2.1.12 Documentary RequirementThe request papers should preferably be prepared for before applying for a bank loan,incomplete documents can cause delays. The following documents are commonly askedfor.Residence certificates tax players’ identification number. BIR stamped tax declarationfor the past three years, financial statement for the past three years, bank & gradereferences.Mini-business plans or projects feasibility study; especially for borrowers who arejust starting in business. Business registration papers for single proprietorship, registration with the departmentof trade and industry and with the municipal office. For partnerships, articles ofpartnership and joint resolution to borrow-for corporations, security and exchangecommission critical articles of incorporation with by-laws, boar resolution to borrowand stock holder bio data for corporative, registration with the because of cooperativedepartment.
14Paper pertaining to collateral: for real estate mortgage copy of TCT location planswith vicinity map, tax clearance, tax receipts, tax declaration, insurance floor plan orpictures. For chattel, registration certificates, insurance loan (credit) evidencingpayment in the case of important equipment for exporters’ letters of credit, confirmedpurchase orders and sales contracts. 2.1.13 Credit InvestigationThe company’s background and history covering the date of registration (incorporation), the type of business organization, records of registration name ofincorporators, and a summary of operating records.Financial condition: the current break down of financial statement reflecting theresult of operations for the past three years. Dealing with government agencies; the lending bank checks on the credit availedof by the applicant form lending government agencies, the nature of the loan.Collateral offered, and installment payment, including arrear ages if any. Court asset; the bank cheeks on civil and criminal case involving creditapplicants. It also obtains information of the applicant from compotators. Afterthe credit investigation and supporting have been accomplished and evaluated, arecommendation for approval is prepared and the release of the loan is facilitated.2.2 Empirical ReviewAgresti et al,(2008). The need to give due attention to borrower, thus need not beoveremphasized in order to ensure loan performance. There is a tendency by borrowers togive better attention to their loans when they perceive they got better attention. Some ofthe loans defaults ascribe to lower level of attention given to borrowers. It is advised thatbanks keep up with their loans timely. It is clear that effective credit monitoring involveslooking into various operations of the company including operations of the loan,checking whether the company is properly managed, and the environment in which thecompany is carrying out its business is satisfactory.