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Guidelines on How to Write a Business Loan Letter

How to Write a Business Loan Letter

Writing a professional business loan letter can be a bit stressful and some people don’t know the right format to use in writing this letter. However, today I will be guiding you on how to write a business loan letter in the best and most acceptable format.

Just like student loans, car loans, and mortgages loans which are categorized under personal loans, the business loan is created mainly to fund already existing business operations, start a new business, and possibly start making huge profits. This lending process is usually between business owners and traditional banks or maybe private lenders.

Nonetheless, before you plan on getting a business loan, make sure to have your business plan ready because it will be required by the lending service provider in the United States to help them understand how the loan is to be spent in order to achieve the business goals.

What’s a Business Plan?

With reference to what Wikipedia says and the best of our understanding, a business plan is a written document that contains the prospected business goals, financial requirements, and strategies to be used in order to get the goals achieved within a particular period of time.

What makes a business plan a good one? For any business plan to be considered a good one, it must include an executive summary of the business, products and services, intended marketing strategy and analysis, financial planning, and budget or forecast techniques.

The following are the importance of a business plan:

  1. To create an effective strategy for the business growth
  2. Get an insight into your future financial needs
  3. Attract investors and lenders to your business.
How to Write a Business Loan Letter

How Does Business Plan Collerate with Business Loans

As I said earlier, the function of the business plan during the business acquiring process is that; The lender will request it to help them know how the borrowed funds are to be managed.

Guidelines on How to Write a Business Loan Letter

A business loan letter is a formally written document and it must contain the following;

1. Two Addresses (Your address or business address and the lender’s address

As usual in every formal letter, your address should be on the right-hand side of the sheet, while the receiver address (Lender) should be on the left-hand side just after or beneath your own address.

2. Salutation or Greeting

Normally, every letter be it formal or informal does come with a salutation. But there are appropriate salutations used in formal letters irrespective of how close you are to the person the letter is being addressed to.

The generally accepted salutation for letters like this is “Dear sir” or “Dear Madam” (depending on the gender if known). But if you don’t know the gender of the person you are addressing this letter to, you then use “Dear sir”

NOTE: Salutation comes immediately after the address of the receiver which is situated on the left-hand side.


3. Heading or Title of the Letter

Beneath the salutation, you write down the title of your letter. something like “APPLICATION FOR A LOAN OF $20,000,000“.

The title will help the receiver to know what the letter is all about even before reading the body of the letter.

4. Body of the Letter

The body of your business loan letter should orderly contain;

  1. Summary of your business loan request letter
  2. Basic information about your business
  3. A brief explanation of why you really need the loan
  4. Summary of your ability to repay the loan
  5. Conclusion

5. Ending ( Best Regards, Yours truly, Best Wishes, etc)

6. Signature line: sender’s name, signature, and Designation.



Make sure to keep your letter brief and detailed.

However, you have to attach the following documents with the application letter when sending it for submission:

  1. Business plan
  2. Profit-and-loss statement
  3. Balance statement
  4. Cash-flow statement

The above-mentioned documents will be required from you. So, get them prepared and attached to the letter.

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Unwana Gold is an SEO content writer and blogger working with EntrepreneurBusinessBlog.com


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