Talking credit with Mike Strathman: The credit application process
What can you expect from the credit application process?
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I think most small business owners want to know about the credit application process.
The credit application process is, believe it or not, relatively simple.
If I want to apply for business credit, how do I do it? Where do I go?
There's actually multiple ways for the small business owner to apply for credit. They can go into any Wells Fargo or business banking office. For some products they can apply online and some products, they can apply over the phone. Once a small business owner submits an application, they can go into any Wells Fargo or business banking office. They can call their banker. Or we have a toll-free number that they can call. Also, for some of our products there's an online tool, that Wells Fargo offers, where they can check the status.
Is the credit application process the same for everybody?
It really depends on the product, the amount of credit being requested, and the complexity of the application itself. So every application can be a unique experience. Generally, we're going to make sure that we have complete and accurate information that is necessary to make a credit decision. The next thing we would do is pull the business and personal credit reports. But also, we're going to pull your deposit relationship with Wells Fargo Bank. But if you have deposit accounts at other institutions, we want to know that as well so that we understand the entire financial picture of the business and the guarantor.
For certain products and certain loan sizes, we can actually use our computer modeling to make the decision, and that can be very quick — almost instantaneously. But the majority of them will go to an underwriter.
How can the credit application process be a learning experience?
If we're unable to grant credit today, that doesn't mean that they will be denied again in the future. Improve upon the five Cs of credit. Ensure that your credit history is solid, ensure you've got the capacity to pay, ensure that you've got enough capital invested, ensure you understand the conditions, and if we're doing a secured product, you've got adequate collateral.