How to Write a Perfect Business Loan Request Letter
What cover letter is to resume, business loan letter is that to the bank loan application. A business loan request letter is the preface for your loan application; it plays a crucial role in the decision whether the loan is approved or not. Hence it is vital to pay attention to the content of the letter while drafting it, all the necessary information regarding yourself and your business is to be mentioned. The letter is to be drafted in a way that the loan approval has no doubt in mind and takes a well-informed decision.
Information to be included in your business loan request letter:
- Ensure to address the letter to the right authority: When writing an official letter to be sure of whom to address it to. While enquiring about applying for a business loan at the bank branch, ask them who you should be writing the letter to.
- Start by explaining about your business: Write about your business plan if you are working on starting one or if it is for an existing business then explain what it is. Any investor would be interested in investing in a company which has a scope of generating revenue, so they would like to know everything about your venture.
- Mention all the essential business information: Include the following important information even though you may be mentioning some of them in the application form for business loan:
- Your name, age, and contact details
- Legal name of your business
- Legal form of your business
- Business address
- Year the business was established
- Annual turnover
- Employee Strength
- Major customers
- Other success indicators
- Specify the amount to be borrowed and the type of loan sought: Clearly determine the amount of money you want to accept the loan. Also specify the loan that you are applying for, like if it is a working capital loan to say maybe expand your business or loan to buy a space for your venture.
- Explain how you would be expending the loan money: Give your expected projection for your business on utilizing the loan, like doubling of production capability in a year or owning a bigger office space to increase employee strength.
- The time you would be taking to pay off the loan: It is advisable to mention the duration in which you would be repaying the loan taken from the bank. This shows your credibility and the intention to pay back as soon as possible.
- List any assets and debts: Declare all the assets that can be eligible for being collateral for the loan, it may help you to accept the loan. Your honesty and trustworthiness can also be deemed as a kind of collateral, prove this with a positive work history of yours. Additionally, mention the outstanding business debts and give an estimated time by when you will be able to pay it off.
- List of documents attached: At last mention the list of documents that you plan to attach with the business loan request letter.
- Some necessary things to keep in mind while drafting the letter: While writing the letter to accept the loan the tone should be formal but be courteous. Make sure you use proper salutations and at the end of the letter, show your gratitude.
The person to whom you will be writing for a loan would be scanning many such letters requesting for a loan in a day. Keeping this in mind, write a concise and to the point letter mentioning only the necessary things; so that the person can find all the information required to sanction the loan just by skimming through it. The ideal length of the letter should be one to two pages. The last and the most important part of drafting the business loan request letter is to proofread it before submitting; errors can be highly distracting and also creates a bad impression.
Indifi is a technology platform that works to bring together investors and investees for a smooth and seamless experience. There are a lot of ventures which have a potential to earn high revenue and many ideas that need capital to startup, but formal financial institutions are not ready to give them loans for some reason or the other, Indifi makes an effort to help them secure loans from private lenders.
Relevant applications are taken to different lenders; this increases the chances of getting a loan, and also lenders had the opportunity to choose from among an array of loan takers.