Loan Application Letter

At some point, an infusion of outside cash may be needed to keep your business running smoothly, to expand, or to take advantage of a market opportunity. A business loan application letter informs the bank of the amount of money needed and makes a case for why you are a good investment risk.

Format and Content

The loan application letter format is generally six paragraphs long, with each major topic discussed in a separate paragraph. The content includes the loan amount requested, a description of your business, the purpose of the loan, target market and competition, and the amount you have invested in your business. Call the bank and ask for the name of the person who handles business loans and address the letter to that individual.

Sample

Business owners request loans for a variety of reasons. In this loan application letter sample, the owner of a decorating business is requesting a loan in the amount of $25,000.00 to expand her warehouse space. She includes information regarding her business success to inspire interest in her loan application.

Dear Mr. Brand,

I am requesting a business loan in the amount of $25,000.00 for the purpose of expanding my warehouse facilities. My business has experienced significant growth over the past two years. This increase in business necessitates I expand my current warehouse facilities to accommodate a larger inventory.

I have significant experience in the home decorating business and I am considered an expert consultant in the industry. My interior design plans have been featured in several national magazines, including Decorating Digest, Home Embellishments and JeanAnn’s Town and Country Designs. I started Lindon’s Home Decorating Services in 1995 and the company has earned a profit consistently year after year, even during the recent recession.

The market for this business is heavily dependent on the housing market and the health of the economy. Over the years, I have pursued and won major contracts with national hotels. This steady stream of work protected my business during the recent recession. Today, the housing market is improving rapidly and the projected growth exceeds prerecession numbers. In addition, sharp increases in the building supply market suggest a growing trend in home remodeling.

My customer list includes five large hotel chains and two large national corporations that provide my company with new work orders each month. I utilize cost-effective marketing strategies that result in an average of 200 new orders every month from private homeowners.

To date, I have invested and recouped through profits $200,000.00 of my own money. I intend to invest $50,000.00 of my own money for this specific project. My collateral consists of business assets with a fair market value of $950,000.00 and personal assets valued at $550,000.00.

I am enclosing my business plan, which details the reasons of the loan request. You may contact me at (555)-555-5555 if you have any questions.

Sincerely,

Iris Lindon

Ms. Iris Lindon

Chief Executive Officer

Lindon’s Home Decorating Services

Enclosure: Business Plan