A Loan Request Letter is a letter written by a loan applicant and addressed to a lending institution, generally sent as a part of the loan application process. A loan request letter introduces you to the bank or other lending institution, clearly describes your planned use for the loan funds, and describes how you will pay back the loan. It is the part cover letter and part resume because you demonstrate the qualities that make you a good candidate for a loan by outlining your qualifications.
Anyone who applies for personal or business loan should write a loan request letter and enclose it with their loan application. This letter is often the lending institution’s first impression of you as a borrower. Therefore, it should be professional, clear, and concise, easily fitting into one page.
Important: Write using a professional format and in a professional tone. Banks and other lending organizations are concerned about your ability to repay the loan. Pointing out your financial problems works against you – instead, point out your qualifications as a borrower. Remember, this letter is your first contact with the lender and uses it to showcase your company as a reliable borrower.
What a Lender Needs to Know
In order to consider your loan request, a lender needs some information about you or your company. Although this information is included in detail in your loan application, your letter should formally introduce your request. Here is what you should include in your loan request letter:
- Your name and/or your company name, including any DBA
- Your contact information
- Your business entity structure
- Brief description of your business
- Your number of employees
- How long you have been in operation
- Annual revenue and profits if your company is profitable
- Amount of loan requested
- How the funds will be spent
- Your financial security
- A list of enclosures
The bank or lending institution is primarily concerned with how the money they are lending will be spent and repaid. Be sure to include information on these two critical points in your letter.
In addition to the loan application, you should enclose applicable financial documents, such as tax returns. Send your business plan, cash flow statement, and profit and loss (P&L) statement.
Loan Request Letter (Format)
Here is the basic format for a loan request letter. You can use this format for either personal or small business loan request letters. If the loan is personal, leave out the business information points and discuss the proposed use of a personal loan.
{your name}
{your company’s name}
{your address}
{date}
{lender name}
{lender title}
{lender institution name}
{lender address}
RE: {(Small business) or (Personal)} loan request for {amount}
Dear {lender name}:
The purpose of this letter is to request a {(small business) or (personal)} loan in the amount of {amount} for the purpose of {purpose}. {Use this space to discuss your small business. Include name, business structure, and industry.}
{Business name} began operation on {date}, with {number} employees. As a {business structure type}, {business name} has consistently grown and now employs {number} individuals. {Use this space to discuss your marketing presence.}
{Use this area to briefly discuss your most recent year’s revenue and profit, if profitable. Discuss revenue and profit consistently over time when possible.}
{Use this area to describe the reason for the loan request.} {Use this area to explain that the opportunity is immediately available, but you lack sufficient immediate funds.}
Attached, please find our business plan, our annual profit and loss statement, and our most recent cash flow statement for your review. These financial documents and our strong credit score of {number} combine to make us a safe credit risk for {lending institution name}.
I would greatly appreciate the opportunity to speak with you about a {(small business) or (personal)} loan. I can be reached at {phone number} or by email at {email address}.
Thank you for your time and your consideration of my request.
Sincerely,
{your signature}
{your name}
Sample Loan Application Letter
Here is a sample letter based on the above format. This letter is used to request a small business (SBA) loan for an online retailer.
Matthew Dobney
Entirely Electronics
3048 West First Street
Spavinah, OK 89776
EntirelyElectronics.com
June 22, 2048
Mr. James Burrows
SBA Loan Administrator
Bank of American Businesses
New York, NY 65782
RE: Small business loan request for $20,000
Dear Mr. Burrows:
The purpose of this letter is to request a small business loan in the amount of $20,000 for the purpose of enlarging our warehouse.
Entirely Electronics began operation on June 1, 2020, with two employees. As a partnership, Entirely, Electronics has consistently grown and now has 20 full-time employees. Entirely Electronics has been quite successful in obtaining a proportionate share of the online electronic retail community. Our online presence has grown from our website alone to Facebook, Instagram, and Yelp. Our marketing techniques consistently drive new customers to Entirely Electronics, and we boast a high customer retention rate.
Last year, Entirely, Electronics saw a growth of 25% in revenue over the previous year. Our profit margin remained stable at 18% throughout the year.
Our growth has created a significant shortage of available warehouse space, and market research shows we will continue to grow. As we look to the future, we understand we must create more warehouse space to continue growing. Although our revenue is consistent, we do not have the immediate large amount needed to complete the necessary expansions to our warehouse.
Attached, please find our business plan, our annual profit and loss statement, and our most recent cash flow statement for your review. These financial documents and our strong credit score of 790 combine to make us a safe credit risk for Bank of American Businesses.
I would greatly appreciate the opportunity to speak with you about a small business loan. I can be reached at 983-744-6597 or by email at dobneym@entirelyelectronics.com.
Thank you for your time and your consideration of my request.
Sincerely,
Matthew Dobney
Matthew Dobney
Loan Request Letter Template
Writing a loan request letter takes a bit of time and research, but does not have to be difficult. Using the above format, you can easily request a loan for your small business or a personal need. The sample letter demonstrates how to make a great first impression on a lending institution.
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