application letter for a bank loan

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20 Best Loan Application Letter Samples (Guide and Format)

An application letter for a loan is a formal letter written to a financial institution by a borrower requesting a loan, payable in a specified amount of time.

The letter helps lenders get acquainted with the borrowers better to determine if they qualify for the loan based on the information provided or not. Writing it is important because it helps convince lending institutions to lend you a specific amount of money. It is their first impression of you, which is why it should be written with great care. In this article, we will guide you on how to write it, the type of information you should provide, and some pointers that will help you highlight your strengths in the letter.

Brief Overview- What to Include

There are no strict rules for writing an application for a loan. It depends on the borrower to decide what information to include, but the following items are typically included in it:

• Contact information
• Explanation of why money is needed
•  Amount of money being requested
• Purpose of the money
• Details about employment history
• Personal references
• Company information
•  A list of supporting documents

When to Write?

Two main situations warrant this letter. The first instance is when you are seeking a loan from a conventional bank lender. Conventional bank lenders are financial institutions that do not offer loans but make them available to the general public. Conventional banks usually require applicants to submit this application to prove their creditworthiness.

The second situation that warrants its use is when applying for an SBA-guaranteed loan. An SBA-guaranteed loan involves the federal government; applicants must undergo additional screening before they are approved for funding. Applicants can improve their chances of getting an SBA guarantee by submitting a personalized, formal loan application with supporting documentation.

There are situations when you do not necessarily need to write this letter, such as when you are borrowing from friends and family, from an alternative lender who may only require your bank statements or pay slips, when seeking equipment financing, and lastly when you are requesting a business line of credit.

Free Templates

Pre-writing Considerations

Applying for a loan involves being prepared for anything, so it is important to have the things you need before writing. Do some research on your lender, and write down notes about why they are suitable for you and what you would like them to know about your project. Write those questions that may arise during the process of applying for your loan. Check your credit score and know your rights as a borrower when you apply for a loan.

After you have done all of the above, review everything and ensure that what you’ve written is easy to understand by someone who has not read your notes or audited your finances. When applying for a loan in a major financial institution or applying for an SBA loan, you will almost always be required to write an application letter for a loan. It is important to note that unless it is supported by a sound credit situation or proper financial planning, it may not be enough to help you secure the loan. 

Fortunately, there are two things that you can do to increase your loan limit and increase your chances of getting a loan. You can first check your business and personal credit scores from accredited credit reporting bureaus such as TransUnion, Equifax, and Experian and take the necessary steps to improve them.

The second thing that you can do is to prepare your business financial statements, i.e., your profit and loss statement, cash-flow statement, balance statement, etc., for the past six months and attach them to your letter. These documents are essential when applying for a loan as they help the financial institution assess your creditworthiness and increase your chances of securing a loan.

How to Write a Loan Application?

Writing it can seem daunting, but it can be a simple process if you follow the proper format and include all the required information.

The following is a summary of the information you must provide in your letter:

The header is an integral part of the standard business letter format. It should include:

• Your name and contact information : Make sure to include your full name, address, and contact information. This should include a mailing address with a zip code, a business email address, and your cell phone number where you can be reached.
• The date : Include the month, day, and year of the letter. You must ensure that you write the date on which the letter was created.
• The name of the recipient : This will be a bank representative in many cases, but it can also be an SBA representative or another financial institution to whom the borrower is addressing the letter.

Subject line

When writing it, make sure to include a clear subject line that will help the recipient understand the purpose of the letter. Make sure to include whether the loan is for personal or professional use in the subject line.

“Loan Request Application Letter.”

Address your letter correctly. If you do not know who will be reading it, write “ To Whom It May Concern .” If you are trying to get a business loan, address it to the company’s representative issuing the loan. If you are applying for a personal loan, address it to the bank or whoever provides it.

Introduction

It should begin with a brief statement of the goal and amount you are requesting. It should also state your qualifications for the loan and any other pertinent information that can be used for your evaluation as a borrower such as your financial status, your work history, the length of time you have been in business, etc.

The body is the main part of the letter, and it should contain all the information the recipient will need to decide whether to grant the loan or deny the request.

Some of the information that must be covered in the body includes:

• Basic business information : If you are writing it, the first item to include in the body of the letter is details about your business. This information will help the lender understand who you are and will serve as the foundation for your loan application. Some of the information that you should cover in this section includes your business’s registered name, business type (i.e., partnership , sole proprietorship, LLC , etc.), nature of your business (i.e., what you do), main services and products, your business model, the number of employees that you have, and your annual generated revenue.
• The purpose of the loan : You must explain why you need the loan and the purpose for which it is being requested. This can be to purchase or expand a business, for a personal reason, or to pay some debt.
• Present yourself as being trustworthy : To get a loan, you need to establish trust with the lender. This can be achieved by explaining what you do for a living, providing some identity documents, and demonstrating why you deserve to be trusted.
• Explain how you intend to pay back : Explain briefly how you plan on repaying the loan. This should include a timeline for repayment and be supported by evidence such as a business plan, personal financial statement, or credit report .
• Proof of financial solvency : In some cases, you will be asked to provide evidence that the funds requested are not your only source of income. Documents like bank statements or tax returns can help you prove that you have other sources of funding, which will increase the likelihood that your request will be granted.

In the conclusion, you must thank the lender for considering your request. Briefly mention all the attached financial documents. Remember that each lender has their own set of loan application requirements and may request different information or documentation from borrowers, so make sure to double-check the specific instructions provided by the lender.

Once you have finished writing the letter, be sure to sign it at the bottom. You may include phrases such as:

“Respectfully yours” or “Sincerely yours”.

Place your name and contact information directly above the signature line.

SBA Loan Application Letter Template

[Your Name]

[Your Address]

[City, State ZIP Code]

[Your Phone Number]

[Your Email Address]

[Loan Officer’s Name]

[Bank Name]

[Bank Address]

Dear [Loan Officer’s Name],

I am writing to apply for a Small Business Administration (SBA) loan to help fund my [business name]. I am excited to have the opportunity to present my business plan to you and explain why I believe my business is a great candidate for an SBA loan.

[Provide an introduction to your business, including its history, products or services offered, and unique selling proposition. Explain why you started the business and what sets it apart from competitors. This should be no more than two paragraphs.]

I am seeking an SBA loan in the amount of [$ amount], which will be used to [briefly explain how the funds will be used]. My business has experienced steady growth in recent years, but we need additional capital to take advantage of new opportunities and expand our reach.

[Provide a detailed explanation of how you plan to use the funds, including any expected return on investment. Be specific about the amount of money you need, how long you will need it for, and how it will be used.]

As part of my loan application, I have included the following documents for your review:

• Business plan
• Financial statements for the past three years
• Tax returns for the past three years
• Cash flow projections
• Articles of incorporation
• Personal financial statements for all owners

A list of collateral that will be used to secure the loan, if applicable

[Provide a comprehensive list of all the documents you have included with your application. Make sure you have included everything the bank has asked for, and any additional documents that may be relevant.]

I am confident in the future success of my business and believe that an SBA loan is the right choice for us. I understand that the loan application process can be lengthy, and I am committed to providing any additional information or documentation that may be required to support my application.

Thank you for considering my loan application. I look forward to hearing from you soon.

Loan Application Letter Sample

Make your small business loan application more polished with our simple sample letters. They’re crafted to help you convey your needs professionally and improve the impact of your request. 

Sample letter 1

Dear Sir/Madam,

I am writing to apply for a Small Business Administration loan to support my growing business, GreenTech Innovations. Established in 2018, we specialize in eco-friendly technology solutions. Our recent market analysis indicates significant growth potential in sustainable energy products.

To capitalize on this opportunity, we require additional funding for research and development, marketing, and expanding our team. An SBA loan would enable us to invest in these critical areas, fostering innovation and job creation. Our business plan, attached to this application, outlines our strategy for a sustainable and profitable future.

GreenTech Innovations has a strong financial track record, with consistent revenue growth over the past three years. We have maintained a healthy cash flow and have a solid plan for loan repayment, as detailed in our financial projections. Our commitment to financial responsibility and strategic growth makes us an ideal candidate for an SBA loan.

Thank you for considering our application. We are committed to contributing positively to the economy and the environment. Your support would be instrumental in helping us achieve our goals.

Jordan Smith

Owner, GreenTech Innovations

Sample letter 2

Dear Business Loan Officer,

I am reaching out to request a business loan for my company, Bella’s Boutique, a unique clothing and accessories store located in downtown Springfield. Since our opening in 2019, we have become a beloved part of the local community, known for our exclusive designs and personalized customer service.

This loan is sought to enhance our inventory, upgrade our in-store technology, and expand our online presence. These improvements are essential for keeping pace with the evolving retail landscape and meeting the growing demands of our customers. Our detailed business plan is attached for your review.

Financially, Bella’s Boutique has demonstrated resilience and growth, even amid challenging economic times. Our sales figures have shown a steady increase, and we have a clear plan for managing the loan and ensuring its repayment. We believe these factors make us a strong candidate for a loan.

Your consideration of our loan application is greatly appreciated. This funding will not only help Bella’s Boutique thrive but will also support the local economy by providing more employment opportunities and enhanced retail experiences.

Thank you for your time and consideration.

Warm regards,

Isabella Martinez

Founder, Bella’s Boutique

The effectiveness of these sample letters as a guide for someone seeking to write a loan application lies in several key aspects. Firstly, they demonstrate the importance of a clear and concise introduction, where the purpose of the letter is immediately stated, ensuring the reader understands the intent from the outset. This is crucial in any formal business communication. Both samples skillfully describe the nature and background of the respective businesses, providing just enough detail to give the reader a sense of the company’s identity and market position without overwhelming them with unnecessary information. This balance is vital in maintaining the reader’s interest and establishing the context of the request.

Moreover, the letters excel in explicitly stating the purpose of the loan, which is a critical component of any loan application. They outline how the funds will be utilized to grow and improve the business, demonstrating not only a clear vision but also a strategic approach to business development. This helps in building a sense of trust and reliability with the lender. Furthermore, the inclusion of financial health indicators, such as past revenue growth, cash flow management, and a repayment plan, adds to this trust by showing financial responsibility and foresight.

The writers also incorporate attachments like business plans and financial projections, which provide additional depth and substantiation to their claims. This shows thorough preparation and professionalism, which are highly regarded in the business world. Finally, the tone of the letters is appropriately formal yet approachable, and they conclude with a note of gratitude, reflecting good business etiquette. This combination of clarity, conciseness, relevance, and professionalism makes these letters exemplary guides for anyone looking to draft an effective and persuasive business loan application.

Tips for Writing

Following are some tips for writing this letter:

Be specific

Be sure to include specific details in it to keep the reader’s attention. Ensure that you include information about the purpose of the loan, how much money you need, and the reason why you are a good candidate for a loan.

Brevity is essential when writing this letter. Stick to the essential points and avoid extraneous details. This will help to ensure that your letter is easy to read and that the reader is not distracted by irrelevant information.

Address the appropriate person

Ensure that you address your letter to the most relevant party for your particular situation.

Consider contacting the bank to find out to whom it should be addressed. This is how you can be sure that it will get to the right person.

Use a proper format and layout

As with all letters, you should use clear, concise paragraphs and avoid unnecessary jargon. Make sure to use the appropriate format for formal letter writing and use a professional, polished layout.

Include business financial statements

The financial statements for your company must be attached to your letter if you are a business owner. In this way, the reader will better understand your overall financial situation and help demonstrate that you are a good candidate for a loan.

The following are some of the purposes for which you may request a small business administration loan: to start a new business, to buy new equipment or inventory for your company, to upgrade or expand an existing business, to cover unanticipated expenditures, to pay off high-interest debt, to fund marketing campaigns, to move your office to a new location, to buy insurance for your business, to purchase stock, to buy out shareholders, and for any other lawful reason authorized by the lender.

Key Takeaways

Here are the key takeaways from this article:

• When writing an application for a loan, be sure to provide specific details about the purpose of the loan, how much money you need, and why you are a good candidate for a loan.
• Use the standard business letter format and use clear, concise paragraphs.
• Brevity is vital when writing such a document, so mention only the essential points and avoid extraneous details.
• Address your letter to the most relevant party for your situation, and be sure to include your company’s financial statements.

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Applications , Request Letters

Loan Request Letter (Format & Sample Applications)

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)

{your name}

{your company’s name}

{your address}

{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.

{your signature}

Sample Loan Application Letter

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 [email protected] .

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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How to Write a Loan Application Letter

Table of Contents

Sometimes, taking out a loan can become inevitable. Whether dealing with piled-up medical bills or a financial emergency, it’s common to turn to fast and convenient borrowing options. According to statistics, advances and loans accounted for more than 60% of bank assets in the European Union in 2021. 

If you wish to take out a loan, you’ll have to fill out a loan application or request letter that details what you need the money for and how you’ll use it. The best way to appeal to a lender is by using a convincing tone and showcasing a clear plan for the money. Keep reading as we look at ways you can achieve this and ensure that your loan is granted successfully. 

What is a Loan Application Letter?

A loan application letter is a typed or handwritten letter provided to your lender, helping them decide whether to approve your loan request. This letter is written when the borrower is seeking financial assistance from a lender to pay off some bills or other expenses. 

When Do You Need One?

You might require a loan application letter in the following financing situations:

• When you wish to borrow money from the SBA (Small Business Administration) since it recommends and encourages applicants to start their loan proposals with an executive summary or a loan application letter
• When a borrower opts for a loan from a conventional bank lender and has to demonstrate that their business is financially viable and experiencing growth

In some situations, you aren’t required to write a loan application letter. These include scenarios like when a borrower is seeking equipment financing and said equipment serves as collateral, when someone requests a business line of credit with business bank statements or financial statements, and when a borrower seeks a term loan online using alternative lenders who want to go over your recent bank statements. 

Essential Loan Application Elements

There are specific guidelines you need to follow when writing a loan application:

1. Header and Greeting

Whether you’re filling out a loan application letter for a personal or business loan, it’s crucial that you start with a header and greeting. Include several sentences that outline the necessary, accurate details of your loan request in the header. If you’re opting for a business loan, then you need to include the following details:

• Company name
• Company phone number
• Company address
• Loan agent or lender’s name and title
• Loan agent or lender’s contact details
• A subject line stating the desired loan amount

Follow this by incorporating a greeting right below the header so that you introduce your application with a friendly tone. 

2. Loan Request Summary

You will have to provide your lender or loan agent with an overview of your loan request in this section. Ensure this section is concise, detailing only crucial information that’ll enable the lender to reach the letter’s body quickly. Entrepreneurs applying for a business loan should state why they are trustworthy borrowers, basic business details, the ideal loan amount, and the use of the loan. 

3. Basic Business Details

It would be best if you started by making a clear loan request which includes the amount you wish to borrow. When you write a few sentences about the workings of your business, they should include the following information:

• The legal business name 
• Any DBA used by the organization
• The amount of time the business has been operating
• The business structure
• Number of employees
• An overview of what the company does
• Profits and annual revenue, if applicable

Once this is done, you can move on to the next step, which is explaining why you need a loan. Don’t also forget to outline how you plan to repay the owed amount if the lender grants the loan.

4. Loan Usage

Every lender’s goal is to minimize risk as much as possible, so don’t be surprised if they carefully scrutinize your application before deciding whether to accept or disapprove it. They will assess whether you can pay back the loan entirely on time. Make a solid outline of how you intend to use the loan and why granting you the funds is a wise investment. It’s essential to inform the lender that you have clear goals you will accomplish if the loan application is approved. 

5. Proof of How You’ll Pay Back the Loan

In order to show your company’s financial health, you’ll need to use figures from the latest balance sheet or income statement. These records are essential because they demonstrate that you can repay the loan. 

Additionally, you must include any additional business finances to prove you’re a low-risk investment. State down any existing debt and a schedule detailing how you’ll pay it back if you owe someone else money. Perhaps, you’re a new business, but profits are stable. In that case, ensure you mention this, as it proves your ability to repay the loan. 

Once you achieve this, you can add a particular cash flow prediction to give the lender an idea of your payback plan, including the principal and interest amount. 

6. Give Accurate Information

There’s no doubt that lending money is a risky investment. You can make your lender’s life easier by providing factual and correct details to ensure both parties agree with the terms of the deal. For example, include your accurate credit history. If you are dishonest during the loan application process, you will be considered a fraud, and there will be repercussions for your actions. 

Tips for Writing a Loan Application Letter

• Before sending a loan letter request, check your business and personal credit scores and whether you need to take specific steps to improve them
• Provide transparent, genuine, and concise explanations
• Ensure all information is factual and relevant
• Keep all your financial statements ready, such as business balance sheets, cash flow statements, PSL statements, etc
• Submit every relevant credential with your loan application request letter
• Include the date, time, method, and manner you’ll use to make your payment
• Avoid writing a letter that is unnecessarily wordy and long
• Follow the rules available online on writing formal letters, so you don’t use an informal tone while assembling your loan application letter
• Whether including your business’s current assets, liabilities, or financial health, don’t jot down false information that can get you into legal trouble.

Loan Terms and Penalties

If you fail to pay your loan on time, cancellation fees or penalties may apply that depend on the number of days you’re overdue on the payment. For example, if you’ve looked into how to get a title loan with a lien , you know that your car will be used as collateral. In case you default on payment or provide false information, you are likely to lose ownership of the vehicle.

You should go through the loan terms and conditions as this will enable you to determine how many days your payments can be delayed, how much penalties are for late payments, and the amount you’ll be charged if you cancel your loan. Choosing a loan provider that offers the lowest and most amenable terms is recommended. 

Whatever reason you have for acquiring a loan, writing a solid loan application letter will improve your chances of obtaining the financial help you need. This application letter should be composed in a polite, convincing tone and include accurate information. You can do thorough research to pick a lender whose provided options align with your requirements. Consider beforehand how much money you need and apply for the relevant loan. 

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Sample Loan Application Letter

Last Updated On December 25, 2019 By Letter Writing Leave a Comment

Loan application is written when the applicant wants to seek monetary assistance in the form of loan mostly on a mortgage of property. Since it is a request, the letter should be written in a polite tone.

Use the following tips and samples to write an effective loan application letter to a bank manager or a company.

Sample Loan Application Letter Writing Tips:

• As loan application letter is formal, the phrases and words should be chosen carefully.
• The language used should be simple and easy to understand
• The content of the letter should be short and straightforward.

Sample Loan Application Letter Template

__________ (Branch Manager’s name) __________ (Branch address) __________ __________

______________ (Your name) ______________ (Your address) __________________

Date __________ (date of writing letter)

Dear Mr. /Ms_____________ (name of the concerned person),

I have a savings account in your bank with account no._________ for the past …………… years. I want to apply for a ……………..(type of loan) loan for ………………….(state purpose) .

If you can inform me about the details and formalities required for seeking the loan, I shall make all the arrangements and meet you at the earliest.

Looking forward to meeting you,

Thanking you,

Yours Sincerely,

___________ (Your name)

Sample Loan Application Letter Sample, Email and Example/Format

Pavan Kumar 3214 Breeze apts Worli Hyderabad

The Branch Manager, Axis Bank, Station Road Branch, Hyderabad

30th September 2013

Subject: Loan application letter

Dear Sir/Madam,

I have a savings account in your bank for the last five years. I want to avail a home loan from your bank. I would like to know the details to seek a home loan from your bank.

I am a salaried employee, and I work for a central government organisation as a research scientist. You can verify my salary certificate and other details.

As the home loan interest rates have down, I would like to utilise this opportunity to buy a house. I have already booked a flat in Banjara Hills Hyderabad, and I need about Rs 35 lakhs as the loan amount. With my pay scale, I think I am eligible to seek a loan for this amount.

If you can send your representative to my place, we can discuss and finalise the loan. I shall keep all the documents ready so that there will not be a delay in processing the loan.

Looking forward to hearing from you,

_____________

Pavan Kumar

Email Format

A loan application letter is written to ask for financial credit service on some secured mortgage basis. As it is our requirement, the words should be so humble and sincere that the banker or the lender acquires total trust on the applicant. Loan application letter helps the loan applier to appeal for the various types of loans whichever he wishes to depend upon certain conditions.

I have sent this letter to you to explain my reasons behind requesting a loan modification on my mortgage. I wish to purchase a Mercedes Benz 300 Limousine costing Rs 56 lakhs. I am seeking an interest reduction down to 6.25% from my current 8.80%. I feel it is a fair percentage for you, and it is just within my means.

Without a reduction on the interest, I will not be able to afford the monthly payments. I have to choose between a loan modification and a foreclosure. I would far prefer the former, and you probably would as well. 6.25% is the most I will be able to manage, even if I cut all of my expenses out of the picture. Please consider my application seriously, and I hope to hear more from you on the matter.

Yours Faithfully,

____________

Jimmie Verna Melendez.

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How to Write a Letter to a Bank Asking for a Loan

Last Updated: January 4, 2024 References

This article was co-authored by Carla Toebe . Carla Toebe is a licensed Real Estate Broker in Richland, Washington. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. She graduated from Washington State University with a BA in Business Administration and Management Information Systems. There are 8 references cited in this article, which can be found at the bottom of the page. This article has been viewed 203,920 times.

Businesses applying for a loan from a lending institution may be asked to prepare a loan request letter. This letter should include documentation of a strong management team, substantial experience in the industry and a complete understanding of the current marketplace. The letter should not only introduce your business to the lending institution, but it should also clearly state how much money you need, how you will repay the loan and the security you would pledge to back up the loan. [1] X Research source

Writing an Executive Summary

Describing Your Business

• Include a narrative discussion of the development of your products or services since the inception of your business. Detail the volume of business each product generates. Describe significant changes in your products or services. [8] X Research source
• Briefly state your tentative goals for the next 5 years. [9] X Research source
• Describe your work force, including the size and their critical skills. [10] X Research source
• Briefly describe your supplies and name your major suppliers. [11] X Research source

Writing the Loan Request

Including Other Documentation

• Make sure to include the assumptions behind the projections and state clearly that your estimated results are projections, which means they aren't guaranteed, and may not be reached.

Expert Q&A

• The quality of your writing reflects on your business. Use simple, straightforward language. Avoid arcane terms and acronyms. Make your request clear and well-organized. Thanks Helpful 0 Not Helpful 0
• Be positive. Keep the focus on demonstrating how you plan to be successful. Thanks Helpful 0 Not Helpful 0
• If you're not sure how to word your letter, work from a template or example letter. A quick online search for “example bank loan request letter” or “bank loan request letter template” will bring up numerous examples that you can modify to suit your needs. Thanks Helpful 0 Not Helpful 0

You Might Also Like

• ↑ http://www.allbusiness.com/how-to-prepare-a-loan-proposal-11725601-1.html
• ↑ https://www.sba.gov/offices/district/nd/fargo/resources/how-prepare-loan-proposal
• ↑ http://bisonfinancial.com/loans/sample-executive-summary/
• ↑ https://www.bdc.ca/EN/articles-tools/money-finance/get-financing/Pages/how-write-proposal-business-loan.aspx?caId=tabs-1
• ↑ http://www.thedailymba.com/2011/02/14/the-advantages-of-a-business-loan/
• ↑ http://www.captureplanning.com/articles/92131.cfm
• ↑ http://www.brs-seattle.com/loan%20proposal.pdf
• ↑ https://www.sba.gov/content/financial-projections

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Word & Excel Templates

Printable word and excel templates.

Loan Application Letter

Applying for the loan requires you to provide a lot of documentation. Some organizations ask you to fill out the loan application form, while in some cases, you have to write a loan application letter to the institute to apply for the loan.

The loan application letter allows you to add all the details that you are required to provide. The letter is written to the loan manager of the company, and he then decides whether he should accept the application or not. The letter should include the personal information of the applicant, and since it is a formal letter, it should be written to the point by avoiding unnecessary details. The lender should follow a standard format while writing the loan application letter. The loan manager should be told about the intended use of the money.

The first paragraph of the letter should state the reason for lending the money. It should be assured in the letter that you will not use this money for any illegal purpose. The date on which the applicant will return the borrowed money should be mentioned in the letter.

You should also include information about you in the letter that can make the reader feel that you are a trustworthy person. Here is a sample letter that can help you learn about the structure and format of the letter.

Loan application letter:

Dear [Recipient’s Name],

It is stated that I am writing this letter to request a loan from the finance office of your company because of some of my very peculiar and essential needs. My mother is seriously ill, and I must get her treated at the hospital, for which I need money. Please accept my loan application and sanction me $2000. I assure you that I will return you the loan from the deductions of my gross salary.

I will be highly grateful for this favor of yours.

I am looking forward to your reply.

[Your Name]

Preview and Details of Template

File:  Word  ( .doc ) 2003 + and  iPad  Size: 31 KB

More options

I am writing this letter to get a loan from your bank branch situated in New Jersey. Currently, I am working as a sales executive for ABC Organization and need a $10,000 loan. I am in utmost need of this amount as I have to meet the surgery expenses of my father. I have gone through all the requirements related to the loan process and have enclosed the necessary documents along with this email. Please let me know what other documents I need to send you, and you can call me at any time for further queries. I hope you will give a positive response to my request.

This application is a request to ask for a loan from your organization. I am Christiana Roseland, and I am currently running a bakery in New Jersey. I am planning to open a new branch according to the rising demand of people. For this purpose, I need $70,000/- and I will return the amount in installments. I have thoroughly read the rules and policies for the loan process and hopefully, I will return the entire amount within the given time period and the financial pronouncement has been affixed with this application. Waiting to get positive feedback from you.

This letter is a request for a loan application to construct a house. I am the managing director at ABC Company, and my monthly salary is not adequate to meet the construction expenses. I will return the due amount according to the company’s rules and policies and will not let you be disappointed. I contacted the admin office to find out the details, and Mr. Jackson has provided me with all the information. If you need additional information, you can ask me at any time. Thank you for taking my request into account.

Dear Madam, I, Darcy Louis, work in the security office of your company. I live in Valley Stream and travel two hours daily to come to the office. I do not have a personal vehicle, and sometimes it creates a lot of difficulties, and I often arrive late to the workplace. I want to apply for a loan because I have to buy a motorcycle. I need $10,000 in this regard. I have chosen a six-month installment plan, and 20% of my salary will be deducted each month. I request that you accept my loan application. I will be grateful to you. Thanking in anticipation.

Dear Sir, I am Dorothy John, and I live in Toronto. I am running a branch of ABC School. The strength of students is increasing with each session, and it is becoming difficult to adjust to the large number of students in a limited space. Therefore, I need to open a new branch adjacent to the current school and construct a new building, but I do not have enough money. I learned about your loan policy and want to apply for it. I have attached the needed documents along with the application. I am hoping to hear a quick response from you.

I am Julia Hughes, and I am writing this message to ask for a loan from your bank. I have an account in your Brooklyn branch, and my account number is [#]. I have a small business marketing in Brooklyn, and I intend to open a new branch in the Netherlands. Hence, it can be a source of ease for hundreds of people. The savings I have and the loan I am asking for will be of great help in expanding my business. Kindly send me an email detailing all the formalities for the loan process. I would like to ask you to send me a confirmation message so I may visit your branch on an immediate basis.

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Letter Solution

Welcome to "Letter Solution" Everything is about letter and application writing.

Bank Loan Application Letter Sample 8+ With Format

One format and 8 sample on bank loan letter.

Table of Contents

Bank Loan Application Letter Sample: Naturally, we take a loan from a bank when we fall into a money crisis. We talk to the branch manager about it. After that, he discussed everything and instructs us on all terms and conditions. Some bank managers tell to submit a request letter with the required documents. And then many people can not write a proper request letter. So I have written the post with a format and six samples that will clear your confusion and create a good idea about any type of bank loan application letter sample. Then you can write a new application in your own way. A well-written request letter for the loan can help you to be approved your application at the time of applying for a loan.

There are different types of loans in the bank. For example

• Business loan
• Personal loan
• Educational loan
• Two-wheeler loan
• Loan against property

When you will apply for a personal loan, eligibility is a must for you.

Personal loan eligibilit:

• You should be salaried person.
• You should have a job under government, public company.
• Your age should be between 25-50 years.
• You need to be an Indian citizen.
• The minimum salary should be 25000 but it depends on the city.

Application Format

Bank Loan Application Letter

The Bank Manager

[Name of the bank]

[Name of the branch]

[Address of the branch]

Date: …../ …../ ……

Sub: [Application for home loan]

Respected Sir/Madam,

I am ___________ [Your name]. I am a [savings/current] account holder with your branch for _____ years. I am a ______ service man. My monthly salary is deposited in my bank account. I always maintain a good balance in my account. But I need a loan for _____________ [Purpose of the loan].

I am requesting you for an amount Rs. __________ as a loan. I have enclosed all the required documents as you instructed earlier. I have read, got and agree with the term and condition of the bank.

I am waiting for positive response from you.

Thanking you

Yours sincerely

[Name of the applicant]

Contact details

Bank Loan Application Letter Sample

Bank of India

[Branch Name]

[Branch Address]

Date: 00/00/00

Sub: [Request for business loan]

Dear Sir/Madam,

With due respect, I beg to state that I have a current account with your branch. I am a businessman and run three restaurants. I need an amount of Rs. 100000/- as a loan for my business purpose.

I will be thankful to you if you will consider my request as early as possible.

Write A Letter To Bank Manager For Educational Loan

Gabgachi Branch

Delhi-700 071

Date: 12/11/2021

Sub: Application for educational loan

I, Ashutosh Kumar Saha, a permanent resident of Sukanta More, Gabgachi, would like to apply for an education loan for further studies. I have just appeared for my higher secondary board exams and would like to complete a course in B.TEC from a reputed institution in Delhi.

I can come to the branch at your convenience to discuss it required to get a loan in my favor. I will always be grateful to you if you look into the matter and approve my loan.

Ashutosh Kumar Saha

Application For Home Loan

Name of the bank

Name of the branch

Address of the branch

I am prakash saha. I am a savings account holder with your branch for ten years. I am a government serviceman. My monthly salary is deposited in my bank account. I always maintain a good balance in my account. But I need a loan for building my house.

I am requesting you for an amount of Rs. 200000/- [Two Lakh] as a loan. I have enclosed all the required documents as you instructed earlier. I have read, got and agree with the term and conditions of the bank.

I am waiting for a positive response from you.

Application For Personal Loan

It is stated that I would like to request you for a personal loan of Rs. 200000/-. I have a savings account for 15 years with your branch and save a good balance in the first week of the month. I have been working in an I.T company for 20 years and my salary is 25,000/-. I will pay the loan by deduction money by a savings account. I have read the term and conditions and got it. I have enclosed the necessary document as the instruction.

I am waiting for your positive response of hearing.

Yours faithfully

Sample of Bank Loan Application Letter

Sub: [Application for __________________ ]

With a lot of respect, I beg to state that I am an old account holder in your branch. My account number is XXXXXXXXX. Now I am a serviceman. I am doing my job in Malda Sonoscan Nursing Home. My salary is 12000/-. I need a loan amounting to Rs. 80000/- for buying a car. The deduction should be from my salary account.

Therefore I request you to grant me the loan and then I will be obliged to you.

Business Proposal For Bank Loan Sample

Sub: [Application of proposal of the business loan]

I am writing this letter to request a small business loan in the amount of Rs. 80,000/-for the purpose of business development. My current account number is XXXXXXXXX in your branch. I am an account holder for ten years and maintain a good balance in this account.  

My company name is [XYZ]. It is a growing business that serves furniture to customers. You can follow our success online at [website name]. 25 workers work here daily.

I have attached all the required documents along with this application as you instructed earlier. So I earnestly request you for a small loan. 

I am looking forward to hearing at your convenience.

FAQ’s On Requesting Loan

How do I write a letter requesting a loan?

Answer: It is not a hard matter. Just follow the structure and fill up the place with your right information.

Sub: [Application for_______ ]

Write first paragraph following the format.

Second paragraph

Third paragraph

That is enough for a letter of requesting loan.

What is the difference between application and letter?

Answer: There is a difference between application and letter. A letter is written for communication or giving information to anyone. On the other hand, an application is written to request for something.

How do you end an application letter?

Answer: You end an application letter with “Yours faithfully or your sincerely”. Besides it nowadays to write contact details at the end is very important.

Should I write thank you in advance?

Answer: Yes. You should write “Thank you” in advance for close connotation. It will express your politeness.

• Closing your bank account
• A new pass book
• New check-book
• Transfer bank account
• Opening a joint account
• Bank statement
• Hire a locker
• Change specimen signature
• Renewal of fixed deposit account
• Complaining non-receipt of pass-book
• Stop payment of a lost check
• Reopen account
• Change registered mobile number

I hope you have got the right information and chosen bank loan application letter sample . If you like the post, you can do a little help by sharing it with your friends, relatives and do comment in the below comment box.

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• Bank Loan Request

How to Write a Bank Loan Application Letter: Example and Writing Tips

Last updated on January 02, 2023 - © Free-Sample-Letter.com

What is Bank Loan Application?

A bank loan application is a request made to a financial institution , such as a bank, to borrow a specific amount of money. The purpose of the loan can vary, such as to fund a business venture, pay for education expenses, or make a large purchase.

In order to apply for a loan, an individual or business must complete an application that includes personal and financial information, as well as details about the purpose of the loan and the requested amount . The lender will use this information to evaluate the borrower's creditworthiness and determine whether to approve the loan and at what terms.

Step-by-Step Guide: Crafting a Successful Loan Request Letter

Here are some tips on how to write a bank loan application letter:

• Identify the purpose of the loan and the amount you’re requesting . Be specific and clearly state your financial needs. For example: "I am writing to request a loan of $10,000 to cover the costs of my daughter's tuition at XYZ University." or "I am writing to request a loan of $50,000 to fund the expansion of my small business, XYZ Company."
• Explain your current financial situation and provide evidence of your ability to repay the loan. This may include income statements, tax returns, and other financial documents. For example: "I have been self-employed as the owner of XYZ Company for the past 5 years and have consistently earned a net profit of $30,000 per year / I have been employed as a software engineer at ABC Company for the past 8 years and have a stable income of $75,000 per year. Attached, you will find my tax returns and financial statements as evidence of my ability to repay the loan."
• Describe the specific use of the loan proceeds and how they will benefit you or your business. Be sure to include a detailed plan for how you will use the funds and how you will generate the income to repay the loan. For example: "The loan funds will be used solely for my daughter's tuition and other education-related expenses. I have a budget in place and am confident that I can make the monthly loan payments while still being able to cover my other financial obligations." or "The loan funds will be used to purchase additional inventory and hire two additional employees, which will allow us to increase our sales and profitability. I have a solid business plan in place and am confident that these investments will enable us to repay the loan within 3 years."
• Include any supporting documents that may help your case , such as financial statements or a business plan. For example: "In addition to the documents mentioned above, I have also included a copy of my budget plan, which shows my projected income and expenses for the next 3 years." or "In addition to the documents mentioned above, I have also included a copy of my detailed business plan, which outlines my marketing strategy and projected financial performance."
• Request a specific repayment plan and timeline. Be realistic and considerate of the lender's needs when proposing a repayment schedule . For example: "I am requesting a loan repayment period of 3 years, with monthly payments of $1,500. I understand that this may be negotiable and am open to discussing alternative repayment terms that work for both parties."
• Express your appreciation for the lender's consideration and provide contact information for follow-up. Thank the lender for their time and make it easy for them to get in touch with you if they have any questions. For example: "Thank you for considering my loan request. I am confident that this investment will help my business grow and thrive / I am confident that this investment in my daughter's education will pay off in the long run. If you have any questions or would like to discuss further, please don't hesitate to contact me at 555-555-5555 or by email at [email protected]."

➤ You May Also be Interested in Our Sample Letter to Request an Alternative Payment Plan from a Creditor

Need to Write a Bank Loan Request Letter? Use Our Free Templates for Success

For applying loan in a bank or financial institution.

Dear (mr/miss etc. + Loan manager name),

Following my visit to the bank yesterday where all necessary papers were filed regarding my loan request, here are a few more details pertaining to the loan.

I have been a long-standing customer with (name of bank) for over (number) years now and I recently applied for a (personal/company) loan of ($/€ amount). This loan will allow me to pay for (reason needed) which I have been planning for some time now.

My preferred loan structure, after much thought, is a (secured/unsecured) loan. I believe this is the best option for me and I also hope to be able to pay it off within (X years).

I prefer to take out a shorter loan period rather than the popular long term packages, and therefore hope that you will be able to see this as a positive factor in granting me this loan.

I am currently employed at (company name) and have been the (name of position) for (No. of years). Should you require any references or further information, please do not hesitate to contact (my boss/the HR Dept. etc.) at any time. They can be reached on (tel. no.) or via email on: ([email protected]).

As requested by (Mr./Miss X), please find (enclosed/attached) copies of my most recent bank statements for the last (3/6) months.

I am available to come in and speak with you at any time, I do hope that you will look favorably on my request and I very much look forward to hearing from you.

(name/signature)

Bank Loan Request Letter for Small Business (SBA)

Dear [Loan Manager's Name],

I am writing to request a loan of $50,000 from the Small Business Administration (SBA) to fund the expansion of my small business, XYZ Company.

I have been self-employed as the owner of XYZ Company for the past 5 years and have consistently earned a net profit of $30,000 per year. Attached, you will find my tax returns and financial statements as evidence of my ability to repay the loan.

The loan funds will be used to purchase additional inventory and hire two additional employees, which will allow us to increase our sales and profitability. I have a solid business plan in place and am confident that these investments will enable us to repay the loan within 3 years. In addition to the documents mentioned above, I have also included a copy of my detailed business plan, which outlines my marketing strategy and projected financial performance.

I am requesting a loan repayment period of 3 years, with monthly payments of $1,500. I understand that this may be negotiable and am open to discussing alternative repayment terms that work for both parties.

Thank you for considering my loan request. I am confident that this investment will help my business grow and thrive. If you have any questions or would like to discuss further, please don't hesitate to contact me at 555-555-5555 or by email at [email protected].

[Your Name]

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How to Write a Loan Letter to Your Bank

How a Letter to the Bank Might Get Your Loan Approved

Why Write a Letter to Your Bank?

• Letter for a Mortgage Application

Parts of a Loan Letter to a Bank

Sample outline for a loan letter.

Maskot / Getty Images 

Sometimes getting a loan is as easy as filling out an application. But as dollar amounts increase or the situation gets more complicated, lenders may want reassurance. They could even ask you to explain why your loan is a good idea.

If your bank wants more than the basic information that goes on an application, a letter to the bank could be in order. Some banks specifically request letters, while others might appreciate any extra steps you take to try and win the loan.

Learn how a loan letter can improve your application and what you should include in one.

When you write a loan letter to accompany your application, you have the chance to explain exactly why the lender should approve your request. It gives you an opportunity to:

• Add commentary on topics that do not appear in a standard application
• Explain your financial situation thoroughly
• Lay out your plan for using and repaying the loan
• Address any weak spots in your application or finances

Loan letters can be particularly beneficial for small businesses, which often need capital to grow but may not meet the strict requirements laid out by bank loan applications.

Like a cover letter for a job application, a loan letter is your chance to make your case on your terms.

Loan Letter for a Mortgage Application

If you are applying for a mortgage and your application has some weak spots or unexplained elements, writing a loan letter can increase your chances of approval or of receiving a lower interest rate.

You may need to write a letter to accompany your mortgage application if you have:

• Multiple names on your credit report
• Negative entries in your credit report
• Gaps in employment
• Atypical sources of incomes, such as a small business or freelance work
• A recent change in jobs
• Unusual activity in your bank account
• Former delinquencies or bankruptcies

A loan letter gives you a chance to explain these things and address any concerns they may create for the bank.

When writing a letter to accompany your loan application, you need to both keep things brief and provide sufficient detail to make a convincing argument.

Even while keeping things concise, however, there is still specific information you will want to include.

Who and What

Tell the bank a little bit about yourself. If you're applying for a business loan , be sure to include information about the whole team, including the number of employees and how long you've been in business.

Highlight any strengths, designations, or credentials you've earned, as well as successes in your past. Don't go overboard: just pick just a few of the most impressive and relevant things that come to mind.

Lay out the specific amount that you are requesting for your loan. But sure to include the timeframe, such as $100,000 to be repaid over five years.

Explain exactly how you will use the funds. Your lender needs to know that the money will be put to good use.

For example, if you have been turning away business because you didn't previously have capacity, let your lender know about this unmet demand and your ability to satisfy it.

Demonstrate that you have done some market research and know how the loan will impact your business or personal finances .

Your lender needs to know how you’ll fund the repayment. Will you repay a personal loan from your salary or a business loan from increased revenues?

Be specific about how and why your earnings will increase as a result of the loan.

Your lender will notice if you have bad credit or insufficient income to repay the loan. When you address those issues directly, you signal that you're a serious borrower who understands what's at stake.

Be polite and formal in your language, addressing your letter to the loan officer or specialist that you are working with and ending with "Sincerely" or "Regards." Be sure to include your full legal name, address, and contact information.

Like a cover letter for a resumé, aim to keep your loan letter no longer than one page.

Sample for a Small Business Loan Letter

• Overview : “ACME Enterprises specializes in… and has been in business since 2007...”
• Reason : “I’m writing to request a loan for $100,000…”
• Professional information : “ACME Enterprises was founded by Jane Doe, who has over 10 years of industry experience. The marketing team is led by John Jones, who previously helped grow XYZ Corporation…”
• How funds will be used : “Our goal is to increase the number of daily service visits by purchasing an additional vehicle and related equipment. The total cost of these investments is…”
• Benefit : “Currently we are unable to respond to 30% of requests for service, which results in customers calling our competitors or switching products. We will be able to profitably respond to all of those calls with the additional equipment…”
• Basic financial information : “ACME Enterprises currently operates at a profit. Revenue from the previous year was $X, and net income was $Y…”
• Concerns : Anything else that shows you’ve done your homework and deserve the loan.
• Closing : “Please see the enclosed business plan, and feel free to contact me with any questions you have at…”

You will also need to submit a business plan with your loan application. Think of your introductory letter as an abbreviated version of the business plan.

Sample for a Mortgage Loan Letter

• Personal information : “My spouse and I have recently submitted a mortgage application at XYZ Bank, our full names and contact information are...”
• Basic financial information : “You will see in our application that our joint income for the last ten years has ranged from $X to $Y..."
• Concerns : “I’m writing to explain my irregular income and why this will not impact my ability to repay the mortgage I have applied for…”
• Explanation : "Since 2011, I have been self-employed. My business is ABC Enterprises, which provides freelance ABC services for clients such as... My business has made an annual income of no less than $XX for the last ten years, out of which my personal salary has increased from $X to $Y. In the enclosed business plan, you will see that due to These Market Factors I expect demand to continue increasing as I expand my services..."
• Closing : “Thank you for your time and attention, and feel free to contact me with any questions you have at…”

The lending decision ultimately depends on the financials, such as your credit scores , income, collateral , and ability to repay the amount you borrow. But a loan letter can improve your chances by explaining your situation and the impact the loan will have on those factors.

Home > Finance > Loans

How to Properly Write a Business Loan Request

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Have to submit a business loan request letter as part of your loan application? Not sure how to get started?

We don’t blame you. These kinds of letters aren’t as common as they used to be. While online lenders don’t usually ask for small-business loan requests, some traditional banks and credit unions still do. And if you apply for an SBA business loan (a loan backed by the US Small Business Administration), you’ll need a small-business loan request as part of your loan application package.

No matter which lender you’re applying with, this guide will help you write a strong business loan request letter―and to get the business loan you need.

How to write a business loan request letter

• Start with the easy stuff
• Write a brief summary
• Add information about your business
• Explain your financing needs
• Discuss your repayment plan
• Close the letter

1. Start with the easy stuff

Writing a loan request can feel overwhelming. After all, it’s not an everyday part of being a small-business owner. What do you say when applying for a bank loan? How do you write a business proposal for your loan application? What’s your lender even looking for in a business loan request letter?

That’s why we suggest starting your request writing process with the easy bits: formatting.

You’ll want to begin your business loan request with some pretty standardized formatting that includes your contact information, the date, your lender’s contact information, a subject line, and a greeting.

Typically, you’ll want to format the beginning of your small-business loan request roughly like this:

First and last name

Business’s name

Business’s phone number

Business’s address (this one is optional)

Lender name (or loan agent’s name and title, if you have one)

Contact information for your lender or loan agent

Subject line

Obviously you can simply plug in the relevant information for most of this. Easy peasy, right?

You’ll really only have to come up with your own subject line and greeting. But don’t overthink it. Something like this will work just fine for your subject line:

• Re: [Your business’s name] business loan request for [loan amount]

Likewise, keep your greeting simple. “Dear [lender]” or “Dear [loan agent]” will do quite nicely.

Got all that? Then you’re ready to get into the actual loan request.

By signing up I agree to the Terms of Use.

2. Write a brief summary

Before you dive into the meat of your loan request, you should give a brief summary of your letter. Just write a short paragraph that says why you’re writing and what you want.

So you’ll probably want to include the following details:

• Business name
• Business industry
• Desired loan amount
• What you’ll use the loan for

No need to get fancy with this. You’re trying to condense the most important information into one or two sentences.

For example, your summary might look something like this:

• I’m writing to request a [loan amount] loan for my small business in the [industry name] industry, [business name]. With this loan, [business name] would [describe your intended business loan use].

As you can see, you don’t need much detail here. You’re just giving the reader a quick overview of what’s to come.

And now that you’ve given them that preview, it’s time to get more in depth.

Remember, your lender isn’t here to grade your writing. Try to use good spelling, grammar, and punctuation―but don’t stress about crafting beautiful sentences.

3. Add information about your business

Your next section should add more detail about your business. You’ll want to include information like this:

• Business’s legal name (if different than name used)
• Business’s legal structure (LLC, partnership, S corp, sole proprietorship, etc.)
• Business’s purpose
• Business’s age (or date it began operating)
• Annual revenue
• Annual profit (if applicable)
• Number of employees

Now, keep in mind that you’re not trying to give your reader an encyclopedic history of your business. Instead, you’re trying to show that you have a well-established business―one that’s solid enough to deserve a business loan. So focus on relevant details that show your business’s maturity.

You can keep this section as short as a few sentences or as long as a few (brief) paragraphs. Just make sure you leave plenty of room for the next two sections.

4. Explain your financing needs

After discussing your business, it’s time to explain why you need a bank loan.

That means you’ll want to offer some details about how you plan to use your business financing. For example, you can talk about the employees you plan to hire, the building you want to expand, or whatever else you intend to do with your term loan .

Take note, though, that you also need to explain why your loan request makes sense. Because your lender doesn’t really care that you want a loan―it cares whether or not it makes sense to lend to you. You need to convince your lender that you have a good plan for your loan―one that will make it easy to repay the money you borrow.

Try to answer questions like these as you write this section:

• Why should your lender want to approve your loan application?
• What happens to your business if you get your small-business loan?
• What kind of growth will your business loan allow for?

Dig into your business plan and projections to find some good stats. Explain how hiring those additional employees will increase your revenue by a certain percentage or dollar amount. Break down how opening that add-on to your restaurant will allow you to seat a number of additional customers, and how much revenue you expect that to bring in.

The more specific you can get, the better. Because again, you’re trying to convince your lender that you’re borrowing as part of a thoughtful business plan ―not just because you want some cash.

And take your time with this part. In most cases, this section and the next one will form the meat of your business loan request letter. 

As a rule, you should keep your business loan request letter to one page.

5. Discuss your repayment plan

By this point, your lender should understand what your business does and why a loan would help it grow. Now you need to prove to your lender that you can repay your small-business loan.

This doesn’t mean you have to show precise calculations breaking down your desired interest rate and monthly payment. (After all, your bank probably hasn’t even committed to a specific interest rate yet.)

Instead, talk about things like your business’s past finances, other existing debts, and any projections can you offer.

So if you have a profitable business, point that out, and discuss how that will free up cash flow to repay your loan. Offer summaries of profit-and-loss statements that show your business has been growing. Tell your lender how you’ll pay off that existing loan within a few months, so they don’t need to worry about it interfering with repayment of your new term loan.

Put simply, this is your chance to convince your lender of your creditworthiness. Especially if you have a slightly low credit score or some other concern, you want to use this section to show that you will absolutely repay your loan.

6. Close the letter

Finally, you can add a few finishing touches.

Usually you should close with a short paragraph or two that refers the reader to any attached documents (like financial statements) and asks them to review your loan application.

You may also want to include a sentence expressing willingness to answer any questions―or just saying you’re looking forward to hearing back.

Then end things with your signature, list any enclosed documents, and you’re done!

Well, sort of.

At this point, we strongly recommend you print off your business loan request letter and read it―out loud, if possible. This will help you catch any errors. Because no, your lender isn’t a writing teacher, but you still want to make a good impression.

Plus, if you make typos on something like your business name or desired loan amount, that inaccuracy could lead to confusion from your lender―slowing down your loan approval process.

Once you’ve proofread your loan request letter, you’re ready to submit it to your lender. With any luck, your thoughtful letter will help convince your lender to give you that loan you want.

Loan proposal letter template

So how do all those steps look when you put them together? Something like this:

            First and last name

            Business’s name

            Business’s phone number

            Business’s address (this one is optional)

            Date

            Lender name (or loan agent’s name and title, if you have one)

            Contact information for your lender or loan agent

            Subject line

            Greeting

This first paragraph should summarize the rest of your letter. Keep it to just a couple sentences.

The next one to three paragraphs add more detail about your business. Include facts about its age, revenue, profit, employees, and other relevant information.

Then explain why you need financing and how you’ll use it to grow your business. This section can be a little longer (but remember your whole letter  should fit on one page).

Next, talk about how your business will repay your loan. You may want to mention how financial documents show your business’s financial health, for example.

Finally, close with a short paragraph or two that list any enclosed documents and invite the lender to consider your loan application.

Printed name

List of enclosed financial documents

That’s not so hard, is it? With this basic business loan request letter template, you can easily write your own personalized business loan proposal.

The takeaway

So there you have it―that’s how to properly write a business loan request.

Get your formatting right, include a short summary, talk about your business, explain your loan needs, prove you can repay your loan, and close things off. (And don’t forget to proofread.)

We believe in you. You can write this thing.

And good luck getting your loan application approved!

Don’t just tell your lender you can repay your business loan―make sure you can with our business loan calculator .

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How to Write a Loan Request Letter to Get Your Small Business Funded

TABLE OF CONTENTS

If you want to get business financing from your bank or the Small Business Administration (SBA), you’ll need to know how to write a loan request letter. 

Indeed, your bank’s underwriter will look for your business loan request letter when reviewing your application. The SBA expects you to have one, too.

A well-written letter requesting a loan can make the difference between having your application approved and it getting turned down.

Here’s what you need to know about how to write a loan letter, including when you need one, what you’ll need before writing one, what format you should use, examples to review and a loan request letter template to write your own.

What Is a Business Loan Request Letter?

A business loan request letter is correspondence a borrower writes and submits to a bank as part of the loan-application process. 

Business loan request letters include the following:

• Loan amount 
• Planned use of funds
• Explanation of why you should be funded 
• Details about how you plan to repay your loan 

When You Need a Loan Request Letter

There are 2 main financing situations when loan request letters are called for:

• When you’re requesting a loan from a conventional bank lender and you want to demonstrate that your business is growing and financially viable
• When you’re applying for a loan from the SBA , which recommends you begin your loan proposal with a cover letter or executive summary

If either situation applies to you, you should know how to write a loan letter.

There are situations when you don’t necessarily need a loan letter, including:

• You’re requesting a term loan online from an alternative lender, who may only require recent bank statements  
• You’re seeking equipment financing , in which case the equipment itself will serve as collateral
• You’re requesting a business line of credit , which only may require recent financial statements or business bank statements

Prerequisites for Writing Loan Request Letters

While a loan request letter may be needed for bank and SBA loans , it won’t be enough for approval unless it’s supported by a sound credit situation and solid financial planning. For your request to be persuasive to lenders, you should do 2 things before preparing your business request letter and loan application package:

• Check your personal and business credit scores and take any steps you can to improve them
• Prepare the business financial statements you’ll need for your loan package

Your personal and business credit scores and business financial statements will help lenders assess whether you’re a good financial risk and will lend weight to your loan request letter. Business financials should be submitted with your loan application along with your cover letter. 

Essential financial statements you will need include:

• Profit-and-loss statement (also called an income statement)
• Balance statement
• Cash-flow statement

Business Loan Request Letter Format

When you write your loan request letter, it’s recommended to keep it to 1 page while including the following key elements:

Heading and Greeting

The very top of your letter for a loan application should include contact information, a subject line as a header and a greeting as follows:

• Your name and contact information
• The date of your letter
• The name, title and contact information of your loan agent
• A subject line stating that you’re writing about a loan and specifying the dollar amount you’re requesting

Summary of Your Small Business Loan Request Letter

Start by briefly stating the purpose of your letter and the amount you’re asking to borrow.

Basic Information About Your Business

This should include:

• Your company’s legal name
• Your company’s legal structure ( sole proprietorship , partnership, limited liability company, S corporation, etc.)
• A brief description of what your business does
• How many years you’ve been in business
• How many people you employ
• Your annual revenue and profit

Explanation of the Purpose of Your Loan

Tell your lender how you plan to use the loan. Be as specific as possible, citing numbers to quantify your goals. For instance, instead of saying you plan to use the loan for advertising, specify what types of advertising you’ll use, how much each will cost and the percentage of new customers or increased revenue you hope to gain.

Summarize Your Ability to Repay the Loan

Touch on your credit history and highlight key data from your financial statements that reflect your ability to repay your loan, including:

• Summaries of recent profit-and-loss or balance statements demonstrating that your business is financially healthy and growing
• Schedules for repaying any other business debts you already owe
• Cash-flow projections that indicate when you’ll be able to budget repayments for your loan’s principal and interest

Concluding Elements

The end of your letter should include:

• A paragraph referring to your attached financial statements
• A concluding paragraph asking the loan officer to review your package and expressing your anticipation of speaking with them soon
• Your signature
• A list of enclosures, including your financial statements and any other documents that are required for your loan application. You may also need to provide your business partners’ financials, including for SBA-backed loans .

Don’t want to write a loan request letter? We’ve got you covered.

Loan request letter templates and samples.

Here are loan request letter samples and templates you can use to create your own letter. 

Sample Request Letter for a Working Capital Loan to Support Expansion

ABC Builders

123 Park Lane

Miami, FL 33145

Jan. 1, 2020

Senior Loan Officer

987 Spring Road

Philadelphia, PA 19115 

Re: Small business loan request for $100,000

To Mr. Doe,

ABC Builders is a successful business that is well established in the building and renovation industry. We began operation with 3 employees in January 2010 as a small company offering renovation services to local businesses and homeowners. We now have 20 employees. We advertise on our website, ABCBuilders.com, and market on social media channels as well as at home building expos. 

Last year, our annual sales totaled $3.5 million. In the first year of business, we earned a net profit of $1 million. Additionally, we have maintained a steady balance in the past 10 years.

Because of increasing interest from prospective clients in neighboring cities, we have decided to open a second location. The loan we are requesting is for this additional location, which we anticipate will increase revenue by $300,000 in the first quarter following opening.

Startup costs can be costly, and we require funding to purchase supplies and equipment. However, we anticipate strong sales for the new branch and have immediate work opportunities, which will contribute to our loan repayments. 

The loan of $100,000 we are requesting will provide us with the funding we need to help successfully open our second location. I have attached the contracts we have in the new location, pending equipment availability and ability to complete the project as well as our business plan with a breakdown of costs and detailed market analysis. 

Thank you for reviewing this letter and the accompanying financial documents. I look forward to hearing from you at your convenience.

Jack Smith [signature]

Enclosures: Business plan, profit-and-loss statement, balance statement, cash-flow statement 

Sample Loan Request Letter to Fund the Salary of a New Hire

Chief Executive Officer

Dear Mr. Smith:

I am writing this letter to request a small business loan in the amount of $100,000 for the purpose of hiring additional staff. 

My business, ABC, Inc., is a growing company that serves clients in the food-service industry. You can follow our success online at www.ABCInc.com.

ABC, a corporation, began operation in January 2016 with 5 workers and 1 location. We have grown consistently in the past 4 years. We now employ 15 workers and have expanded to 2 locations.

Last year, our annual sales revenue was $2.8 million and we generated a net profit of $975,000. We have maintained our cash flow consistently over the past 2 years and have generated a net profit each year we’ve been in business.

To promote our continued growth, we plan to hire a full-time manager this year to oversee our business operations. We are requesting working capital funding to continue our expansion efforts and cover the cost of the new manager’s salary and benefits. In addition, in an effort to retain top talent, we plan to offer an enticing relocation package and signing bonus. This new hire will streamline operations and lead to efficiencies totaling $150,000. 

We would like to pursue this endeavor in the second quarter of 2020, but this venture will require more funding than our current cash flow can sustain. Although we lack a lump sum large enough to cover this additional expense, our budget can allow for monthly payments over time given sufficient financing.

A loan in the amount of $100,000 will enable us to acquire the right talent to facilitate our expansion. Our projections, which are enclosed, indicate that increased efficiency and sales will generate enough increased revenue to repay this loan by 2023.

Attached, please find our business plan and our most recent financial statements for your review. Based on these strong financials and our business credit score of 90, we are confident that you will find us a safe credit risk.

Thank you for reviewing this request letter and the accompanying financial documents. I look forward to hearing from you at your convenience.

Jane Doe [signature]

Jane Doe, Chief Executive

Enclosures: Business plan , profit-and-loss statement, balance statement, cash-flow statement

Additionally, you can use the following example to create your own term loan request letter format.

Loan Request Letter Template

[Your name]

[Your title]

[Your business name]

[Your business address]

[Your city], [Your state] [Your ZIP code]

[Loan officer’s name]

[Loan officer’s title]

[Loan officer’s company]

[Loan officer’s address]

[Loan officer’s city], [Loan officer’s state] [Loan officer’s ZIP code]

Re: Small business loan request for $[amount]

Dear [loan officer’s name]:

I am writing this letter to request a small business loan in the amount of $[amount] for the purpose of [summarize the purpose of the loan here]. My business, [your business name], is a growing company that serves clients in the [type of business] industry. You can see our success online at [list your website and any social media profiles you want to showcase].

[Your business name], a [business legal structure], began operation in [date you began operation] with [number] workers [if applicable], and has grown consistently over the past [number] years. We now employ [number] workers [if applicable].

Last year, our annual sales revenue was $[amount], with a net profit of $[amount]. [If you are not profitable, you can omit mention of net profit here.] We have maintained our cash flow consistently over the past [number] years, and have generated an annual net profit each year we’ve been in business [if applicable].

[Explain the reason for the loan request here. For example: To promote our continued growth, we plan to hire a full-time administrative assistant and a sales representative this year. We are requesting funding to cover the cost of their salaries and benefits. (Substitute appropriate language applicable to your business plan.)]

We would like to pursue this next quarter [specify time frame], but this will require more funding than our current cash flow can sustain. Although we lack a lump sum large enough to cover this additional expense, our budget can easily cover monthly payments over time given sufficient financing. A loan in the amount of $[amount] will enable us to cover labor costs for our two new employees. Our projections indicate that increased efficiency and sales will generate enough increased revenue to repay this amount by [date].

Attached, please find our business plan and our most recent financial statements for your review. Based on these strong financials and our business credit score of [score], we are confident that you will find us a safe credit risk.

[Your signature]

[Your name printed]

Enclosures: Business plan, profit-and-loss statement, balance statement, cash-flow statement [list other documents included.]

You also can find loan request letter templates and sample letters online.

Here are a few websites offering examples of business loan application letters you can refer to when writing your own loan request letter:

• If you’re wondering how to write a letter to a bank manager for a loan, check out RequestLetters.com .
• LiveCareer offers a loan application sample letter as well.
• Refer to these loan request samples , too. 

Mastering the Loan Request Letter Format

A loan request letter is essential if you’re applying for a loan from a conventional lender or the SBA. Add weight to your request by optimizing your personal and business credit scores and including your business financial statements. 

Follow the proper format when writing your letter, including a header and greeting, a summary of your request, basic information about your business, an explanation of the purpose of your loan, a summary of your ability to repay your loan and, finally, appropriate concluding elements. Use a template to make writing your loan request letter a little easier.

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13+ Loan Application Letter Templates

Thinking of asking for a loan? Opening up a business and need the extra money to kick your idea into existence? Loan applications form are a standard piece of document that is significant when asking for a sample loan , and in this website, we provide you with ample of application letter templates for loan to choose from and use.

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Tips before Filling for a Loan

• Why do I need the loan for?
• How will it help my business?
• How will I spend it?
• Who will manage the loan?
• Start by filling up the basics, such as the type of business, the name, contact numbers, and the legal structures.
• Typically after the application, there will an agreement concerning fees associated with the loan. These should be discussed personally with the lender.
• Be sure to double-check that every question is filled. If anything is amiss, the application might end up with the underwriter and may be delayed.
• Be sure to bring plenty of back up documents when meeting personally the lender. These documents include a resume, a credit report templates, past tax returns, the business plan templates, and balance sheets .
• Do not be afraid to include too much information so that there would be an assurance of confidence from you lender that it is strictly business and is legitimate.

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Business Loan Application Letter Sample: Free & Effective

In this article, I’ll guide you through the process step-by-step, drawing from my personal experiences, and provide you with a handy template to get you started. Whether you’re a seasoned business owner or just starting out, these insights will help you craft a compelling letter that stands out to lenders.

Key Takeaways

• Understand Your Audience: Know the lender’s requirements and tailor your letter accordingly.
• Be Clear and Concise: Communicate your business’s needs and how the loan will be used in a straightforward manner.
• Provide Detailed Information: Include pertinent details about your business and your plan for the loan.
• Use a Professional Tone: Maintain a formal tone throughout the letter to convey seriousness and professionalism.
• Follow a Structured Format: Use a clear and logical structure to make your letter easy to read and understand.
• Include Supporting Documents: Attach essential documents that can vouch for your business’s credibility and financial health.

Step-by-Step Guide to Writing a Business Loan Application Letter

Step 1: understand the lender’s requirements.

Before you begin writing, it’s crucial to understand the lender’s criteria. Each financial institution has its unique set of requirements for loan applications. Familiarize yourself with these to tailor your letter effectively.

Step 2: Start with Your Contact Information

Begin your letter with your contact information at the top, followed by the date and the lender’s details. This establishes a professional tone from the outset.

Your Name Your Business Name Your Business Address City, State, Zip Code Date Lender’s Name Lender’s Institution Lender’s Address City, State, Zip Code

Step 3: Craft a Compelling Introduction

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In the opening paragraph, introduce yourself and your business. Clearly state the purpose of your letter – to apply for a business loan – and the amount you are requesting. This sets the stage for the details that follow.

Step 4: Detail Your Business Plan

This is where you shine. Outline your business plan, emphasizing how the loan will contribute to your business’s growth. Be specific about how you intend to use the funds. Will they be used for expanding operations, purchasing equipment, or maybe for bolstering your working capital? Lenders want to see that you have a clear plan in place.

Step 5: Showcase Your Business’s Financial Health

Include a brief overview of your business’s financial status. Highlight your revenue, profit margins, and financial projections. This demonstrates to lenders that you have a viable business capable of repaying the loan.

Step 6: Mention Collateral (If Applicable)

If you’re offering collateral against the loan, specify what it is. This could be equipment, real estate, or inventory. Detailing the collateral reassures lenders about the security of their investment.

Step 7: Conclude with a Call to Action

End your letter by thanking the lender for considering your application and expressing your willingness to provide further information if needed. Include a polite request for a meeting or a conversation to discuss the application further.

Step 8: Professional Sign-Off

Sign off your letter with a professional closing, such as “Sincerely,” followed by your name and position within the company.

Template for a Business Loan Application Letter

[Your Name] [Your Business Name] [Your Business Address] [City, State, Zip Code] [Date]

[Lender’s Name] [Lender’s Institution] [Lender’s Address] [City, State, Zip Code]

Dear [Lender’s Name],

I am writing to apply for a business loan of [Loan Amount] for [Your Business Name]. As [Your Position] of the company, I am committed to guiding our business to new heights, and this loan is a crucial step in our growth strategy.

Our plan is to allocate the loan towards [Specific Use of Loan]. This investment is projected to [Expected Outcome of Loan Investment], enhancing our profitability and ensuring our ability to repay the loan.

Enclosed with this letter, you will find our business plan, financial statements, and cash flow projections, providing a comprehensive view of our business’s financial health and growth potential.

Thank you for considering our loan application. I am looking forward to the opportunity to discuss this further and am happy to provide any additional information required.

[Your Name] [Your Position] [Your Contact Information]

Tips from Personal Experience

• Personalize Your Letter: While using a template is helpful, adding personal touches that reflect your business’s unique aspects can make your letter stand out.
• Be Transparent: Honesty about your business’s current financial situation and how you plan to use the loan builds trust with lenders.
• Proofread: A letter free from grammatical errors and typos shows attention to detail and professionalism.

I’d love to hear your thoughts or experiences with writing business loan application letters. Do you have any tips to share or questions about the process? Feel free to leave a comment below.

Frequently Asked Questions (FAQs)

Q: What is a business loan request?

Answer: A business loan request is a formal request made by a business to a lender or financial institution for a loan to finance business operations or expansion.

Q: What information is typically included in a business loan request?

Answer:   A business loan request typically includes information about the business, including its financial history, plans for the loan proceeds, and a projected financial statement. 

It may also include personal financial information about the business owner or owners.

Q: How is a business loan request typically made?

Answer:   A business loan request is typically made in writing, through a loan application or business plan submitted to a lender or financial institution.

Q: What documentation is required to support a business loan request?

Answer:   Documentation that may be required to support a business loan request can include financial statements, tax returns, and personal financial information. 

It may also include business plan, projected financial statement, and any collateral that the business can offer.

Q: What are the potential outcomes of a business loan request?

Answer:   The potential outcomes of a business loan request can include the lender or financial institution approving the loan, denying the loan, or offering a modified loan amount or terms. 

The interest rate, repayment period, and other terms of the loan will be based on the creditworthiness of the business and the lender’s lending policies.

Q: What is a business loan request letter?

Answer : A business loan request letter is a formal written document submitted by an individual or a business to a financial institution or lender, seeking financial assistance in the form of a loan. 

It outlines the purpose of the loan, the amount requested, and provides supporting information to convince the lender of the borrower’s creditworthiness.

Q: How do I start a business loan request letter?

Answer : To start a business loan request letter, begin by addressing it to the appropriate person or department at the lending institution. 

Use a formal salutation such as “Dear [Lender’s Name]” or “To Whom It May Concern.” Introduce yourself or your business and clearly state the purpose of the letter, which is to request a loan.

Q: How should I structure a business loan request letter?

Answer : A business loan request letter should follow a professional and organized structure. It typically includes an introduction, a body, and a conclusion. 

The introduction should clearly state the purpose of the letter and provide essential details about yourself or your business. 

The body of the letter should elaborate on the loan request, including the amount needed, the purpose of the loan, and any supporting information or documents. 

Finally, the conclusion should express appreciation for the lender’s time and consideration, while offering your contact information for further communication.

Q: What tone should I use in a business loan request letter?

Answer : A loan request letter should maintain a formal and professional tone throughout. It should be respectful, concise, and polite. Avoid using overly technical jargon or informal language. 

It is important to demonstrate professionalism and credibility to increase your chances of a favorable response.

Q: How long should a business loan request letter be?

Answer : A business loan request letter should be concise and to the point, typically ranging from one to two pages. 

Avoid excessive details or unnecessary information that may distract from the main purpose of the letter. Keep the content focused, clear, and persuasive.

Q: What is the purpose of a business loan request letter?

Answer : The purpose of a business loan request letter is to formally request financial assistance from a lender or financial institution. 

It serves as a written proposal, outlining the borrower’s need for funds, the purpose of the loan, and the borrower’s ability to repay. 

The letter aims to persuade the lender that the loan is a viable investment with a solid repayment plan and potential for positive outcomes.

Q: How important is a business loan request letter?

Answer : A business loan request letter is crucial when seeking a loan from a lender or financial institution. 

It acts as a formal request, providing essential information about the borrower, the purpose of the loan, and the borrower’s ability to repay. 

A well-written and persuasive loan request letter increases the likelihood of the loan being approved, as it demonstrates professionalism, credibility, and a clear understanding of the borrower’s financial needs.

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Loan Application Letter Format to Bank

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The letter has to be short and concise. All the details have to be clearly mentioned in the letter. The letter has to be addressed to the authority that will be sanctioning your loan.

Loan Application Letter Sample

Laura Baker 100 North Tryon Street, Charlotte, NC, United States (704) 386-4771

Daniel Martin Manager- Credit Division Yes Bank 800 South Mint Street, Charlotte, NC, United States (704) 358-7407

Dear Mr. Martin:

As per our telephonic conversation, I am writing an application for the loan that I propose to take from your bank. I have been a loyal customer of your bank for last twenty years. I am planning to buy an apartment and I require a home loan from your bank. I have gone through terms and conditions for the home loan. I accept them all.

I require loan of $ 5000 from your bank. This amount will help me in buying as well as furnishing my apartment. I f you can sanction the loan, I will be obliged and will be in a position of buying the apartment that I have chosen. With your financial assistance, I can build my own home. I will be paying all the installments on time. I have a good credit history, so getting a loan will not be a problem as there are no issues of debts. I am enclosing photocopies of my salary slips, social security number card, house agreement and plan of the apartment with this letter for your perusal.

If you have any queries, you can contact me on phone at (704) 386-4771 or email me at [email protected]. I am waiting for a positive reply which will help me in fulfilling my wish of owning an apartment.

Yours sincerely

Laura Baker

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What Is a Personal Loan Agreement?

• What's in Personal Loan Agreements?

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How to Write a Personal Loan Agreement

Step-by-step guide to creating a personal loan agreement

Ward Williams is an Editor focused on student loans and other financial products and services. He has five years of professional editing, proofreading, and writing experience. Ward regularly contributes to stories about government policy and company profiles. He received his B.A. in English from North Carolina State University and his M.S. in publishing from New York University.

Investopedia / Zoe Hansen

A personal loan agreement is usually a good idea whether you're lending money to family or friends or borrowing from them. It's a way for you to ensure that both parties understand the loan's terms.

Additionally, a personal loan agreement document can be enforced in court if something goes wrong, such as the borrower failing to make payments. Here's what you need to know about writing a personal loan agreement.

Key Takeaways

• A personal loan agreement document provides the borrower and lender with a way to review terms and expectations.
• Personal loan agreements are used when individuals loan money, not when banks loan money.
• Your personal loan agreement should include identifying information for all parties, clear terms (including the interest rate), and a repayment schedule.
• Personal loan agreements are enforceable by courts.

Personal loan agreements, sometimes called personal loan contracts, are designed as legally binding documents to outline the repayment terms of a loan, which helps the borrower and lender understand expectations .

A personal loan contract can also stipulate whether the arrangement includes collateral. While most personal loans are unsecured (i.e., there's no valuable asset used to secure the loan), it's possible for these arrangements to have some collateral . A secured personal loan contract should include the situations in which a lender could claim the valuable item used to offset the risk of making the loan.

Most personal loan agreement documents include information about the borrower and lender, loan amount, interest rate , fees, repayment terms and schedule, how disputes are settled, and what type of collateral (if applicable) will secure the loan.

Personal loan documents are considered enforceable in court, so a borrower who doesn't meet their obligations could have a judgment levied against them, such as a lien or wage garnishment .

What Should Be Included in a Personal Loan Agreement?

You typically utilize a prearranged contract when signing a personal loan contract with a traditional lender. If you're lending to or borrowing from friends and family, you might need to write your own personal loan agreement document.

If there's only a small amount involved, a simple promissory note might be sufficient. However, in some cases, you may need a more complicated contract. Here are some of the items that should be included when creating a personal loan contract:

• Identification : Those involved in the contract should share their full names and addresses. Driver's licenses and Social Security numbers (SSN) might also be used for further identity verification.
• Date : Dates for signatures, the time the agreement goes into effect, and other important dates should be identified in the personal loan agreement document.
• Loan amount : Include the total amount being borrowed. This is the principal of the loan.
• Collateral : If applicable, include what is being used to secure the loan, its value, and the conditions under which a lender can claim the property.
• Interest rate : The stated interest rate of the loan should be included, and designate whether it's a fixed rate or variable rate . Variable rates should include the provisions for determining a new rate and how often the rate changes. If you're charging any fees (such as origination fees ), you also need the annual percentage rate (APR) , which includes the interest value of the fees.
• Repayment schedule : Using the interest calculation, it's possible to work out a repayment schedule. Often repayment happens monthly, but your agreement can include other arrangements. Make sure the date of the last payment is clear.
• Penalties : Any personal loan contract should include penalties for late payments, in addition to the consequences of default.
• Jurisdiction : State where the agreement will be enforceable. Double-check state laws, as well as mediation requirements, when choosing a jurisdiction.
• Severability clause : This portion of the personal loan agreement is designed to ensure that most of the rest of the agreement remains intact, even if one part of the contract is found illegal or unenforceable.
• Entire agreement clause : Many contracts, including personal loan agreement documents, feature a section detailing that any other arrangements outside of what's documented in the contract aren't part of the agreement.
• Signatures : Finally, don't forget to have the borrower and lender each sign the document.

While not necessary, it might make sense to have others witness the signatures (and sign as well) or to get the services of a notary to officiate over the signing.

Other Clauses You May Find in Business or Bank Loans

While many personal loan documents are quite simple, some can become more complicated thanks to additional clauses that are often included in business or bank loans. Some items you might see include:

• Successors : This clause explains what happens if one of the parties passes away before the agreement is fulfilled.
• Legal expenses : This specifies who's responsible for paying different legal fees depending on the various outcomes of a dispute.
• Modification : You may want to include some steps the parties might take if they want to alter the agreement.
• Credit verification : Signing the agreement typically grants permission for the lender to request documentation designed to help verify your income. You might also see a clause granting the lender permission to review your credit history.

You can find personal loan agreement templates online, such as this one from the Law District:

Example of a Personal Loan Agreement

While you can write your own agreement from scratch, there are several templates that can make it easier to create a personal loan agreement document. Here are examples of how you might fill in template sections:

1. Parties : This Personal Loan Agreement (this "Agreement"), dated as of September 19, 2023 (the "Effective Date"), is by and between Jane Doe (the “Borrower”), with the mailing address of 123 Main Street, in the City of Anytown, in the State of Delaware, and John Doe (the “Lender”), with the mailing address of 123 Any Street, in the City of Everyplace, in the State of New Jersey.

2. Loan Amount : The sum loaned by the Lender to the Borrower will be: Ten Thousand Dollars ($10,000).

3. Payment : This Loan Agreement, which covers the entirety of the principal sum and any interest accrued, will be due and payable via the method specified below:

☐Single payment: The loan, any unpaid interest, and all other charges and fees are due either: On the demand of the lender / On or before ______/_____/20____

☐Weekly installments of __________ Dollars ($________) beginning on ____/_____/20___ and continuing every 7 days until the entire balance is paid in full.

X Monthly installments of one-hundred and eighty-eight Dollars ($188) beginning on 10/19/2023 and continuing every month until the entire balance is paid in full.

☐Quarterly installments of __________Dollars ($________) beginning on the ____ day of each quarter and continuing every quarter until the entire balance is paid in full.

☐Other:__________________________________

4. Interests : (Check one of the options below)

X This Loan Agreement bears interest at a rate of 4.95 percent (4.95%) compounded annually. This must be equal to or less than the maximum usury rate in the Borrower’s State.

☐ This Loan Agreement does NOT bear interest.

5. Late fee : (Check one of the options below)

☐ There is a late fee in this Loan Agreement. If the Borrower does not make a payment within_________ days of the contractual due date. Under this provision, the Borrower agrees to pay the Lender a late fee of ________% of the amount due at the time of the missed payment.

X There is NO late fee in this Loan Agreement.

6. Prepayment : (Check one of the options below)

X The Borrower of this Loan Agreement may pay back the loan in full or make additional payments at any time without incurring a penalty.

☐ The Borrower will incur a surcharge of ________% of the amount paid in surplus to the agreed payment schedule.

7. Income Verification :

The Lender reserves the right to require an income verification to the Borrower. This Verification may include, at least, the following:

• Earnings statement or W-2 form identifying employee and showing amount earned period of time covered by employment.

8. Events of Acceleration :

If any of the following events occur, this will constitute an “Event of Acceleration” under this Loan Agreement:

• The Borrower fails to pay any part of the principal or interest when it is due under the terms of this Loan Agreement; or
• The Borrower becomes insolvent or refuses to pay any debts when they become due.

9. Acceleration : If one of the Events of Acceleration above occurs, the Lender can, at their sole and exclusive option, declare this Loan Agreement immediately due and payable.

10. Remedies : The Lender has the right to remedy any breach of this Loan Agreement. Delays or omissions in exercising the rights granted under this Agreement by the lender do NOT constitute a waiver of these rights. Additionally, no omission, waiver, or delay may invalidate any of the stated terms, nor shall they restrict the Lender from enforcing this Agreement. The Lender’s rights and remedies shall be cumulative and can be pursued singly, successively, or together at their sole discretion.

11. Subordination : The Borrower’s obligations under this Loan Agreement supersede and subordinate all other indebtedness, if any, of the Borrower, to any unrelated third-party lender. 

12. Waivers : The Lender cannot be deemed to have waived any rights provided under this Loan Agreement unless they are provided in writing. This shall not, however, be construed as a future waiver of said rights or any other covered by these terms and conditions.

13. Legal Expenses : In the event any payment made under this Loan Agreement is not paid when due, the Borrower agrees to pay, in addition to the principal and interest owed, reasonable attorneys’ fees. The amount of these expenses shall NOT exceed the maximum usury rate in the State of New Jersey upon the outstanding balance owed by the Borrower under this Loan Agreement. This sum shall be added to any other reasonable expenses the Lender has incurred in exercising their rights and remedies upon default by the Borrower.

14. Governing Law : This Loan Agreement shall be governed by, and construed in accordance with, the laws of the State of New Jersey.

15. Successors : This Loan Agreement binds the Borrower and the Borrower’s successors, heirs, and assigns, however, the Lender may not assign any of their rights or delegate any of its obligations without the prior written consent of the holder of this Agreement.

16. Signatures : IN WITNESS WHEREOF, the Borrower has executed this Promissory Note as of the day and year first written above.

Lender’s Signature: Jane Doe Date: 9/19/2013

Print Name: Jane Doe

Borrower’s Signature: John Doe Date: 9/19/2013

Print Name: John Doe

The Securities and Exchange Commission (SEC) also has a template you can use to make a personal loan agreement.

Frequently Asked Questions (FAQs)

Does a personal loan agreement need to be notarized.

No, notarizing a personal loan agreement isn't usually required. However, it can help to have an "official" record of the contract to encourage both parties to take the terms seriously.

Can a Personal Loan Agreement Be Changed Over Time?

Yes, if all concerned parties are willing to change the agreement, it's possible to modify the original. However, there should be an agreed-upon process to follow.

If I'm Lending Money, How Much Interest Can I Charge on a Personal Loan?

In general, you should charge interest in line with the prevailing market. However, you are limited only by state laws (usually the borrower's). You can charge up to the amount allowed by state law.

How Is a Promissory Note Different From a Loan Agreement?

A promissory note is often considered a type of loan agreement. However, many promissory notes are much simpler than a full contract, simply stating the amount borrowed and when it should be repaid.

Anytime you borrow or loan money, consider having a loan agreement in place to protect both parties and to clarify terms, especially when lending money to family and friends . Writing a personal loan agreement document can provide all parties with information and it can reduce misunderstandings about the terms of the loan and its repayment.

Legal Information Institute. " Loan Agreements ."

Consumer Financial Protection Bureau. " What Is a Judgment? "

U.S. Securities and Exchange Commission. " Loan Agreement and Promissory Note (Example) ."

LawDistrict. " Personal Loan Agreement ."

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Best Personal Loans From Banks

Best personal loans from banks of august 2024.

Updated: Aug 1, 2024, 1:35pm

Personal loans are flexible forms of funding that you can use for almost any purpose, including home renovation, debt consolidation and other big expenses. Several banks offer personal loans to qualifying consumers. You might be able to qualify for a personal loan anywhere from $1,000 to $100,000 with rates starting around 6%, depending on the bank.

• Best Personal Loans
• Best Debt Consolidation Loans
• Best Personal Loans for Fair Credit
• Easiest Personal Loans to Get
• Emergency Loans
• Loans for Bad Credit

Summary: Best Personal Loans From Banks

Methodology, tips to compare personal loans from banks, how do bank loans work, bank loans vs. online loans, pros and cons of bank loans, how to get a personal loan from a bank, next up in personal loans.

Why you can trust Forbes Advisor

Why you can trust Forbes Advisor: Our editors are committed to bringing you unbiased ratings and information. Our editorial content is not influenced by advertisers. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the loans methodology for the ratings below.

• 21 online lenders researched
• 8 traditional banks researched
• 4 levels of fact-checking

BEST FOR EXISTING U.S. BANK CUSTOMERS

Minimum Credit Score

Does not disclose

8.74% to 24.99%

with autopay

Loan amounts

$1,000 to 50,000 to existing U.S. Bank customers (up to $25,000 for noncustomers)

Depends on the area you live in

With a U.S. Bank personal loan you can gain quick access to funds for your one-time financing needs, whether that is consolidating your debt or covering a large expense. U.S Bank offers unsecured personal loans ranging from $1,000 to $50,000 to existing U.S. Bank customers (from $1,000 to $25,000 for noncustomers). Loan terms run between 12 and 84 months for customers (between 12 and 60 months for noncustomers).

U.S. Bank’s loans carry low interest rates that range from 8.74% to 24.99%, depending on your creditworthiness, which includes discounts for automatic payments. Borrowers with higher credit scores are more likely to qualify for interest rates on the low end of the spectrum. Similar to other top providers, U.S. Bank charges no origination fees, and there is no prepayment penalty, meaning you can always make loan payments before they are due.

Applying for a U.S. Bank loan is easy and can be done online; however, you must be a current U.S. Bank customer. Some customers may need to visit a U.S. Bank branch if additional information or documentation is required.

• Operates physical branches
• 0.50% autopay discount
• Quick funding
• Need a credit score of at least 800 to qualify for the lowest advertised rates
• Smaller loan amounts available to non-U.S. Bank checking customers
• Branch locations in only 26 states

Eligibility

• Minimum credit score. Does not disclose
• Minimum income. Does not disclose
• Co-signers. Permitted
• Co-borrowers. Permitted

Expert’s Take

U.S. Bank’s loans are a reliable option for small business owners seeking financing solutions. What makes U.S Bank special is its flexible loan terms and competitive interest rates, making it a favorable choice for entrepreneurs looking to fund their business ventures. Also, U.S. Bank’s simple application process and responsive customer service make it a very convenient option for small business owners to access the funds they need promptly.

— Michael Ashley, finance expert, Richiest.com

BEST FOR PEOPLE WHO LIVE ON THE EAST COAST

TD Bank does not disclose this information

8.99% to 23.99%

$2,000 to $50,000

TD Bank offers fast funding on personal loans, also known as TD Fit Loans, from $2,000 to $50,000. You don’t have to be a TD Bank customer to apply, and you can apply online, over the phone or in person. Plus, you can check your rates online with no impact on your credit score.

Note: TD Fit Loans are available to residents of Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia and Washington, D.C.

• Fast funding in as little as one business day
• No origination, application or prepayment fees
• Option to check personalized rates with no impact on your credit
• Only available in 15 states and Washington, D.C.
• Rate discount only available for TD Bank banking customers
• Late fees of 5% of minimum payment due or $10, whichever is less

Eligibility: TD Bank does not disclose a minimum credit score to take out a loan. As with other lenders, you’ll need a strong credit score to get the lowest rates. We recommend a score of at least 670.

Loan uses: You can use TD Bank personal loans for just about any legal personal expense.

Turnaround time: If you’re approved, you’ll get your funds in as little as one business day.

BEST FOR NO INTEREST IF REPAID WITHIN 30 DAYS

7.99% to 24.99%

$2,500 to $40,000

Discover is an online bank that also offers customers credit cards, retirement solutions and personal loans in all 50 states. As a lending platform, Discover stands out because of its online application and mobile banking tools, well-reviewed customer support team and quick funding.

In general, loans are available from $2,500 to $40,000 and may be issued for between three and seven years. So, while borrowers may get a larger loan from another lender, the repayment terms are fairly flexible. Discover charges a late payment fee and does not offer an autopay discount; however, it does not charge any origination fees or prepayment penalties, making it competitive with other top personal loan providers.

• No origination fees
• Low interest rates
• Funds can go directly to paying off credit lines
• No interest rate discount for autopay
• No co-signers or co-borrowers accepted
• Good credit needed to qualify

Eligibility: 

• Minimum credit score: 660
• Minimum income: $25,000
• Co-signers. Not permitted
• Co-borrowers. Not permitted

BEST FOR CURRENT WELLS FARGO ACCOUNT HOLDERS

Wells fargo.

No requirement

7.49% to 24.99%

with autopay discount

$3,000 to $100,000

Wells Fargo offers fixed-rate personal loans with limits between $3,000 to $100,000 and repayment terms from 12 to 84 months. While longer term lengths, such as longest term offered by Wells Fargo, will decrease your fixed monthly payment, you will pay more interest over the life of your loan compared to a loan with terms of, let’s say, 12 months.

Wells Fargo personal loans boast interest rates from 7.49% to 24.99% for customers who qualify for the 0.25% relationship discount. To qualify, you need to have a Wells Fargo checking account and make automatic payments from a Wells Fargo deposit account.

Although Wells Fargo is available to anyone in the United States, only current Wells Fargo customers will be able to apply online. New customers will need to visit a branch location. Wells Fargo does not have branch locations in Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Maine, Massachusetts, Michigan, Missouri, New Hampshire, Vermont or West Virginia.

• Receive funds the next business day, if approved
• 0.25% discount when you enroll in autopay
• No origination fees or prepayment penalty
• Must have a Wells Fargo checking account to receive 0.25% discount
• New Wells Fargo customers will need to visit a branch to apply
• No option to prequalify

Overview: Wells Fargo offers fixed-rate personal loans with limits between $3,000 to $100,000 and repayment terms from 12 to 84 months. Although Wells Fargo is available to anyone in the United States, only current Wells Fargo customers will be able to apply online.

New customers will need to visit a branch location. Wells Fargo does not have branch locations in Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Maine, Massachusetts, Michigan, Missouri, New Hampshire, Vermont or West Virginia.

Eligibility:

• Doesn’t disclose minimum credit requirement
• Doesn’t disclose minimum income requirement
• Doesn’t allow co-signers or co-borrowers
• Debt consolidation
• Home improvement
• Medical bills

BEST FOR DEBT CONSOLIDATION

Rates may vary by ZIP code

$1,000 to $35,000

PNC Bank offers unsecured, fixed-rate personal loans from $1,000 to $35,000 with annual percentage rates (APRs) starting around 7% and not exceeding 30% (rates may vary by zip code). You can apply online or in person at one of its more than 2,600 locations. Keep in mind, however, that your rates and terms will vary depending on where you live and your creditworthiness.

• Offers competitive rates
• Has no origination fees
• Offers autopay rate discounts
• Doesn’t clearly share eligibility requirements
• Loan amounts are low compared to other lenders

BEST FOR EXISTING CITIBANK CUSTOMERS

Citi® personal loan.

11.49% to 20.49%**

$2,000 to $30,000

Citibank offers small personal loans for customers who have had a Citi deposit account for at least 12 months. You can submit your application online and get a response in less than 60 seconds.

• No origination, application or prepayment penalties
• Flexible repayment terms
• Funds may be sent within one business day
• Competitors have lower interest rates
• Loan amount limit is lower than other lenders
• Only available for existing Citi customers

Credit Eligibility: You must have excellent credit to be eligible for a Citi® Personal Loan.

Loan uses: You can use your funds for almost any legal personal purpose. However, you can’t use them for education or business.

Turnaround time: Same business day when using direct deposit with a Citi® account, or up to 2 business days when using direct deposit with a non-Citi® account.

• Loans up to $30,000 with fixed rates from 11.49% to 20.49% APR**
• Zero fees – no origination fees, no late fees, no prepayment penalty, and no hidden fees
• Quick and easy online application process
• Fast funding when using direct deposit – same day with an existing Citi account, or within 2 business days with a non-Citi account
• Discount for enrolling in automatic payments when you submit your loan application

**Rates as of 8-01-2024. Your APR may be as low as 10.49% or as high as 20.49% for the term of your loan. The lowest rate quoted assumes excellent credit and a loan term of 24 or 36 months. Your APR will depend on a variety of factors including your creditworthiness, term of loan, and existing relationship with Citi. Citi offers personal loans with a period of repayment between 12 and 60-month terms. For example, if you borrow $10,000 for 36 months at 15.99% APR, to repay your loan you will have to make 36 monthly payments of approximately $351.52.

There is a 0.5% APR discount if you enroll in automatic payments at loan origination. Additionally, existing Citigold and Citi Priority customers will receive a 0.25% discount to the APR. If you are in default, your APR may increase by 2.00%. Rates subject to change without notice.

To check for offers you may qualify for, Citi conducts a soft credit inquiry. If you are presented with an offer and choose to proceed with the application process, Citi will conduct a hard credit inquiry which may have an impact on your credit score.

Citi® Personal Loan proceeds cannot be used to pay for post-secondary education expenses or for business purposes. Credit cards issued by Citibank, N.A. or its affiliates, as well as Checking Plus and Ready Credit accounts, are not eligible for debt consolidation, and Citibank will not issue payoff checks for these accounts. If you are unsure of the issuer on the account, please visit https://www.citi.com/affiliatesproducts for a list of Citi products and affiliates.

If you are approved for a personal loan with Citi, you can get your funds the same day with a Citi deposit account, or up to 2 business days for a non-Citi account when using direct deposit. Or, you can select to receive a check by mail in approximately 5 business days.

Terms, conditions, and fees for accounts, products, programs and services are subject to change at any time.

You must be at least 18 years of age (21 years of age in Puerto Rico). Co-applicants are not permitted.

If you apply online, you must agree to receive the loan note and all other account disclosures provided with your loan origination in an electronic format and provide your signature electronically.

Personal loans are made available by Citibank, N.A., Equal Housing lender

We reviewed eight popular banks that offer personal loans based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best banks based on the weighting assigned to each category:

• Loan cost: 35%
• Loan details: 20%
• Eligibility and accessibility: 20%
• Customer experience: 15%
• Application process: 10%

Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges and applicable fees. We also looked at minimum credit score requirements, whether each bank accepts co-signers or joint applications and the geographic availability of the bank. Finally, we evaluated each bank’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification options and mobile apps.

To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology .

If you’re on the hunt for a personal loan , it could be a good idea to inquire at your current bank, especially if it offers any perks for existing customers. Shopping around for a few additional loan offers, however, can help you find a personal loan with the best rates and terms.

Here are some loan features to review when comparing personal loans from banks:

• Interest rate. A lower interest rate will mean lower interest charges over the life of your loan. Compare rates from a few different banks to find a loan with the lowest costs of borrowing. In particular, focus on each loan’s annual percentage rate (APR), which includes both interest and fees.
• Fees. Keep an eye out for additional loan fees, such as origination, administrative or disbursement fees. Some lenders don’t charge any fees, whereas others charge an origination fee of 1% to 8% of your loan amount.
• Repayment terms. Find out how long you have to pay your loan back, since your term will directly impact your monthly payment and long-term interest costs. Personal loan terms often range from one to seven years, depending on the bank.
• Loan amounts. Each bank sets its own minimum and maximum borrowing limits, so look for one that can provide the funds you need. Some banks offer personal loans up to $100,000 while others max out at $50,000 or lower.
• Time to fund. Before borrowing, you might also find out how long it will take the bank to review your application and disburse your loan. Prioritize a bank with a fast funding time if you need funds right away.
• Restrictions on loan use. Ask the bank if there are any restrictions you need to know about on how you use your personal loan. For instance, banks often don’t want you to use a personal loan on postsecondary education expenses.

Bank loans offer a lump sum of funding up front that you pay back over time. You can usually borrow anywhere from $1,000 to $50,000 or more and pay it off over one to seven years; some banks offer repayment terms as long as 10 years.

Interest rates tend to range from 6% to 36%. Borrowers with strong credit will qualify for more competitive rates, while borrowers with weaker credit will get higher rates.

Some banks require that you’re a customer to borrow, which may mean opening a checking account and making a small minimum deposit. However, not all banks require that you become a customer to borrow a personal loan.

If you’re an existing customer, you might qualify for bonus perks, such as a discount on your interest rate.

Bank loans and online loans aren’t all that different. Both offer cash up front that you’ll pay back over time on a monthly basis.

However, banks may have brick-and-mortar locations, which you can visit if you prefer an in-person borrowing experience. Plus, some banks offer interest rate discounts and other perks to existing customers.

Online lenders, on the other hand, have the edge over banks in other ways. For instance, online lenders can often fund loans nationwide, whereas traditional banks may only lend in certain areas.

Most online lenders also make it easy to prequalify for a loan online, which can make the loan shopping process easier. Some banks offer prequalification, but not all of them.

Opting for an online loan might also make sense if you need a loan quickly, as some lenders can disburse funds the same day you apply. Online lenders may offer more competitive interest rates than banks, too, since they don’t have to cover the costs of operating physical locations.

Before borrowing a personal loan from a bank, consider these pros and cons.

• Potential discounts for existing customers: Some banks will reduce your interest rate as a way of saying thank you for banking with them. Even a small discount on your rate can lead to significant savings over the life of your loan.
• Option to apply in person or online: If your bank has brick-and-mortar locations, you may get the choice of applying online or in person. This option may be appealing to consumers who want to interact face-to-face before borrowing a loan.
• High loan amounts: Some banks offer loans as high as $100,000 with flexible repayment terms.
• May not have the option to prequalify: Not every bank lets you prequalify with a soft credit check. You might have to formally apply before seeing your loan terms, which is more time-consuming and can ding your credit score by a few points.
• Can take longer to process your application: Banks may take longer to evaluate your application and disburse your personal loan compared to online lenders.
• APRs may be higher than online loans: Because many banks have to cover the costs of operating physical locations, they may charge slightly higher APRs than online lenders.

When you borrow from a bank, you can often apply online or in person at a local branch. Here are the steps you’ll need to take to get a personal loan from a bank:

• Check your credit. Before you start applying, review your credit report from AnnualCreditReport.com so you don’t run into any surprises. Also check your credit score to see if you’re a competitive candidate for a loan. If your score is low, consider taking steps to improve it before you apply, such as paying down existing debt.
• Figure out how much you need to borrow. Use the Forbes Advisor personal loan calculator to estimate your monthly payments and total interest charges. Be careful not to borrow more than you can afford.
• Prequalify, if possible. Some banks let you prequalify , allowing you to check your rates with no impact on your credit score. This prequalification option makes it easy to shop around and compare loan offers to find the best rates and terms.
• Select a loan and submit a formal application. If you want to move forward with a loan, you’ll submit a full application. You’ll need to provide personal details and upload documentation to verify your income and other information. At this point, the lender will run a hard credit inquiry to check your credit profile, which has a temporary negative impact on your score.
• Receive your loan funds. The bank will likely deposit your personal loan directly into your bank account. You’ll start paying your loan back on a monthly basis on the agreed-upon term.
• Best Personal Loans For Fair Credit
• Best Emergency Loans
• Best Low-Interest Personal Loans
• Best Fast Personal Loans

With nearly a decade covering personal finance, Rebecca Safier simplifies loans and other complex financial topics to help people manage their money with confidence. Her work has been featured in Forbes Advisor, Buy Side from WSJ, U.S. News & World Report, Newsweek Vault and other publications. Rebecca has her student loan certification from the National Association of Certified Credit Counselors and her Master of Education in Adolescent Counseling from the Harvard Graduate School of Education.

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American Express Personal Loans

Get the funds you need with american express® personal loans.

Why Choose American Express® Personal Loans?

Quick application & funding, competitive rates, no hidden fees, no credit score impact to apply.

Get an American Express® Personal Loan in three simple steps:

Check for an offer.

Simply log in to your American Express online account to see if you are pre-approved for a Personal Loan, how much you can borrow and what your rate is.

Get a decision in seconds when you apply

Tell us the amount you’d like to borrow, select a monthly payment option, and enter some info about yourself. You’ll get a decision in seconds.

Funds sent in as fast as 1 day

If you're approved, we'll send the loans funds, in as fast as 1 day, to your bank account after you accept the loan.²

How can you use an American Express® Personal Loan?

Pay off debt faster

Consolidate higher-interest credit card and other debts 3 , and pay the balance off with a fixed interest rate and monthly payments. With no origination fees or prepayment penalties, you can save your money for what matters.

Make home improvements

Use your Personal Loan to improve your home, whether it's upgrading your kitchen or building a home office. With fixed monthly payments and repayment options, it's a great resource that can help ease your mind.

Fund big purchases

Whether it’s a big screen TV, a new refrigerator, or a vacation to your dream destination, an American Express ® Personal Loan can help you get what you want, when you want it.

Cover personal expenses

Life is full of expenses like moving costs, welcoming a new baby, or unexpected vet bills. An American Express ® Personal Loan can help you handle your personal expenses.

Check to see if you are pre-approved for an American Express® Personal Loan

Frequently Asked Questions

Am I eligible to apply for a Personal Loan?

Is there anything I can’t use my loan for?

How will I receive my Personal Loan funds?

How quickly will I receive my loan funds?

How much do I have to pay each month?

How long will I have to pay off my Personal Loan?

Have other questions? See our full list of FAQs .

Applying for Your First Mortgage Loan

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Confidently navigate this process

The process of buying your first home is more manageable if you take steps to prepare for the purchase (discussed in the article Thinking About Buying your First House? ). Once first-time buyers get to the stage of applying for a mortgage loan, it’s important to be well-informed. These tips can help you navigate the mortgage loan application process.

Consider shopping for your mortgage loan first…before you find your house

Knowing your loan options before you start looking at houses will help you in your home search by providing the amount a lender will loan you to buy a house. This information will help you target homes in a price range you can afford. When you find a lender and mortgage that’s right for your situation, you can get a preapproval for the loan, which will save time later when you’re ready to make an offer on a house, since lenders will have most of the information they need to move forward with the loan.

A mortgage preapproval is similar to a loan application, but with important differences. With a preapproval, a lender provides a commitment letter/document and agrees to loan you a specified amount of money to buy a home, subject to certain conditions. With a preapproval, you do not provide a specific home you want to buy, but get a strong sense of how much money you can get to buy a home. To get a preapproval, you will have to provide documentation. Lenders typically ask for items such as identifying documents (state-issued ID such as a driver’s license and/or passport), pay stubs for the last 60 days, two years of federal tax returns, bank account statements (savings and checking), and any investment account statements (including retirement accounts) from the last quarter. The lender will also check your credit history by obtaining a credit report. Preapprovals are typically valid for 60 to 90 days. You are not obligated to formally apply for a loan you have been preapproved for, so you should still shop around to ensure you are getting the best possible deal. It’s important to note that a mortgage preapproval is different from a mortgage prequalification, which only gives you a general idea of the amount a lender may be willing to lend to you and the terms available based on estimated financial information that you provide.

Find the mortgage that works best for you

There are many different types of mortgages to choose from, and an important aspect of the process is to choose the mortgage that works for you now and in the future. When shopping for a mortgage, consider the type of interest rate (fixed or adjustable) and whether a conventional loan or a government-guaranteed or insured loan is best for you.

The distinguishing feature of the fixed rate mortgage loan is that the interest rate does not change. This means your monthly principal and interest payment will stay the same for the entire repayment term, whether it is, for example, 15 years or 30 years. (However, your total monthly payment could still change if you pay property taxes and insurance as part of your monthly mortgage payment and those costs change.) On the other hand, the interest rate fluctuates periodically (such as annually) with an adjustable rate mortgage (ARM), so your monthly payment typically will change when the rate does. ARMs can offer a lower initial interest rate than fixed rate mortgages, but when the rates increase, your payments typically increase.

Before deciding on a fixed rate mortgage or ARM, consider how long you plan to be in the house you’re purchasing. In general, borrowers who anticipate selling their home within a few years are more likely to benefit from a low-rate ARM than those who plan to own the home for many years. But, an ARM can be a good choice for some borrowers depending on other factors. Be sure to consider whether you can make your ARM loan payments if the interest rate increases to the highest level it could go while you own the home.

You may also choose a conventional mortgage loan or a loan insured or guaranteed by the federal government. Loans from the Federal Housing Administration (FHA), the United States Department of Veterans Affairs (VA), and the United States Department of Agriculture (USDA) offer government insured or guaranteed loans . These loans typically have more flexible requirements than conventional loans (such as the minimum credit score needed for approval) and may allow borrowers to make smaller down payments than for conventional loans. However, rates and fees may be higher for these loans than for conventional loans, depending on your credit history, down payment, and other factors. However, you'll have to pay for mortgage insurance, an extra cost increasing your monthly payments that protects the lender in the event you default on the mortgage.

You may also find lenders offering interest-only loans, hybrid mortgages, and balloon payment loans. These loans generally start with low payments that increase over time. Before choosing one of these loans, be sure you understand the loans terms and the potential risks.

Once you decide on a type of mortgage, comparison shop for your loan by online and/or by getting quotes from different lenders. Interest rates and fees vary from lender to lender, even for the same type of loan, so shop around and don’t be afraid to try to negotiate these costs.

For suggestions on how to save money with worksheets to help you plan to save visit: Money Smart - Your Savings .

Loan estimate

Knowing the monthly payment and the interest rate of your loan is not enough; you need to understand the major other costs and other terms of the loan. When you apply for a mortgage, the lender must provide you with a document called the “ Loan Estimate ” within three business days of receiving your application. The Loan Estimate provides important information about the loan offered to you by the lender, including a summary of loan terms, estimated loan and closing costs, and additional information.

Moving forward with the loan

The Loan Estimate is not an approval of the loan; it simply shows the loan terms the lender can offer you if you decide to move forward with it. You must inform the lender if you decide to proceed with the loan, and you can obtain a written “lock-in” from the lender. A lock-in guarantees the rate agreed upon, the period the lock-in lasts, and other information you specifically negotiated, such as the number of “points” (fees) to be paid to the lender for the loan. (Usually, the more points you pay, the lower the interest rate.) A fee may be charged for locking in the loan rate. If so, ask if the fee is refunded at closing.

As your loan application is being processed you may be asked to provide additional documentation showing the source of your down payment funds, cash reserves to cover the first few months of mortgage payments, and documents specific to your situation.

Closing the loan

Closing is the last stage in the process. At closing, you'll be required to have the agreed-upon funds, which could be used for the closing costs (including the escrow deposit, which is money that is set aside for a couple of months of property tax and mortgage insurance payments) and the down payment. The closing costs vary, depending on the type of loan you choose, and property type, but could be 2% to 6% of the loan amount. These costs generally include appraisal fees, attorney fees, credit report fees, title search fees, and property inspection fees.

To learn more about mortgages, see the FDIC Affordable Mortgage Lending Guide . Also, the Consumer Financial Protection Bureau website provides helpful information about mortgages .

Additional resources

FDIC Affordable Mortgage Lending Center

FDIC Path to Buying a Home

FDIC Get Banked

CFPB Mortgage Key Terms

For more consumer resources, visit  FDIC.gov , or go to the FDIC Knowledge Center . You can also call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342). Please send your story ideas or comments to  [email protected] .

Last Updated: June 17, 2022

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Grants and other types of financial aid for single parents.

Senior Associate, JPMorgan Chase

If you’re a single parent exploring your financial aid options for college, you might be on the hunt for grants that you’re eligible for. Since grants typically don’t need to be paid back, it’s a form of financial aid that’ll help reduce future financial hardship.

Of note, in addition to grants, single parents — like other students — also might have access to financial aid opportunities like work-study programs and scholarships they can take advantage of.

Let’s look at the various grants, scholarships, and other financial aid opportunities available to single parents.

How can a single parent pay for college?

For any student — including single moms or dads — a good first step to getting financial aid for college is to file the Free Application for Federal Student Aid (FAFSA ® ) . This application helps students qualify for aid like grants, scholarships, work-study programs, and federal student loans.

It’s important to remember that the only way to qualify for many types of aid is to file the FAFSA ® before the deadline and to ensure you list all the schools you’re planning to apply to on the application.

If you’re accepted by schools that you have applied to, they’ll send you aid award letters after you complete the FAFSA ® , which will outline what financial aid, if any, they’re making available to you. Aid offerings will vary from school to school.

If you still need more financial assistance after you’ve received award letters, you can apply for other types of aid to assist with your goal of attending college.

How much can a single parent get from FAFSA ® ?

How much you receive from FAFSA ® depends on your financial situation, including your income and assets, like how much is in your bank account. As a single parent filling out the application, one key thing to note is that you'll likely be able to include your children on the form as dependents, which could impact how much financial aid you’re offered.

Financial aid appeal letter for single parents

If you received financial aid award letters and the aid offered to you is not enough to help you afford college, in certain circumstances it might be worth submitting an aid appeal. A financial aid appeal could be beneficial if you’ve had a substantial change in your financial situation, such as having a baby or unforeseen medical bills since the tax year asked for on the FAFSA ® .

Filing for an aid appeal shows your school that your financial situation differs from what they see on the FAFSA ® and could help prove your case that you need more financial aid. has a different process for its aid appeals, but generally, you need to fill out a form and write a letter stating your circumstances and financial impacts.

Schools typically set aside money for students who file aid appeals. If you’re going to appeal your aid package, it’s best to do it as soon as possible, when those additional funds are more likely to be available.

Filing for an aid appeal doesn't guarantee more aid, but based on your individual situation it might be worth a shot.

Grants for single parents

As we highlighted above, grants are a valuable form of financial aid because, for the most part, they don’t need to be paid back. Here’s some of the grants that may be available for single parents, including single moms.

Pell Grants

Federal Pell Grants, a need-based grant provided by the federal government, is a type of aid that undergraduate students who demonstrate exceptional financial need may be awarded, including single parents. The maximum award for the 2024-25 academic year (July 1, 2024 to June 30, 2025) is $7,395. The U.S. Department of Education announces the amount for the upcoming academic year every February.

Other grants for single parents

In addition to the Pell Grant, many grants are open to single parents nationwide. They’re offered at the state and federal levels, as well as through private organizations and companies.

The best way to find grants for single parents is to contact the financial aid office at your school and ask if they know of any specific grant opportunities for students like yourself. They should be able to provide a list of available grants.

State grants for single parents

Many states offer grants and other financial aid programs for single parents. A great way to find grants that fit your needs is to check your state’s website, or the state website of the area you’re going to school in and see what’s available.

Hardship grants for single parents

If you’re going through a financial hardship and need additional help paying for college, contact the financial aid office at your school. They should be able to help point you toward financial aid opportunities to help you.

Being a single parent who's also attending school can be tough, especially if you’re already facing financial issues. There may be hardship grants or assistance programs out there to help.

The financial aid office is there to help students access the aid they need to complete their college education. Don’t hesitate to utilize this resource if you’re in need of help.

Scholarships for single parents

Like grants, scholarships are generally funds you don’t have to pay back . Luckily, there’re many scholarships available to single parents.

Some scholarships are accessible outside of the FAFSA ® and require their own applications and qualifications (although you may be required to also fill out the FAFSA ® in addition to their unique applications). It’s vital to read through each scholarship application and ensure you meet the qualifications.

The best way to find scholarships is to do an online search through a trustworthy scholarship database, such as the U.S. Department of Labor's scholarship search tool. Beware of scams , and make sure as you search that you’re on the lookout for scholarships available in the years you’re looking to attend school.

Final thoughts

There're many opportunities for single moms and dads to get financial aid for college. While it often takes research and dedication to secure aid, several resources are available to help you through the process, including your school’s financial aid office and other counseling services. As a single parent, don’t be afraid to use these resources to help you get the aid you need.

• financial aid

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