Business credit application template

Why a credit application matters for collections

The credit application is often the most important document in a later collection case. A signed application can establish who the customer legally is, the agreed payment terms, and contractual rights such as late charges, collection costs, attorney's fees, venue and a personal guaranty, all of which are much harder to establish after the fact.

Section-by-section notes

1. Applicant information: use the exact legal name and entity type (check the Secretary of State record), plus any DBA. You'll need it to sue the right party.
2. Ownership and principals: identifies who runs the business and who might sign a guaranty.
3. Bank and trade references: lets you check payment history. Your reference checks should comply with any applicable privacy rules.
4. Credit requested and payment terms: states the limit you're considering and your standard terms (for example Net 30).
5. Terms and conditions: the key collection clauses. Late charges and interest must be lawful in the relevant state, and attorney's-fee and venue clauses are enforceable to different degrees in different states.
6. Authorization: permission to obtain business credit reports and contact references. Pulling a personal credit report on a guarantor has extra legal requirements, so get advice before doing it.
7. Personal guaranty (optional): makes an individual personally responsible if the business doesn't pay. It should be a clearly separate, separately signed section.
8. Signature: signed by an authorized officer, with name, title and date.

Have an attorney adapt the terms to your state and industry before relying on them. If you sell to consumers, different laws apply.

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The template

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[YOUR COMPANY NAME] — BUSINESS CREDIT APPLICATION
[Address] · [Phone] · [Email]

SECTION 1 — APPLICANT INFORMATION
Legal business name: ______________________________
DBA / trade name (if any): ______________________________
Entity type:  [ ] Corporation  [ ] LLC  [ ] Partnership  [ ] Sole proprietorship  [ ] Other: ________
State of formation: ________   Year established: ________
Federal EIN: ______________
Billing address: ______________________________________________
Shipping address (if different): ________________________________
Phone: ______________   Website: ______________
Accounts payable contact: __________________  Email: ______________  Phone: __________

SECTION 2 — OWNERS / OFFICERS
Name: __________________  Title: ____________  Ownership %: ____
Name: __________________  Title: ____________  Ownership %: ____

SECTION 3 — BANK REFERENCE
Bank: __________________  Branch/city: ______________  Contact & phone: ________________

SECTION 4 — TRADE REFERENCES
1. Company: ______________  Contact: ____________  Phone/email: ____________
2. Company: ______________  Contact: ____________  Phone/email: ____________
3. Company: ______________  Contact: ____________  Phone/email: ____________

SECTION 5 — CREDIT REQUESTED
Requested credit limit: $____________   Estimated monthly purchases: $____________
Tax-exempt?  [ ] No  [ ] Yes (attach certificate)
PO required on invoices?  [ ] No  [ ] Yes

SECTION 6 — TERMS AND CONDITIONS
1. Payment terms are Net [30] days from invoice date unless otherwise agreed in writing. [Your Company] may change or revoke credit at any time.
2. Past-due balances may be charged [a late charge / interest] of [__% per month / __% per year], not to exceed the maximum rate allowed by law.
3. If an account is referred for collection, Applicant agrees to pay reasonable costs of collection, including [collection agency fees and] reasonable attorney's fees and court costs, to the extent permitted by law.
4. [Venue/governing law: This agreement is governed by the laws of the State of ________, and the parties consent to venue in ________ County, ________.]
5. Applicant must notify [Your Company] in writing of any change in ownership, name, entity type or address.
6. These terms apply to all sales on credit and control over conflicting terms in any purchase order unless [Your Company] agrees otherwise in writing.

SECTION 7 — AUTHORIZATION
Applicant certifies that the information above is true and complete, and authorizes [Your Company] to contact the references listed and obtain business credit reports to evaluate and review this account.

Authorized signature: ____________________  Printed name: ________________
Title: ______________  Date: ____________

SECTION 8 — PERSONAL GUARANTY (OPTIONAL — SIGN ONLY IF REQUIRED)
In consideration of credit extended to the Applicant, the undersigned personally and unconditionally guarantees prompt payment of all amounts the Applicant owes [Your Company], including costs of collection as stated above. [Have counsel review guaranty language, and any authorization to obtain a guarantor's personal credit report, before use.]

Guarantor signature: ____________________  Printed name: ________________
Home address: __________________________  Date: ____________

FOR OFFICE USE ONLY
Approved limit: $________  Terms: ________  Approved by: ________  Date: ________

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After you extend credit

Track receivables, follow up promptly, and use our final notice, demand letter and late fee calculator when invoices slip. For accounts that won't pay, see B2B debt collection.

Not legal advice. This page is general information, not legal advice, and laws vary by state and change over time. CollectionPlacement is a referral service, not a law firm or collection agency. Consult a licensed attorney about your situation.

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