Company carries $2,500.00 fire insurance on buildings; $1,000.00 fire insurance on merchandise. Mr. Doe carries $5,000.00 life insurance policy, payable to his wife; no accident insurance; no workmen's compensation insurance and no automobile liability insurance. None of his assets are pledged except as indicated in the statement. Mr. Doe has endorsed a note as an accommodation signer for the amount of $1,500.00, payable in 12 months. The date of this statement was January 1, 1924.

Mr. Doe wants $2,000.00 in order to repay an item of $1,000.00 incurred by the previous owner of the business and in order to take discount on accounts now due. He expects to pay $500.00 a month from the profits of his business. He opened an account in the name of his company July 7, 1923, coming from the A B Trust and Savings Bank, where he carried a personal account. Their letter to this bank stated that he opened an account with them about a year ago, coming from Detroit, where, the bank stated, he had carried a small routine account three years. In Detroit he was an employee of a large automobile accessory plant. Mr. Doe has a nice appearing store and is apparently aggressive and honest. His average bank balance carried is $1,000.00.

Profit and Loss account appeared as follows:

This company is a corporation with an authorized capitalization of $25,000.00 with 250 shares of $100.00 each, 100 of which have been issued. 100% has been paid in on the number issued.

Title to real estate is not in the name of Doe. The business carries two bank accounts. The stocks owned are oil securities of a speculative character. The bonds are Liberty Bonds. The automobile operated is a Cadillac.

When this application came before the loan committee on its first presentation the following questions were asked:

a. Has Mr. Doe had any previous experience in the retail dry goods business?

b. Do you believe the antecedent information specific enough to advance unsecured credit?

c. Why is title to real estate not in name of Doe?

d. Isn't the insurance inadequate?

e. Why should a business of this size carry two bank accounts?

f. What are the details concerning Item 6 on statement-"Due from an escrow"?

g. What are the particulars regarding Mr. Doe's contingent liability of $1,500 on his brother's note?

h. Why is the inventory in round numbers, indicating an estimation rather than actual count?

i. Why does a man of this small net worth speculate in oil by buying 200 Oil and Soakum units?

j. What is the item of $300.00 in Accounts Receivable which does not result from merchandise sold?

k. Why does this man operate a Cadillac with such a small net worth and consequent heavier expense in connection with his car?

1. How can a man operate for a year, doing a credit business, and show no bad debts, losses or depreciation?

m. How can Mr. Doe repay this $2,000.00 loan at the rate of $500.00 a month when his last year's profits were less than $200 00 a month?

n. Isn't it a rather heavy proportion to show out of a net worth of $15,866.64 $16,650.00 invested in slow assets?

o. Why were not trade references and supply houses submitted?

p. Why is a company of this size incorporated?

q. Shouldn't you examine the books of this Company?

r. Do you believe that a merchant of this size, in the neighborhood he is in, is justified in doing a credit business?

s. What kind of a man is Mr. Doe?

What kind of answers would you wish to have in connection with each one of these questions in order to grant the loan?

II. Mr. Richard Blanks has been banking with one of the agencies of the National Bank and Trust Company, Long Branch, N. J., since the early part of 1920, when he went into business for himself, having formerly been in the employ of a wholesale dry goods house where he had a clear record. With an initial capital of $10,000, which he had saved through his years of labor, a general merchandise store was opened up on Montver Street just off Woodland Boulevard. Since opening up his business he has not asked for any loan and has conducted his account satisfactorily, as evidenced by the following average balances:

He is now asking for a $15,000 loan for 90 days with which to pay some of his bills which have become past due, as business has fallen off and collections have been poor. He hopes to repay this from the collection of his accounts receivable as evidenced by his statement which shows:

ACCOUNTS

Period from 1-1-23 to 12-31-23

.$357,844.00

15,236.00

0.00

EXPLANATORY DATA RE STATEMENT

-Are small for the major part and represent credit given to customers who have been known for a long period of years and involves only a small part of his business.

MERCHANDISE

REAL ESTATE

-Consists of general department store merchan-
dise and is advised to all be in good condition
and not over a year old.

-Stands in his own name and was acquired a

year ago for his business. It was originally
bought on contract, but later converted into his
own name and a large mortgage placed against
the property.

BALANCE OF ITEMS-Self-explanatory.

1. Would you make this loan on the basis outlined?

COMPARATIVE FIGURES OF MR. BLANKS' BUSINESS SINCE ORGANIZATION

2. With this additional information, is your position on the loan altered?

III. The Omaha Motor Sales Company has maintained an account with the AB Bank since the latter part of 1923, as they started an automobile agency in their neighborhood on the first of the year, handling Paiges and Jewetts. Their paid-in capital at organization amounted to $12,500, since which time they have paid in $2,500 additional. Three men operate this concern, which is a corporation-one having been a salesman for one of the large downtown houses handling these cars; the second a repair man in the same organization; and the third an accountant and auditor for a different automobile house.

They are requesting at this time a loan of $5,000 with which to stock two Paige closed models, as their cars on the floor have been somewhat cut down owing to excellent business. They handle their contracts through the Finance Corporation of Nebraska and average balance has been $2,000 during the life of the account, and all dealings have been satisfactory. The individuals carry small personal accounts of $100 or $200 and do not claim any outside means. The statement of the Company, as of June 30, 1924, follows:

The loan committee asked the following questions and received in each

case the answer given below: