Writing a Good Bank Loan Request Letter for Small Business

The Bank Loan Request Letter is one that is commonly used from a business to start the lending process from a bank. While it can be used by an individual, it is just easier to fill out an application online or to see a bank specialist in person. 

The company seeking a loan has a larger feat, for they must obtain a loan based on the company’s sales records. A person gets approval for a loan based on their credit score alone, but a company has to rely on receivables, credit standing and many other factors.

purpose of letter

The purpose of this letter is to let the bank know some important things. First, a bank needs to know the reason why the money is needed. They will want to know how the funds will be used. This form letter can be considered a standard cover page for the application and other documents that the company should have filled out. 

All banks are going to want an application, complete with a signature. This allows them to check the credit rating of the company and to have references to check. This is an overview that is attached to this packet. 

It helps the bank with their decision making process. Statics show that those who use a this letter have a better chance in obtain the loan, provided their credit worthy. 

Make sure the letter is addressed correctly and goes to the right department. It is wise to find out who is in charge of the business loans, and direct the letter to this person. 

give a detailed plan for the money

They often ask way more of a company seeking a loan, than an individual who is looking for a couple thousand dollars. They will want a detailed plan for the money, perhaps a couple estimates and proposals to do the work. 

If it is a small business, with an excellent rating, this plan can help the bank see what the money will be going for. Banks like to lend money to those who are going somewhere and can be long term customers. 

However, they know those who are at risk and will avoid doing business with the unsure thing. Still, a bank loan approval comes down to a few things, credit score, length of business history and assets/debts.

Banks don’t typically lend money to those who don’t have a plan with the money, meaning if a company wants $10,000, they need to have a good reason to justify this sum. The letter needs to have many bits of information included. 

This includes the name and address of the business, the years it has been established, the gross sales for the past year and any other pertinent information. The goal is to paint a great picture of the company, just make sure to have proof to back up this information. 

Sample Bank Loan Request Letter for Small Business

January 6, 2019

Huntington National Bank
90 Syndicated Lane
New Albany, MD 43058

Attn: Small Business Loan Department

Johnson Construction is a very successful company that is well established in the construction industry. We began operation in June of 2005, as a small construction company that helped local business and homeowners with their renovation needs. We have a website that sells our services and also have many channels through which we gain new business. 

Last year, our annual sales amount was $894,892. The first year of business, we brought home a profitable $98,000. We have maintained a steady balance over the past 14 years, due to the fact that we have provided our customers with a service they need. Our business, and ones of its nature, are in high demand. 

Due to the large customer demand from our central division, we have decided to open a second branch. The loan we are requesting is for the opening of this second division. Startup costs can be excessive, and while the other business is profitable, we still find ourselves in need. 

We anticipate strong sales for our new division in Waverly, Ohio. In fact, after doing much outreach to this area, we have seen that the need in this region is great. We have immediate opportunities available that will allow us to capitalize this untapped market. 

However, we cannot transport our equipment from our New Albany location on a daily basis. The loan of $50,000 will give us the ability to buy the equipment we need. I have attached the contracts we have in the Waverly area, all pending we have the equipment ready and can do the job. It makes sense to have both location running, and we can ensure that the new business will be a success. 

Please take a moment and review this request letter. If you feel that you can help our company in our latest endeavor, we would love to hear from you.

Sincerely,

Isaac Johnson
Johnson Construction