Top 4 Tips to write a good Business Loan Request Letter
If you’ve applied for a loan at a bank for your business, you’re probably familiar with the need for a loan request letter. This letter contains important information about your business’s history, financial status and gives you an opportunity to convince the bank to loan you money.
Well, it might seem impossible to write down about your business on one page. But knowing how to write a business loan request letter in an effective way can help you get the loan easily. The letter is more like an opportunity to personally convey to your lender why they should approve of your application.
What’s a Business ‘Loan Request Letter?
A business loan request letter is a letter to a bank that supports your loan application. It should include the amount of money you want to borrow and explain why you need the loan, how you expect to use the loan, and how you plan to pay the bank back. With all this information, it gets easier for your loan to get approved by the bank. The letter is like the first glimpse of your business so make sure that it is communicative and persuasive in its approach.
Let’s walk through the 4 things that every business loan request letter should include:
- Basic Business Information
- Mention the name of your business
- The legal status of your business
- A short note detailing the business operations
- The years (or months) of operation
- The number of permanent employees and temporary workers.
- Turnover of the immediately preceding financial year. Also, a short history of turnovers of the three immediately preceding financial years for perspective
- Purpose of the business loan
The business loan request letter must include a detailed explanation of exactly how you will use the funds for your business. Your lender needs to be assured that the money will be put to good use. For example, you might want to use finances for the expansion of your store to get more customer walk-ins and gain attraction towards your business. Also, be sure to include details regarding how the investment will pay off. It is best to have a plan of how your revenues will increase, as this information can be a great addition to convince the lender.
- Assure the lender of loan repayment
Make sure to keep clear communication with the lender about how you see yourself repaying the loan. You also need to specify why you think you will be able to keep up with interest payments regularly. Your lender needs to know how you’ll fund the repayment, whether it’s from your salary or increased revenues. You also need to be specific about your earnings, including your personal credit history and financial status to support your credibility.
- Closing the business loan request letter
While closing the business loan letter you need to show how you will highly appreciate if the loan gets accepted and how you will put the loan amount to good use. However, sounding too eager and desperate will create immediate red flags for the lender. Hence, you need to convince the lender that you are capable of handling your business. Make sure to end the letter on a positive note to increase the possibilities of getting youronline business loan approved.
Throughout the proposal, focus on a clear explanation proving why your venture will succeed. Use simple, plain language that’s well-structured and easy to read. The ultimate goal is to persuade the lender that you’re ready and are capable to make a success of your business and repay the loan.