How to Write a Letter of Intent for a Loan
When you need to borrow money, writing a letter of intent can help communicate that your reasons for needing the funds are legitimate and that you have the intention and ability to repay the loan. In addition to assuring the lender that you will follow through on loan payment, a letter of intent will should also prove that lending you money involves little risk because you have enough collateral in the event of defaulted payments.
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Instructions
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Use formal letterhead and the standard format for a business letter. When typing your letter of intent, use a standard font, such as Times New Roman, single spaces between each line of text and a double space between each paragraph.
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Type the lender's name and contact information on the top left side of the page, the date and the salutation. However, if your letterhead does not include your address, that should be the first item at the top of the page. Examples of a salutation include, "To Whom it May Concern," or "Dear Ms. Doe."
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Write the purpose of your letter in the first paragraph. Clearly state that you wish to borrow money and how you intend to use the funds. If, for example, you want to start a small business, you may state that you want a small business loan so you can purchase office equipment for the employees you plan to hire. Avatar Financial Group states that you should state why you are asking this particular lender for a loan in addition to listing other sources of funding you may have, such as an angel investor or money you saved.
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Create an executive summary to tell the lender about your business. According to the Small Business Administration (SBA), you should describe the business you want to run, the date you anticipate to start, the address of the business' location and the products or services you will sell. Additionally, include a brief history about the company or yourself, the need for the services you offer and your plans for growth.
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Write about how long you anticipate it will take to repay the loan. It is important to assure the reader that you have the ability to make scheduled payments with interest. In addition, describe the collateral you plan to offer and its worth.
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Close the letter by thanking for the reader for his time and consideration. If you are attaching documents, include this fact in the closing paragraph so the reader can anticipate and take the time to review them. Additional documents you may enclose include pictures, supporting financial documents and a full business plan.
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