A business loan is a sum of money that the lender provides and the borrower pays back, plus interest, over a set period of time. There are different types of business loans which include; bank loans, mezzanine financing, asset-based financing, invoice financing, microloans, business cash advances, and cash flow loans.
Read more: How To Delete Your Expedia Account
Loans are common in personal finance; student loans, car loans, and mortgages are seen as a normal part of life. same thing applicable to business loans, but instead of being used to finance personal items, they are used to fund a business. Business loans are lending deals made between business owners and banks or private lenders. All businesses need capital, either to fund operations or solely to start themselves up and begin turning a profit.
Also, when it comes to business loans, A lender will surely want to see your business plan which should contain everything from your financial protrusions to what marketing strategies you’ll be executing, as well as the business idea itself and your goals. In other words, this will enable the lender to fully understand how the borrowed funds are used.
Step by Step Format of Writing a Business Loan Application Letter
When applying for a business loan, it is recommended that you put or write everything on one page and ensure you include the following key elements below:
- Heading and greetings
- Summary of your business loan request letter
- Basic information about your business
- Explanation of the purpose of your loan
- Summarize your ability to repay the loan
Business Loan Application Letter Sample
Wilson DickChief Executive OfficerKMV Services Limited51 Trans Amadi Industrial LayoutPort Harcourt, Rivers State01 December, 2021Steve MarkSenior Loan OfficerWERTY BankKm 16 PH/Aba road expresswayPort Harcourt, Rivers StateDear Mark,APPLICATION FOR A LOAN OF ₦50,000,000
KMV Services Limited is a successful business that is well established in the maritime industry. We began operation with 6 employees in April 2008 as a small company offering marine services to multinational maritime companies. We now have 40 employees. We also advertise on our company’s website, kmvservices.com, also, we post our services on social media channels.
Last year, our annual income totaled ₦15.5 million. In the first year of business, we earned a net profit of ₦2.8 million. Into the bargain, we have maintained a steady balance in the past 13 years.
By reason of increasing interest from prospective clients in other locations, we have decided to open two more locations. The loan we are requesting is for these additional locations, which we expect will increase revenue by ₦1.5 million in the first quarter following opening.
Startup costs can be exorbitant, and we require funding to buy tools and equipment. Nevertheless, we expect good projects for the new branch and have immediate work opportunities, which will contribute to our loan repayments.
The loan of ₦50,000,000 we are requesting will provide us with the funding we need to help successfully open our two locations. I have attached the contracts we have in the new locations, pending equipment availability and ability to complete the project as well as our business plan with a breakdown of costs and detailed market analysis.
Thank you for your time and kind consideration for reviewing this letter and the accompanying financial documents. I look forward to hearing from you at your convenience.
Wilson Dick [signature]
CEO; KMV Services Limited
Please note: you must attach the following documents with the application letter and these documents include: Business plan, profit-and-loss statement, balance statement, cash-flow statement.
Yeah, that’s all on How to Write a Business Loan Application Letter. Believe me, this article would help.