Definition of a Business Credit Application

A business credit application is a document used to apply for credit privileges.

A business credit application is a document that allows a business to apply for credit privileges with a company. The information the business provides in a business credit application allows for a investigation into its credit worthiness.

Identification

A business credit application requests company details from the applicant. This can include the legal name of the business, the type of industry the business is in, the product or service it provides, the number of years in business and who the corporate officers or agents are. This helps to identify the company applying for credit privileges and the nature or scope of its business.

Banking

Bank references in a business credit application can substantiate a company's legal name and also provide banking information such as the primary banking institution, account manager and account numbers.

Creditors

Part of a business credit application requests the names of other creditors or lenders. This allows a company to contact them for a credit reference. A credit reference is a response regarding how an applicant treats other creditors regarding credit or borrowing privileges. It can include payment history, recent high credit extended, date of last sale and when the account was opened.

Signatures

A major part of a business credit application is the credit policy. This relates to statements an applicant must sign acknowledging liability and repayment of any debt. It can include language regarding payment terms, credit limits, finance charges, joint and several liability and lawsuit restrictions. The signing of a personal guaranty holds a signer personally liable for any debt incurred by the applicant business.

Financials

A business credit application may ask for a copy of an applicant's recent financial statements. This provides an analysis of the revenues, expenses, assets and liabilities of a company.

References

• CreditGuru: Commercial Credit Application - How to Construct a Meaningful One
• The Federal Reserve Board: The Credit Application Process
• Entrepreneur: The ABCs of Business Credit
• Attorney General of Florida: How to Protect Yourself: Worthless Bank Checks

Resources

• Credit Research Foundation: Personal Guaranty
• HG.org: Can You Avoid a Personal Guaranty by Signing as an Officer?