How to Write a Professional Bank Loan Approval Letter

Getting approved for a bank loan can be a challenging process. You need to prove to the bank that you are creditworthy and will be able to repay the loan. A key part of this process is the bank loan approval letter. This is the formal notification from the bank stating that they have reviewed your application and approved you for the loan.

Writing a professional bank loan approval letter is important as it represents you and your business to the lender. The letter needs to be formatted properly and contain all the necessary information. In this article we will walk you through the steps of how to write a bank loan approval letter, from the introduction to the signature.

The introduction paragraph should start out by formally welcoming the recipient and clearly stating the purpose of the letter – to notify them that their loan application has been approved. For example:

“Dear [Client Name],

I am writing to formally notify you that your application for a [loan type] in the amount of [$XX,XXX] has been approved by [Bank Name].”

This opening clearly states who the letter is addressed to, the reason for the letter, the loan details including type and amount, and the bank providing the approval.

Terms of Approval

The next section should outline the specific terms the client has been approved for This includes

• Interest rate – The rate that will be applied to the loan. Make sure to note if it is a fixed or variable rate.

• Length of loan term – The total length of time the borrower has to repay the loan, such as 5 years, 15 years, etc.

• Required monthly payment – The minimum payment amount due each month.

• Disbursement date – When funds will be distributed to the borrower. Usually 10+ days from approval date.

• Collateral – Any assets or property being used to secure the loan.

Providing these key details clearly shows the client what they are agreeing to per the loan approval.

Additional Requirements

Next, outline any additional requirements the borrower must fulfill before obtaining the loan funds. Common requirements may include:

• Providing income verification or tax documents
• Transferring assets being used as collateral
• Paying appraisal or administrative fees
• Purchasing insurance for collateral
• Signing the final loan closing documents

Briefly list which specific requirements apply to the borrower. This ensures they know any outstanding items to complete for funding.

Expiration and Acceptance

The approval letter should note when the offer will expire if not accepted. A standard timeframe is 30 days. For example:

“This approval will expire if loan documents are not signed and returned within 30 days of this letter’s date”.

Then instruct the client to sign and return the letter if they accept the terms. Include contact information for who they should return the approval letter to.

Expression of Thanks

Wrap up the letter by thanking the client for choosing your bank. For example:

“Thank you for choosing [Bank Name] as your lender. We look forward to working with you over the coming years.”

This shows appreciation for their business.

Signature

Finish the approval letter by formally signing your name, title, and business contact information. For example:

“Sincerely,

[Your Name]
[Position Title]
[Bank Name]
[Phone Number]
[Email Address]”

Having a real signature builds trust and professionalism.

Formatting Guidelines

When writing a bank loan approval letter, follow these formatting best practices:

• Use business letter format – The letter should have your bank’s letterhead, the date, formal address and salutation, professional tone/language, and signature.

• Be concise – The goal is to communicate the key details as clearly as possible without unnecessary wordiness.

• Use clear section headings – Break information into sections with clear headings like “Terms of Approval” to organize details.

• Stick to plain language – Avoid overly complex financial jargon and use simple terms a common client would understand.

• Proofread carefully – Be sure there are absolutely no spelling, grammar, or punctuation errors which could appear unprofessional.

Sample Bank Loan Approval Letter

Using the guidelines above, here is an example bank loan approval letter:

February 28, 2023

John Smith
123 Main St.
Anytown, CA 12345

Dear Mr. Smith,

I am writing to formally notify you that your application for a commercial real estate loan in the amount of $3,000,000 has been approved by First National Bank.

Terms of Approval

You have been approved under the following terms:

• Interest Rate: 7% fixed APR
• Loan Term: 20 years
• Monthly Payment: $18,554
• Disbursement Date: March 28, 2023
• Collateral: 1234 Oak Street commercial property

Before we can proceed with disbursing funds, we will need you to provide the following:

• Last 3 years tax returns
• Proof of property insurance on 1234 Oak Street
• Transfer commercial property deed to First National Bank

This approval will expire if loan documents are not signed and returned within 30 days of this letter’s date. Please sign below if you accept these loan terms and return the signed letter to [email protected].

Thank you for choosing First National Bank as your lender. We look forward to working with you over the coming years.

Sincerely,

Pat Johnson
VP of Commercial Lending
First National Bank
555-1234
[email protected]

Acceptance Signature

Signed: ___________________________ Date: ________________

John Smith

Writing a professional bank loan approval letter does not need to be a complex process, especially if you follow the guidelines above. Clearly communicating the loan details, terms, and requirements in a well-formatted letter will present a polished image to your clients and get the lending process started smoothly. Be sure to proofread closely and provide a real signature to establish trust. With this template and advice, you will be able to efficiently notify clients of their approved loan and the steps required to obtain funding.