Loan application letter: format, templates and writing tips

Loan application letter: format, templates and writing tips

Understanding how to write a loan application letter is important. If you have a small business and you need it to get off the ground or you have the desire to expand it, you will agree that getting sufficient finances to actualise this dream is inevitable. In this case, you may have to write a business loan application letter. However, if you need the loan for personal reasons like when you want to build a house or buy the car of your dreams, then, writing a personal loan application letter becomes very important. So, for whatever reason(s) you may be seeking a loan, this article is there to walk you through the process or writing a loan application letter. Here, you will learn the step-by-step guide in drafting an acceptable loan application letter and a few points that you need to bear in mind while writing it.

Loan application letter

Source: Depositphotos

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Applying for a loan is not a bad thing as long as the purpose for which you are going for it is right. In fact, a good thing about loans is that they give you the opportunity to get the funds you need to execute whatever project you have. Once acquired, you will be required to pay back the money borrowed based on a fixed amount and at intervals specified by your borrower. This opportunity has helped a lot of people to get things done faster and enabled them to fulfill their dreams within a short period of time. Interestingly, while there are different kinds of loans that you can apply for, there are various channels or mediums through which you can get these loans. Usually, once you are able to meet the conditions given, then you will be able to access the loan.

While discussing more about loans in this article, a few of the questions that would probably pop-up in the minds of some people are, "What is a loan application letter?" "What is the purpose of a loan application letter?" "What is the best format to draft a loan application letter?" and so on. Well, if any or all of these questions are part of what you are seeking an answer to, then you need to read this article to the end as we handle these issues one after the other.

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What is a loan application letter?

To understand what a loan application letter is, it is imperative to, first of all, get to know what a loan is. In simple terms, a loan has to do with a sum of money that someone borrows and is expected to pay back within a specified period of time alongside interest. This means that when someone gets a loan, he or she is expected to pay back the loan within a time-frame agreed on by both the lender and the borrower. Apart from this, most times, there is a percentage interest that comes with the loan. However, this does not mean that every loan comes with an interest payable by the person applying for it. There are a few cases where you will not pay any interest.

So, having understood what a loan is, we can then go on to define what a loan application letter is all about. According to Business dictionary, it is defined as a document that provides the essential financial details and other information about the borrower on which the lender bases the decision to lend. Based on this definition, it means that every loan application letter must contain detailed information about the amount sought after and what the borrower hopes to do with the money. While this information can guide the lender in making their decision, this information is not all that is considered before the loan applied for is issued.

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Consequently, ensuring that your loan application letter is well-detailed and written in such a way that it becomes easy for your lender to understand your intent without you having to explain it to them is your core duty. Also, very important is the fact that you need to state exactly what you intend to do with the loan. If it is to build your own house or to pay for your education or your child's, as the case may be, you need to write it. And if you are applying for the loan in order to expand your business or to buy a car, let it be well detailed. The underlying point is that when the intent is well-understood by your lender, you will stand a better chance of being considered for the loan.

Once you have understood all that has been said so far, there are other tips that you need to be aware of while you are writing your loan letter. So, in the next few paragraphs, we will look at those tips. They will give you a better understanding of the format of writing a loan application letter and how to come up with your own.

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Loan application letter writing tips

Having mentioned the fact that you need to clearly state the intent of borrowing the loan, the following are some other tips that you should bear in mind while writing such a letter:

  • Be concise. While you try to be explicit in your request, ensure that you add only that information that is relevant and capable of convincing your lender. So, brevity and conciseness are very important in this case. Be sure to go straight to your point.
  • Write in the business letter format. This means that while you remain formal in your writing, you must also make sure that you are courteous and that you also maintain a friendly tone. At the same time, choose your words carefully.
  • Be engaging in your write-up. Do not bore your potential lender with your words. Let your letter speak life. Also, always remember that if your potential lender cannot connect with what you are writing, that is, if you anger him or her, it automatically means that you have just lost the opportunity to get the loan you are seeking.
  • Remember to add the necessary salutations and greetings while writing. More so, do not forget to show gratitude for the opportunity to ask for the loan.
  • State the amount you are seeking, but while you are doing this, it is advisable that you state a reasonable amount that you know you will be able to pay back conveniently. In other words, borrow within your capacity.
  • Be truthful. Truthfulness is very important. You must never joke with this. Remember that those you are writing to are also intelligent people and they are able to differentiate between when you are telling the truth and when you are lying based on their experience.
  • In the case where you are writing a business loan application letter, make sure that you give factual information concerning the nature of your business, its size, and your profit-making capacity. This projects you as a borrower worth considering.
  • State your present employment status if there is a need for it (and if you are an employee). While writing, you may need to include who your employer is and the salary you receive on a monthly basis. This can help your lender to determine your eligibility for the loan that you are applying for.
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A few things that every lender looks out for when determining who qualifies for a loan and who does not qualify for one are:

  • A good credit history;
  • Time in business (for those who need money to expand their business);
  • Your assets, debts, and expenses;
  • Your loan security in terms of collateral;
  • Your personal and business tax returns;
  • The state of your income, whether it is steady or not;
  • Your salary scale (if you are a paid employee) and other sources of income that you have.

So, depending on the type of loan application letter that you are writing and the requirements needed by whom you are writing to, these are some of the details that you may need to add. Once you are able to work with the tips discussed above, you should not have any problem writing a convincing loan application letter.

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Loan application letter

Source: Depositphotos

Furthermore, now that you have learned these writing tips, the next question you will probably want an answer to is, "How do you go about documenting your thoughts in the best convincing way so that you do not end up losing this golden opportunity before you?" Therefore, we can now go on to discuss the format of a loan application letter.

Loan application letter format

There are different categories of people that you may need to write a loan application letter to depending on where you are applying for the loan from. For instance, if you are seeking a car loan, you may be required to write a car loan application letter to your employer if there is provision for that where you work. Apart from this, there may also be the need to write a loan application letter to a bank manager, especially if the bank is where you are targeting to get the loan from. Depending on whom exactly you are writing to, the loan application format shared below will help you to get it done in a professional and acceptable manner.

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1. Write a well-formatted address of the person you are seeking the loan from

If you are writing to the manager of a bank, for instance, ensure that you write the name of the manager and the address of the bank he manages. Here is an example of how your address should look like:


Mr. McDonalds Festinga,

Intercontinental-Monument Bank,

First Avenue branch,

Greater Accra.

Please note that it is not a bad idea if you choose to add the zip code, city, and the state in your address.

2. Write your own name and address in an easy-to-locate manner

The next thing you need to do is to write your name and your address. And mind you, for whatever address you are putting as yours, make sure that it is a traceable address. This is because it is possible that the bank will want to verify the address you have given so as to be sure that it exists. The same way you have written the address of the bank manager that you are writing to above is the way in which you will write your own. The only difference that will be in the two is that instead of writing "To" as you did above, you will write "From" to indicate that the letter is coming from you.

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3. Remember to date your letter

You need to state the date when you are writing the letter. This is especially important for record purposes. More so, when the letter is to be processed, it will help the concerned body to know when the letter came in to avoid unnecessary delays. The usually accepted format of writing the date is beginning with the day, followed by the month and ending with the year.

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4. Begin with a salutation

While you start to write the letter, ensure that you greet the concerned person. A major reason for this is to make sure that your reader connects with you as he or she reads the letter. An example can be like this:

Dear Mr. Festinga,

5. Title your letter

Since you are writing to request for a loan, it is good that you add this title to it. At least, at a glance, this will help the recipient to know what the content of the letter is.

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6. Give a brief introduction of your relationship with the bank(if you are applying for a loan from the bank) and state your intention

It is important that you put this information so that the bank manager will know that you are not a new customer who is seeking assistance from the bank. Also, with the information that you provide about your relationship with the bank, it makes it easy for the bank to track your record and see how they can help in granting your request. Look at this sample:

In the past 12 years (state the number of years in which you have been banking with them), I have maintained a savings account with your bank with account number xxxxxxxxxx (write your correct account number here). I am applying for a business loan (or whatever type of loan that you are seeking, just write it there) of GHC 10,000 (write the specific amount that you need) for the purpose of expanding my business (here, it is important that you state specifically what you want to do with the loan).

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7. Request for the criteria to qualify for the loan that you are applying for

While you should have known the requirements that must be met before you can get a loan, it will be courteous if you ask for those requirements. This will further show your lenders your readiness to get the loan and your willingness to fulfill the obligations. So, constructing it this way will not be a bad idea:

While I know that there are obligations that must be met, I will be glad if you could kindly inform me about the details and necessary procedures that must be followed by anyone seeking a loan. This will enable me to make the necessary arrangements to meet these requirements as early as I can.

8. Express how much you anticipate getting the loan and appreciate their kind gesture

This is an example of what it should look like:

I look forward to a positive response from you and to meet you in the shortest time possible.

Thank you for your time.

9. Close your letter

Once you have written all of the above, the next thing you should remember to do is to close the letter. Write your name and append your signature.

Depending on the type of loan application letter that you want to write and having understood the format explained above, below are the templates of two types of loan letters that you can write.

Loan application letter

Source: Depositphotos

Loan application letter templates

You can always modify these templates at any time to fit the kind of loan application letter you want to write.

1. Business loan application letter template

Here is an example:


(Branch manager’s name)

(Branch address)


(Your name)

(State your address)

Date: (this should be the date of writing the letter)

Dear Mr. /Ms. (put the name of the person you are writing to),

ATTN: Request for commercial loan

(State the name of your company here) has been engaged in (state what the company is into) for the past (write the number of years the company has been in the business). Since its establishment in (state the year of establishment), the company has experienced a steady growth with branch locations in two other cities within the country.

In the first year of our start-up, the company recorded a total profit of GHC 15,000 and in the second year, it moved up to GHC 48,000. This has been the testimony so far. However, with the rate of demand for our products in other metropolis, there is the need for us to increase our sales which is the reason why we are seeking a loan from you. We need a loan of GHC 2.3 million so as to purchase more equipment and hire more staff to increase our production and then, we will be able to meet the market's increasing demand.

If you can give us the details and formalities required for seeking the loan, we shall make all the arrangements and meet you at the earliest time so that we can perfect all things within the shortest time.

Thank you for your cooperation,

Yours sincerely,

(Your name)

(Your signature)

2. Personal loan application letter template

Remember that we already discussed that there are different reasons why anyone could write a personal loan application letter. So, assuming that the purpose for which you are applying for the loan is to complete a building construction which you have already started, you can follow this template. You can also amend it and use it to write other forms of personal loan application letters using the format discussed earlier.


(Bank manager's name)

(Bank manager's address)


(Your name)

(State your address)

(Write the date of writing the letter)

Dear Mr. /Ms. (Write the name of the person you are writing to),

ATTN: Application for a building loan

I write to kindly request for a loan of (state the exact amount that you need) to complete my new home that is under construction. At the moment, the building is at the lintel level and I need to pack into it due to the consistent increase in my house rent from my landlord. The building has been under construction for (state the period that you started it) and I would love it completed before this forth-coming festive period.

If you check your records, I have been a loyal customer of this amiable bank for nothing less than (state the number of years that you have banked with them). I currently operate a savings account with you and the account number is (state your account details). With my current salary of (state how much you earn) per month, I have been able to develop the habit of saving up to 30% of my salary on a monthly basis. This is just to prove to you that paying back will not be a problem for me.

If you desire any other information about me, I would be glad to supply them all. More so, I will appreciate if I can get a response as to the requirements needed to apply for the loan as soon as possible.

Thank you for your prompt response and unmatchable cooperation.

Yours faithfully,

(Put your signature),

(Write your name in full as it appears on your bank account).

So, from all that has been discussed so far, you see that because writing a loan application letter can be a bit tasking, the process involved must be well-understood. Therefore, based on the information shared here, it is expected that you will be able to come up with your own loan letter in such a way that will capture the attention of your lender and also convince them that you are worth granting the loan.

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