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Whether you need financial aid to send your child to school, to buy a new house, or to start a small business, you can always apply for a loan to realize your life goals. However, getting a loan is not served in a silver platter. You need to have the right qualifications and requirements to get approval. One of these requirements includes a loan letter. If you have no idea how to get started, you can now write one using our Loan Letter Templates in Microsoft Word. Choose any of our templates and get access to its built-in content that you can modify to your specifications. Download one today and get approved today!
A report from the Pew Charitable Trust reveals that 8 in 10 Americans have debts. But despite that, getting a loan remains a viable option for people who are under tight financial circumstances. Unfortunately, getting approved for a loan can be as challenging as paying it off, especially if you requested a huge payable amount. As a result, application requirements become more demanding.
To help you alleviate the burden in dealing with other conditions, allow us to help you with one of its tricky but entirely doable requirements—a loan letter. We provided you with some tips below that you can use as your guide as you go along.
Like any type of letter, addressing it to the right person will always be crucial since acknowledging the recipient will always come first in a letter. Right before you start writing your loan letter, you need to know to whom you address it. For instance, you want to seek a salary loan as an employee of your company. You can either address your letter to your employer and through the head of the Human Resources department.
Sure, the other requirements will do the job of proving your credibility for a loan, but it would be best if you will also put your best foot forward in your loan letter. Give crucial details about yourself or your partners, such as strengths and credentials that will prove that you are capable and responsible enough of paying your dues soon.
Do not beat around the bush and express your intent for needing a loan and the specific amount of money you want to borrow. For example, you need to finance your small business idea. So, right when you write a loan letter for your bank loan application, you can perhaps say you want to request $150,000 for your small business funding, and you intend to pay it in five years.
To avoid rejection and increase your chances of approval, you need to include information that will tell the financial institution that you will put the money to good use. By doing so, you can convince your target recipients to get your loan approved while reassuring them that you can be trusted enough with such amount. You can also include details such as your strategies on funding the repayment through your revenues to add more substance to your letter.
Some of the existing types of loan include:
Some of the existing types of loan letter are:
Some financial institutions will not necessarily require you to submit a loan letter along with other loan application requirements. However, some will gladly accept if you secure one, and it can even increase your chances of approval.
Loan letters contain the details as to why the sender needs the money, how the sender intends to use the funds, and how the sender will repay the payable amount.
The main distinction between loans and grants is repayment. If you get loan approval, you need to repay the money and its interest. On the other hand, you do not need to repay a grant because, in essence, it is a gift.