — A financier’s primary function is to listen to details, hear the “goods” and the “bads”, and then to make a decision about whether taking on that risk is worth it based on the dynamic cash flow load expected for the short-term and in the interest of the continued growth of the enterprise while ensuring that it remains a going concern.All of that fancy stuff said, customers walking in and basically demanding free product for an indeterminate amount of time, interest-and-fee free, and the person acting on behalf of the business even entertaining that request is — well, bizarre.If you have the experience and intuition to make deals like that, though, they do end up being value-adds for the business and contributors to cash-in and profitability.I don’t remember, in business school, ever really being told that business transactions worked like that, or could work like that. If anything, it reminds me of options and futures, and stuff you deal with while warming your seat on Wall Street. Risk.That it works out, or can, in small business also comes off as a bit bizarre to me.

So it sounds like your company has decided to purchase an existing business. Regardless of whether the deal is structured as an asset transaction, a stock transaction, or a merger, make sure you know what you are getting into by requiring detailed information from the seller regarding its business operations and finances. The following is a checklist of information and documents you should review.A. Organization and Good Standing.The Company's Articles of Incorporation, and all amendments thereto.The Company's Bylaws, and all amendments thereto.The Company's minute book, including all minutes and resolutions of shareholders and directors, executive committees, and other governing groups.The Company's organizational chart.The Company's list of shareholders and number of shares held by each.Copies of agreements relating to options, voting trusts, warrants, puts, calls, subscriptions, and convertible securities.A Certificate of Good Standing from the Secretary of State of the state where the Company is incorporated.Copies of active status reports in the state of incorporation for the last three years.A list of all states where the Company is authorized to do business and annual reports for the last three years.A list of all states, provinces, or countries where the Company owns or leases property, maintains employees, or conducts business.A list of all of the Company's assumed names and copies of registrations thereof.B. Financial Information.Audited financial statements for three years, together with Auditor's Reports.The most recent unaudited statements, with comparable statements to the prior year.Auditor's letters and replies for the past five years.The Company's credit report, if available.Any projections, capital budgets and strategic plans.Analyst reports, if available.A schedule of all indebtedness and contingent liabilities.A schedule of inventory.A schedule of accounts receivable.A schedule of accounts payable.A description of depreciation and amortization methods and changes in accounting methods over the past five years.Any analysis of fixed and variable expenses.Any analysis of gross margins.The Company's general ledger.A description of the Company's internal control procedures.C. Physical Assets.A schedule of fixed assets and the locations thereof.All U.C.C. filings.All leases of equipment.A schedule of sales and purchases of major capital equipment during last three years.D. Real Estate.A schedule of the Company's business locations.Copies of all real estate leases, deeds, mortgages, title policies, surveys, zoning approvals, variances or use permits.E. Intellectual Property.A schedule of domestic and foreign patents and patent applications.A schedule of trademark and trade names.A schedule of copyrights.A description of important technical know-how.A description of methods used to protect trade secrets and know-how.Any "work for hire" agreements.A schedule and copies of all consulting agreements, agreements regarding inventions, and licenses or assignments of intellectual property to or from the Company.Any patent clearance documents.A schedule and summary of any claims or threatened claims by or against the Company regarding intellectual property.F. Employees and Employee Benefits.A list of employees including positions, current salaries, salaries and bonuses paid during last three years, and years of service.All employment, consulting, nondisclosure, nonsolicitation or noncompetition agreements between the Company and any of its employees.Resumés of key employees.The Company's personnel handbook and a schedule of all employee benefits and holiday, vacation, and sick leave policies.Summary plan descriptions of qualified and non-qualified retirement plans.Copies of collective bargaining agreements, if any.A description of all employee problems within the last three years, including alleged wrongful termination, harassment, and discrimination.A description of any labor disputes, requests for arbitration, or grievance procedures currently pending or settled within the last three years.A list and description of benefits of all employee health and welfare insurance policies or self-funded arrangements.A description of worker's compensation claim history.A description of unemployment insurance claims history.Copies of all stock option and stock purchase plans and a schedule of grants thereunder.G. Licenses and Permits.Copies of any governmental licenses, permits or consents.Any correspondence or documents relating to any proceedings of any regulatory agency.H. Environmental Issues.Environmental audits, if any, for each property leased by the Company.A listing of hazardous substances used in the Company's operations.A description of the Company's disposal methods.A list of environmental permits and licenses.Copies of all correspondence, notices and files related to EPA, state, or local regulatory agencies.A list identifying and describing any environmental litigation or investigations.A list identifying and describing any known superfund exposure.A list identifying and describing any contingent environmental liabilities or continuing indemnification obligations.I. Taxes.Federal, state, local, and foreign income tax returns for the last three years.States sales tax returns for the last three years.Any audit and revenue agency reports.Any tax settlement documents for the last three years.Employment tax filings for three years.Excise tax filings for three years.Any tax liens.J. Material Contracts.A schedule of all subsidiary, partnership, or joint venture relationships and obligations, with copies of all related agreements.Copies of all contracts between the Company and any officers, directors, 5-percent shareholders or affiliates.All loan agreements, bank financing arrangements, line of credit, or promissory notes to which the Company is a party.All security agreements, mortgages, indentures, collateral pledges, and similar agreements.All guaranties to which the Company is a party.Any installment sale agreements.Any distribution agreements, sales representative agreements, marketing agreements, and supply agreements.Any letters of intent, contracts, and closing transcripts from any mergers, acquisitions, or divestitures within last five years.Any options and stock purchase agreements involving interests in other companies.The Company's standard quote, purchase order, invoice and warranty forms.All nondisclosure or noncompetition agreements to which the Company is a party.All other material contracts.K. Product or Service Lines.A list of all existing products or services and products or services under development.Copies of all correspondence and reports related to any regulatory approvals or disapprovals of any Company's products or services.A summary of all complaints or warranty claims.A summary of results of all tests, evaluations, studies, surveys, and other data regarding existing products or services and products or services under development.L. Customer Information.A schedule of the Company's twelve largest customers in terms of sales thereto and a description of sales thereto over a period of two years.Any supply or service agreements.A description or copy of the Company's purchasing policies.A description or copy of the Company's credit policy.A schedule of unfilled orders.A list and explanation for any major customers lost over the last two years.All surveys and market research reports relevant to the Company or its products or services.The Company's current advertising programs, marketing plans and budgets, and printed marketing materials.A description of the Company's major competitors.M. Litigation.A schedule of all pending litigation.A description of any threatened litigation.Copies of insurance policies possibly providing coverage as to pending or threatened litigation.Documents relating to any injunctions, consent decrees, or settlements to which the Company is a party.A list of unsatisfied judgments.N. Insurance Coverage.A schedule and copies of the Company's general liability, personal and real property, product liability, errors and omissions, key-man, directors and officers, worker's compensation, and other insurance.A schedule of the Company's insurance claims history for past three years.O. Professionals.A schedule of all law firms, accounting firms, consulting firms, and similar professionals engaged by the Company during past five years.P. Articles and Publicity.Copies of all articles and press releases relating to the Company within the past three years.