Personal Loan Application Cover 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.

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.

June 4, 2013
Ms. Iris Lindon
Chief Executive Officer
Lindon’s Home Decorating Services
258 Travis Avenue
Las Vegas, Nevada 55959
Mr. Nicolas Brand
Sr. Loan Officer
TriCountry Bank
56 Second Avenue
Las Vegas, Nevada
Re: Loan Request for $25,000.00
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 595-632-9565 if you have any questions.
Iris Lindon
Ms. Iris Lindon
Chief Executive Officer
Lindon’s Home Decorating Services
Enclosure: Business Plan

Writing A Personal Loan Letter (with Sample Letter)
Use this sample personal loan letter as a template for your formal notification.

Writing A Personal Loan Letter
While banks do not require a letter to obtain a personal loan, there are some financial institutions that will ask for it. Writing a letter asking for a loan is not difficult, but a few guidelines should be followed.

The letter needs to request the loan and then also state your ability to repay it. This letter should not be used as a desperation plea, but should rather state the facts and that’s it.

​The bank doesn’t care how you are, and actually pleading and telling too much can weight negatively on the chances of getting a loan. The bank wants to know the reason why you need the money and your intentions to repay the debt, nothing else.

Start the letter using a block format and putting the date and the financial institutions name and address to the left. If you have used the services of this bank for a specific number of years, it is okay to put that in there. If there are other accounts on file, you should also mention it in the letter.

​​The bank needs to see that by giving you a loan, you are already a valuable part of their banking group. If you have many accounts and do a great deal of business with this specific location, you may get preference over someone who doesn’t deal with this bank.
Tell Why The Money is Needed

​The first paragraph needs to get right to the point. The letter needs to state why the money is needed. Banks are becoming increasingly picky with who they lend money too. The goal of a letter of this nature is to make sure that they get a clear picture of how responsible and able to repay the loan the individual is. ​

​Use this letter to go into details of what the money will be used for. Oftentimes, banks will lend money for home improvements easier than they will just a personal loan. Things that will make the home better and allow it to have a higher market value may be of interest to them. Some banks like to know that there is a home they can put a lien on should the loan default. Any collateral that you may have increases the chances of obtaining a loan.

​Letter Doesn't Need to be Long

​The second paragraph should show that there is a means to repay the loan. If the loan will be paid by employment, state how long you have worked at the job and this shows consistency. This letter doesn’t need to be long, and if you don’t have enough for three paragraphs that is fine.

​Just say what needs to be said according to the banks qualifications and that’s it. You want to showcase yourself as a person that they would want to lend money too. Don’t ramble and don’t say too much. Give your contact information at the bottom of the letter and end with the proper closing. Here is a sample letter to help you with formatting.

Sample 1 - Personal Loan Letter
Name of Borrower
Address of Borrower
City, State, Zip Code


Name of Lender
Company of Lender
Address of Lender
City, State, Zip Code

RE: Personal loan

Dear Name of Lender:

I would like to obtain a personal loan in the amount of [$6,500]. This loan will be used to help renovate my home. I would like to remodel my bathroom and update my home. My home is a 1975 model and the bathroom has not been updated since that time. A bathroom remodel is essential to me being able to put my house on the market. 

I have been a longtime standing member of this credit union and have three open accounts with your organization. I had a person loan back in [YEAR], which I paid off within 6 months of opening. I am currently employed at the Wigwam Corporation and just celebrated my 20th year anniversary. I have stable employment and an excellent credit history and there should be no reason why I cannot obtain a loan from your bank. 

Please contact me at your earliest convenience to discuss this matter further. I can be reached anytime at [555-987-1293]. I would like to get this matter taken care of immediately. 


Signature of Borrower
Printed Name of Borrower

By Andre Bradley

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