What are the Different Requirements in Applying Commodity Financing?

Different Requirements in Applying Commodity Financing

Each financial institution has specific criteria and requirements which must be furnished before loans can be approve. Some lenders are more careful and cautious than other financial institutions to ensure the secureness of their company. They maintain their security because that’s how they can protect also their organization and their personnel.

So, the requirements needed in applying commodity financing are outlined below. Let’s take a look at it.

Requirements Needed for Applying Commodity Financing

  1. Application Form

Application form is mainly own by the lenders to be filled up by the target borrowers. This is used to gather relevant and required information applying commodity financing. Application form is an inconsequential test of one’s ability to follow instructions, penmanship, and literacy and communication skills. The qualification of the applicants merely depends on the completion of the application form.

  • Identification Card

Identification Card is any document that can be used as a valid proof of individual’s identity. The size is usually like a credit card which contains the full name, age, birth date, address, colour of hair and eyes and often contains a photograph. The financer will surely verify your identity to avoid fraudulent transaction. Driver License, Passport ID, and Voter’s Id are some of the Examples of Identification Card.

  • Proof of Income

Proof of income is a document request by the lenders and other entity to verify your income and to determine your capacity to pay.  It is necessary for the Lenders to know your where did your income came from. This wills their basic in approving your loan and to determine your capacity to pay your upcoming loan. Certificate of employment, Bank Statements, Disability insurance, Tax Return, Business Permit and Payslip are some of the examples of Proof of Income.

  • Proof of Billing

It is a document use to verify that your registered address upon applying commodity financing loan is actually exists because the Lenders will use this for sending notices or reminders .It is really important for the financial institutions to know your real address. Electric Bill, Water Bill, Credit Card Statement, Internet Bill, Association Dues and etc. are the list of valid proof of billing.

applying-commodity-financing-banking
  • Collaterals

Collateral is a valuable property owned by an individual who wants to borrow. This is provided to lender as a guarantee of payment once the loan is not paid back. This is served as a security to protect the interests of the financier. By pledging collaterals, the borrowers will get better rates when trying to take a loan. Inventory, Accounts Receivable, Borrower’s Savings Account, Equipment, Land Title, Tax Declaration are some of the assets of the borrower that can be classified as collateral.

  • Feasibility Study

Some of financial institutions required the borrower to provide a feasibility study before approving their application. A feasibility study is an evaluation of the viability of the proposed project or system for applying commodity financing. The borrower should provide a company profile, detailed of the operation and management, financial information, legal requirements, tax obligation, and illustration of products and services.

  • Promissory Note

Again this is financing institutions form to be given to the borrower for signing upon approval of the loan. Promissory note is legal instruments which contain a written agreement of the borrower to pay the Lender a certain sum of money, either on demand or at designated future date. This document contains the principal amount of loan, interest rate, maturity date, and the originator’s signature.  A furnished copy of promissory note will be given also to the borrower for documentation purposes and served as a reminder for her of her obligation.

  • Other documents

All financing institution provided different forms to be filled out by the borrower for filing. Some of them are counselling form, chattel mortgage form, repayment schedule and the like.

In lending, before you furnished a copy of any documents and requirements, both parties should see first personally them. This is to avoid fraud and fake identity because there are some individuals who provide fake requirements. Let us be cautious and take a preventive  measure.

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