How to write a compelling business loan request letter

Running a business is not that simple as you need funds from time to time to cater to your requirement and take advantage of opportunities that come your way. This fund requirement can be fulfilled by an SME business loan. One can get a business loan from banks or NBFCs. In order to get your business loan approved you need a compelling business loan request letter. In this article, we are going to discuss how to write a compelling business loan letter and what points to keep in mind while writing it. But before that, let’s discuss a little bit about business loans. A business loan is a loan that you take from either a bank or NBFC to support your urgent needs to grow your business. It is a way to add more funds to your business without changing the ownership in any way. That’s why a business loan is an extremely vital part of your business. It can help you to start, run, and expand your business. It can be secured or unsecured but primarily it is an unsecured loan. The interest rate for a secured business loan is lower as compared to an unsecured business loan. The amount of loan depends on the size of your business and the expected profit. All types of businesses can take business loans whether retailers, self-employed individuals, privately held, partnership firms, or sole proprietorships. The repayment tenure for this loan is 1-5 years. Now, let’s dive into the main topic which is how to write a compelling business loan request letter. A well-written letter can place you in a better position and can get your loan approved. Two things to keep in mind while writing the letter – one is the format and the other one is the information to include in the letter. Format for business loan request letter.

Format for business loan request letter

Header and greetings: The top of the letter should include:

• The name and contact information of the borrower
• Date
• Name, designation, address of the concerned person to whom you are applying for the loan.
• Subject line
• A greeting

Body of the letter: The body of the letter should include:

• The purpose of your letter.
• Information about your business.
• Explanation on how you are going to spend your fund and the ability to repay your loan.

Concluding element: At the end of the letter, you must write a paragraph mentioning all the documents you are attaching, another paragraph requesting the concerned person to review your loan, and finally your signature.

Information To Include In The Business Loan Request Letter

To write a compelling business loan request letter one must include the following information in the letter.

• One must specify the loan amount. There are various categories of business loans available. One should specify the category in which he/she is applying.
• The reason for your loan and how you are going to spend your fund. Be specific on how to use the money to grow your business.
• A brief summary about your company and facts stating that your business is growing and profitable as it is going to help you in your loan to get sanctioned.
• And finally, the assurance to repay the loan. The main aim of every lender is to minimize the risk. The bank/NBFC needs to know you have a repayment plan in place and a strong financial position.

It is also very important to check your credit score before applying for a loan. The higher the credit score, the greater the chances of getting your loan approved. It adds weight to your loan request.

Conclusion

A business loan request letter can make or break your new business loan application approval. A lot of applications got rejected due to the poor quality of business loan request letters. That’s why a well-written letter with all the necessary information and in the right format can get your loan approved.