The most severe test of a manager's ability and soundness of judgment is found in the writing of a letter of application. The reasons for recommending the loan should be concisely stated and no pertinent fact omitted. In other words, the head office should never have occasion to write back for further information or missing particulars.
A separate letter should, of course, be written for each account, and the condition of the liability and security at the moment of writing should be set forth at the head. The letter should further give a concise statement of:
(a) The amount of credit applied for;
(b) The purpose for which the advances are to be used;
(c) When the advance will be required;
(d) When and from what source payment is expected.
Give full Name or Names of Partners, Age, Business and Residence.
STATEMENT OF THE AFFAIRS OF
as at 19
Per cent deducted in Mgr's valuations
Sales for past year $
Losses " $
Insurance on Liquid Assets 8
" on Fixed Assets $___
Real Estate Searched
To Bank Accounts Payable
Merchandise held for
To Sundry Parties
Miscellaneous movable property
Mortgage Debts: Surplus
Liability as Endorser or Guarantor not included above, namely on: -
Trade Paper in Customer's Account $
On other Accounts at
On other Accounts elsewhere $
Figure 39 244
Name of customer._________.____________.
Dash, Rills Receivable and Accounts
Merchandise held for Sale
Total Liquid Assets
Mortgages and other Investments
Chattels and other Dormant Assets
Premises and Stationary Plant,
Other Real Estate, unencumbered
Other Real Estate, encumbered
Total Fixed Assets
To Rank Accounts Payable
To Sundry Parties
Total Floating Liabilities
Total Mortgage Debts
Increase - Decrease in Liquid Assets___________________$
Increase - Decrease in Floating Liabilities________.___________________________________
Increase - Decrease in Liquid Surplus__________________$
Increase - Decrease in Fixed Assets____________$
Increase - Decrease in Mortgage Debts_______________________________________________
Increase - Decrease in Total Surplus___________________$
Figure 40 245
Sometimes preliminary letters may have been written giving information on some of these points, but the final letter should nevertheless contain full particulars, and reference to previous letters or statements should not be made merely to save the trouble of repeating information, except in special and involved cases. It is much more economical in time and labor for a branch manager to set forth the case fully, rather than to put the head office to the trouble and delay of looking up references.
The reasons leading to the recommendation and any criticism of the account should be carefully and systematically assembled and the information set out in due order and sequence, each subject being discussed in a separate clause, and all to be said on a particular subject brought together in one place as far as possible. This can only be accomplished, as a rule, by the letter being first drafted and carefully corrected before it is written. If the application is from a new customer the cause of the change in his bank account should be reported, and if the application is for a line of trade paper a list of the trade bills under discount with his previous bank should accompany the letter.
If these simple requirements are carefully complied with, the head office will be in a position to accord a prompt authorization or otherwise of the application.