application letter for loan liquidation

Ultimate Loan Settlement Request Letter (Template Included)

In this article, I’ll share a step-by-step guide on how to craft a compelling loan settlement request letter, complete with  proven templates .

Loan Settlement Eligibility Quiz

Disclaimer: The results of this quiz are for informational purposes only and do not constitute financial advice. Please consult with a financial advisor or your lender before making any decisions regarding loan settlements.

Key Takeaways: Understanding the purpose and importance of a loan settlement request letter. Step-by-step guide to crafting an effective letter. Personal experiences and insights from a borrower’s perspective. Essential elements to include in your letter. Free Templates:  Use the proven templates to simplify the process. Additional tips for a successful settlement negotiation.

Understanding the Purpose

What is a Loan Settlement Request Letter?

Trending Now: Find Out Why!

A loan settlement request letter is a formal way to ask your lender to consider a settlement on your loan, usually for less than the full balance. This is especially relevant if you’re facing financial hardships.

Why is it Important?

• Negotiating Terms: It’s a starting point for negotiating your loan terms.
• Financial Relief: Can lead to significant financial relief.
• Credit Score Impact: Potentially less damaging than defaulting entirely.

Crafting Your Letter: A Step-by-Step Guide

1. Gather Your Information

• Loan details
• Financial statements
• Any relevant communication with the lender

2. Start with a Professional Format

• Use business letter format
• Address the letter to the right person or department

3. Clearly State the Purpose

• Be straightforward about your request for a loan settlement.

4. Present Your Case

• Explain your financial hardship
• Be honest and concise

5. Propose a Settlement Amount

• Offer a realistic amount you can afford to pay

6. Mention Your Intention to Resolve

• Show your commitment to resolving the debt

7. Close Professionally

• Thank the reader
• Provide your contact information

8. Proofread and Send

• Check for errors
• Send the letter via certified mail

Personal Experience Highlight

When I wrote my first loan settlement request, I was overwhelmed with anxiety.

But laying out my situation honestly and proposing a realistic settlement amount led to a favorable response from my lender.

This experience taught me the power of clear and honest communication in financial matters.

Essential Elements of the Letter

• Header: Your contact information, date, and lender’s information.
• Greeting: Address the letter to a specific person, if possible.
• Body: Introduction, explanation of hardship, settlement proposal, and a statement of intent.
• Closing: Professional sign-off with your signature.

Loan Settlement Request Letter Template

[Your Name] [Your Address] [City, State, Zip Code] [Email Address] [Phone Number] [Date]

[Recipient Name] [Recipient’s Position] [Lender’s Company Name] [Lender’s Address] [City, State, Zip Code]

Subject: Request for Loan Settlement – [Your Loan Account Number]

Dear [Recipient Name],

I am writing to you regarding my loan account referenced above. After thorough consideration and assessment of my current financial situation, I regret to inform you that I am facing significant financial challenges that are making it difficult for me to fulfill the original terms of the loan.

The purpose of this letter is to request a settlement of my outstanding loan amount. Due to [briefly explain your financial hardship – e.g., job loss, medical emergency, reduced income], I am unable to continue with the regular payments as initially agreed.

In an effort to resolve this situation amicably and avoid any further financial strain, I am proposing a settlement amount of [state your proposed settlement amount], which is [percentage of the total debt] of the total outstanding balance.

I believe this amount reflects my current financial capabilities while also demonstrating my commitment to settling my debt.

Please understand that this proposal is made in good faith and represents a significant stretch of my available resources under the circumstances.

I am hopeful that this offer will be considered favorably and that we can come to a mutual agreement that is beneficial for both parties involved.

I would like to express my sincere intention to resolve this matter and avoid any further complications or proceedings that might arise from non-payment of the debt. I am open to discussing this proposal further and am willing to provide any additional information or documentation you may require.

I kindly request your understanding and consideration in this matter and look forward to your positive response.

Please feel free to contact me at [your phone number] or [your email address] to discuss this matter further or to provide your response to my proposal.

Thank you for your time and attention to this matter. I am hopeful for a favorable outcome that will allow us to settle this debt in a manner that is manageable for me and acceptable to [Lender’s Company Name].

[Your Signature (if sending a hard copy)] [Your Printed Name]

Writing a loan settlement request letter may seem daunting, but it’s an essential step in managing your debts. Remember, clarity, honesty, and professionalism are key.

Approach the process thoughtfully, and use this guide as a roadmap to draft a letter that effectively communicates your situation and settlement proposal.

Comment Request

Have you had experiences with loan settlements? What strategies worked for you? Share your thoughts and tips in the comments below!

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Frequently Asked Questions (FAQs)

Q: What Should I Include in a Loan Settlement Request Letter?

Answer: In my experience, it’s crucial to be clear and concise. I always start by stating my name, loan account number, and the reason for my settlement request, like financial hardship.

It’s important to mention any specific circumstances, like job loss or medical issues. I also include a realistic offer of how much I can pay, backed by a detailed budget plan. And finally, I politely ask for a reduced settlement amount and express my commitment to resolving the debt.

Q: How Can I Make My Loan Settlement Request More Persuasive?

Answer: I found that personalizing the letter makes a big difference. I share a brief story about what led to my financial hardship, making it relatable and honest. 

Providing evidence, like medical bills or a layoff notice, adds credibility. I also show my previous good track record with payments to demonstrate my responsibility. This approach has often helped me gain the lender’s empathy and consideration.

Q: Should I Get Professional Help When Writing a Loan Settlement Request Letter?

Answer: Absolutely, if you’re unsure or overwhelmed. I once hired a financial advisor, and their expertise was invaluable. They helped me understand the nuances of negotiation and how to structure the letter effectively. 

A professional can also advise on realistic settlement amounts and may even handle negotiations directly. It’s an investment, but it can lead to better outcomes and peace of mind.

Q: How Do I Follow Up After Sending a Loan Settlement Request Letter?

Answer: Following up is key. I usually wait for a week or two after sending the letter, then call the lender to confirm they received it. It’s important to be polite but persistent. 

If there’s no response, I send a reminder email or letter. In my conversations, I always refer to specifics from my original letter to keep the discussion focused. Patience and consistent follow-up have been crucial in my experience.

Q: What Should I Do if My Loan Settlement Request is Rejected?

Answer: Don’t lose hope. I’ve been there, and it’s tough. First, I try to understand the lender’s reasons for rejection. Sometimes, negotiating a bit more or providing additional documentation can change their mind. 

If it’s a firm no, I explore alternative solutions, like a payment plan. It’s also wise to consult a financial advisor at this stage for guidance on the next steps. Remember, there are usually options available, even in difficult situations.

Q: What Should be Included in a Loan Settlement Letter Format?

Answer: In my experience, a loan settlement letter should clearly state the settlement amount, the original loan amount, and any terms of the agreement, such as payment deadlines or conditions for the settlement to be considered valid. It’s also crucial to include reference numbers and contact information to facilitate any follow-up required.

Q: What is the Best Way to Structure a Request Letter for Bank Loan Settlement?

Answer: Based on my experience, the best structure begins with your details, followed by the loan information, and a straightforward request for settlement. I always make it a point to clearly state the reason for the settlement request, whether it’s financial hardship or other circumstances, to provide the bank with context.

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Loan liquidation how to liquidate your loan

• Reviewed by Matt Mayerle
• Edited by CreditNinja
• October 15, 2022

Do you have a business or company you are trying to finance? Owning your own business comes with plenty of assets to keep track of, and staying organized is essential if you want to reduce your financial risk. Loan liquidation may be a great way to take care of business expenses without acquiring a massive amount of debt. 

But what is a liquidated loan? What’s the difference between a personal loan vs. a business loan ? How do you know which option is right for you? CreditNinja has your back with all the answers you need here! 

What Is a Self Liquidating Loan?

A liquidated loan means any loan that has been used to finance assets, where the money borrowed is repaid by the cash flow acquired by the sale of that asset. Ideally, a self liquidating loan should essentially pay for itself. Since self liquidating loans are meant to pay for themselves, the payback period for this type of funding is usually relatively short. 

Business owners may utilize a self liquidating loan in order to prepay for assets needed to run their business. Then, as the business runs and sells off those acquired assets, business owners can use those proceeds to repay their loans. 

For example, a shop owner that sells primarily winter clothes like heavy jackets, hats, and scarves may not sell very much inventory during the summer months. However, business is most likely much more profitable during the colder winter months. Therefore, towards the beginning of the season that business owner may use a self liquidating loan to purchase clothing they intend to sell in the winter. Then, after the season ends, the owner can use the profits made from their sales to pay off their loan. 

How Does Loan Liquidation Work?

Getting a liquidated loan works much like getting any other form of financing. First, contact a lender and fill out a brief application. Upon approval, that lender will need to retrieve information about your finances, such as a credit score, how long your business has been running, how profitable your business has been in the past, and how much money you are looking to acquire. 

After you’ve discussed the basics with your lender, they will then give you a loan contract to sign. Read everything carefully. If the terms look good to you, you can go ahead and sign your agreement and receive your money. 

Can Loan Liquidation Affect My Personal Credit Score? 

As long as you keep your business and personal finances apart, loan liquidation shouldn’t be able to affect your personal credit score. When you apply for a business loan, the lender may take a look at your personal credit score to ensure you aren’t a lending risk. But as long as the loan is taken out on behalf of a business, not you personally, your personal FICO score shouldn’t be affected at all. 

If you plan on taking out a personal loan for business purposes, be sure to have a solid repayment schedule planned out to avoid a business loan having a negative effect on personal credit . 

If you use a personal loan responsibly, you may end up seeing an improvement in your credit score over time. Your credit score is determined by various financial habits and behaviors, which include paying back loans and other financial obligations on time. When you keep up with your monthly payments, you are working towards establishing a healthy payment history and minimizing your debts. This type of behavior is particularly appealing to credit bureaus because it means you are a responsible and reliable borrower. Then, when you go to apply for funds again in the future, the lender will be able to see this positive history, which will increase your chances of receiving instant approval and potentially a better loan deal! The general factors that contribute to your credit score are: 

• Payment history.  
• The total amount of debt you owe. 
• Types of credit accounts. 
• Hard credit inquiries you have on your account. 
• Length of credit history. 

Why Is Having a Good Credit Score Important?

Credit scores are a financial tool used by lenders to determine how much of a financial risk a borrower may be. Borrowers with high credit are usually considered more reliable borrowers, which means lenders are more willing to approve them for a wider variety of loan products, higher loan amounts, more convenient payback schedules, are more. On the other hand, borrowers with a lower credit score may have a history of financial struggles, which may cause lenders to think twice before approving them for a loan.  

How Do I Know if Loan Liquidation Is Right for Me?

If you own a business that sells goods or services you need to pre-invest in; a liquidated loan may be the right choice for you. However, before you dive into this type of business loan, consider the pros and cons first. 

On the bright side, self liquidated loans allow entrepreneurs to immediately acquire the funding they need for their business needs. That way, they can make the purchases they need in order for their business to be successful up front instead of waiting until they earn enough profits on their own. 

But, there are also potential disadvantages of a liquidated loan as well. Business owners who don’t make enough profits may not be able to pay back funding that was originally taken out to be a liquidated loan. In this case, the business owner would have to come up with some other means of repaying such loan. Depending on the state of your finances, this may be extremely difficult to do. It may be a good idea to have a financial business plan mapped out before you take out a liquidated loan.

Are There Other Alternatives Besides Self Liquidating Loans?

What if a self liquidating loan is not the right financial option for you? Good news, there are other financial options for you to consider. 

However, when looking for an alternative loan, be mindful to stay away from predatory lenders. For example, some lenders market easy payday loans online as a convenient financial solution when in fact, these types of loans typically have high-interest rates and inconvenient payback terms. Before you apply for any kind of loan, do some lender research first, so you know you are going with the smartest option. 

Check out more information below on other ways you can fund your business besides via self liquidating loans. 

Acquire Investors 

Investors are people who are willing to put their money toward a particular business venture. To acquire investors, put together a brief presentation explaining your business structure, how an investment would assist in making that business structure profitable, and how investors themselves can benefit by contributing funds. If your argument is convincing enough, you may be able to find people who want to invest in your business and share in the profits! 

Business Loans

If you have a long-term business plan you need funding for; a short-term liquidating loan may not be the best way to borrow money. Instead, you can apply for a traditional business loan from banks or other financial institutions. Depending on your financial situation, these places may be able to offer you an extended payback plan, so you don’t have to worry about paying back your business loan immediately. 

Business Line of Credit or Business Credit Card 

If your business has recurring or varying expenses, a revolving line of credit like a business credit card may be the most convenient option. With a business credit card, you can pay for expenses as they pop up and only pay interest on what you spend. Your available line of credit will be renewed with each billing cycle, so you’ll always have that funding to fall back on if needed. But, be sure to prioritize paying off the balance; otherwise, you may find yourself with unmanageable debt that your business profits may not be able to cover. 

Personal Installment Loans 

Should you use a business loan or personal loan for small businesses ? Well, that depends on a few factors. If your business is a small operation that doesn’t require a lot of startup financing, you may be able to get by with a personal loan for your business. For instance, a small business owner who makes candles in their basement may only need a small personal loan of about $1,000 or so to get the supplies they need to run their business. But, for more involved operations like restaurants or brick-and-mortar retail shops, entrepreneurs may need a larger business loan over a personal installment loan. 

Bottom Line: Self Liquidating Loans and Loan Liquidation

A self liquidating loan may be the perfect financial solution for business owners who just need a bit of funding to kickstart their business for a short period of time. People looking for more time to repay their loans may want to look at the other options available. If you need financing for personal reasons, you may want to consider something like a personal installment loan from a direct lender. 

Looking for more free financial resources about loans? Check out the CreditNinja blog! 

References: Fund Your Business | SBA.gov

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What to Include in an SBA Loan Hardship Letter

Article | April 14, 2019

Here’s what you need to know to write a hardship letter that will get accepted.

The debt settlement process for an SBA loan is seldom easy or straightforward. We guide clients through this maze all the time, but many borrowers in default try and settle their debt on their own when it is relatively straightforward. The required documentation for submitting an SBA Offer in Compromise is quite simple. An SBA 770 form (the personal financial statement and monthly cash-flow statement), an SBA 1150 form (the document used to put forth the settlement offer and justification for that offer amount), and supporting documentation – 2 years tax returns, bank account statements, home valuations, etc. One thing that is not required as part of an Offer in Compromise package but, in fact, may be one of the most important documents to submit is an SBA hardship letter or narrative.

By the time a guarantor is submitting an Offer in Compromise, the loan has most likely transferred from the loan-servicing department of the bank to the workout or special assets department. The workout officer who is handling the liquidation of the loan’s collateral and the Offer in Compromise settlement may not know very much about the front end of the loan. They have some notes in their file and have most likely reviewed that information, but it is key to point out that these workout officers often have hundreds of files that they are handling at once. Therefore it is imperative that you point out as much pertinent information in an accompanying hardship letter as possible so that your story can be heard loud and clear.

An SBA hardship letter should always start out with some background on the loan – the steps that were taken during the due diligence phase of the business acquisition to ensure that you weren’t borrowing too little or too much, who the business was purchased from, non-competes that were put in place, etc. The SBA needs to know how much work you put in before acquiring the loan and purchasing or starting the business to ensure that you would be able to make payments on the debt service of the loan.

Every guarantor submitting an Offer in Compromise settlement package has a unique set of circumstances. Yet there are some common issues that many of our clients share and should be addressed in the SBA hardship letter. Those issues are as follows:

• Problems When the Loan Was Issued – Were you able to acquire the amount of capital that you needed to successfully launch your business? Did the SBA lender limit the amount borrowed leading to the business being underfunded from day one? Did it take longer to get the business up and running, and therefore, working capital that was earmarked for other purposes had to be used to pay debt service initially?
• Seller Fraud and Misrepresentation –  This is a ubiquitous story that we hear all too often from our clients. The financial information that was provided by the former owner of the business during the due diligence phase was later found to be inaccurate, with sales and revenue figures inflated. Did the previous owner represent that they would not open another competing business and even sign a non-compete, but then open a competing practice within the range of the non-compete clause? The responsibility is yours when borrowing money that you complete thorough due diligence before buying a business and borrowing money, however, we have seen some extreme situations where the borrower was taken advantage of. This is relevant information in your letter.
• What Have You Done to Alleviate the Problems –  When revenue numbers declined or never hit expectations, what actions were taken to mitigate this? Did you discuss your problems with the lender? Did you request an interest only forbearance period or a modification of the loan and was it granted or denied? Did you cut payroll, work with your landlord to reduce rent, explore sales and marketing strategies? Any and all of these measures should be noted in the hardship letter. If you went through a debt workout, your efforts to get the best recovery value possible for the secured creditors should be noted.
• Current Financial Situation –  What does your personal balance sheet look like? Is your home underwater on it’s mortgage or is there any equity? Have you considered the option or refinancing the property to pull out equity to settle with the SBA? Perhaps the most important aspect of your personal financial situation to point out is a number of personal assets that were liquidated to prop up the business and subsidizing the losses. Detail is critical and it should be noted which assets were liquidated when and exactly how much was put into the business. You should explain your current sources of income and if you expect the amount to change soon. Some assets and liabilities are self-explanatory such as credit cards and auto loans. For others, such as annuities or repayments on notes held, you should provide detailed information. For instance, you may be receiving annuity payments on a monthly basis, but those payments could be ending in the coming months or years. That needs to be pointed out.

Once you have fleshed out all of the facts surrounding your hardships, it is time to put forth the settlement offer, and explain why it is in the creditors best interest to accept that offer. It should be explained that you have put forth your best effort to gather as much money as possible to contribute towards the settlement. Any sources of funds whether it be friends, family, personal loans, etc. should be noted. Also, it should be pointed out that you understand that any exposed assets such as equity in a property, securities, notes receivable, etc. have been taken into consideration when determining the offer amount to put forth.

When in question about what information to include in an SBA hardship letter, it is always advisable to consult an expert. Second Wind Consultants has taken clients through the Offer in Compromise settlement process hundreds of times and can provide expert guidance and advice throughout the process. If you are struggling to settle a debt or you have no idea how to begin, please give us a call and set up a  free no-obligation consultation .

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Loan closure letter. Formats with 7 samples

Requesting a loan closure letter: comprehensive guide.

A loan closure letter is vital in finalizing your loan account. This document verifies that all dues have been paid and the loan account is officially closed. It's essential for maintaining a good credit history and preventing future financial complications.

What is a Loan Closure Letter?

A loan closure letter, or a loan settlement letter, is a formal document the lender provides confirming a loan account's complete repayment and closure. This letter serves as proof that all financial obligations have been met and that the borrower no longer owes the lender money.

Importance of a Loan Closure Letter

Ensuring you receive a loan closure letter is crucial for several reasons:

• Proof of Repayment : It provides written confirmation that the loan has been fully repaid.
• Credit Score Protection : Prevents any negative impact on your credit score by showing the loan is settled.
• Legal Evidence : Acts as a legal document in future disputes regarding the loan.
• EMI full form

How to Request a Loan Closure Letter

Requesting a loan closure letter involves a formal process. Here’s a step-by-step guide:

Confirm Full Repayment

Before requesting a loan closure letter, ensure you have completely paid off the loan, including any pending interest, penalties, or additional charges.

Contact Your Lender

Contact your lender through their customer service helpline, email, or by visiting the branch. Inform them that you have repaid the loan and request a loan closure letter.

Submit a Written Request

Most lenders require a formal written request for a loan closure letter. Draft a letter including your loan account details, proof of repayment, and a request for the closure letter.

If you are still waiting for a response within a reasonable time, follow up with the lender. Persistence is key to ensuring the lender processes your request promptly.

Format of cancellation letters

Sample Loan Closure Letter formats

Loan closure letter 1: early repayment.

Subject: Loan Closure Due to Early Repayment

Dear [Loan Officer's Name],

I hope this letter finds you well. I have completed the early repayment of my loan account number [Loan Account Number] as of [Date]. Enclosed are the transaction details confirming the final payment, which has successfully settled the outstanding balance of the loan.

As the loan has been fully repaid ahead of the scheduled term, I request you proceed with closing the loan above account. Additionally, I would appreciate it if you could provide me with the following documents to complete the closure process:

• A formal loan closure certificate.
• A No Objection Certificate (NOC) confirms no outstanding dues or obligations related to this loan account.
• An updated statement reflecting the zero balance and closure of the loan account.

Please ensure that your records are updated to reflect the closure of this account and that no further transactions, fees, or interest are processed against it. If there are any additional steps or documentation required from my end to facilitate this process, kindly inform me as soon as possible.

I want to take this opportunity to express my gratitude for the support and service provided by [Bank Name] throughout the tenure of this loan. Should you require further information or documentation, please do not hesitate to contact me at [Your Phone Number] or [Your Email Address].

Thank you for your prompt attention to this matter.

Yours sincerely,

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Loan Closure Letter 2: Loan Transfer to Another Bank 

Subject: Loan Closure Due to Transfer to Another Bank

I hope this letter finds you well. I am writing to formally request the closure of my loan account number [Loan Account Number]. After careful consideration, I have decided to transfer the outstanding balance of this loan to [New Bank Name]. This decision is part of my ongoing efforts to consolidate my financial commitments and streamline my repayment process.

The transfer was completed on [Date], and all necessary payments have been made to settle the account. The transaction details confirming the transfer and settlement are enclosed with this letter.

Please confirm the receipt of the transfer amount and proceed with closing my loan account. Additionally, I would appreciate it if you could provide me with the following documents to finalize the process:

• A No Objection Certificate (NOC) indicates no outstanding dues against my loan account.
• An updated statement reflecting the closure of the loan account.

Please ensure that your records are updated to reflect the closure of this account and that no further transactions or interest accruals are processed against it. If there are any additional steps or documentation required from my side to facilitate this process, please let me know as soon as possible.

Thank you for your cooperation and assistance in this matter. I have always appreciated the support and service provided by [Bank Name], and I look forward to completing this process smoothly. Should you require further information, please do not hesitate to contact me at [Your Phone Number] or [Your Email Address].

Loan Closure Letter 3: Financial Hardship

Subject: Loan Closure Request Due to Financial Hardship

I hope this letter finds you well. I am writing to formally request the closure of my loan account number [Loan Account Number] due to ongoing financial hardship. Unfortunately, my current financial situation has made it increasingly difficult to continue with the regular repayments of this loan.

After careful consideration and consultation with a financial advisor, I have decided that closing this loan account is the most viable option for managing my finances more effectively. The final payment that settles the outstanding balance on my loan account is enclosed.

I request your prompt assistance in processing the closure of my loan account. Additionally, I would appreciate it if you could provide me with the following documents:

• A No Objection Certificate (NOC) indicates no outstanding dues or obligations related to this loan account.

I appreciate your understanding and assistance during this difficult time. Should you require further information or documentation, please do not hesitate to contact me at [Your Phone Number] or [Your Email Address].

Loan Closure Letter 4: Completion of Loan Term

Subject: Loan Closure Request Due to Completion of Loan Term

I hope this letter finds you well. I am pleased to inform you that I have completed the repayment of my loan account number [Loan Account Number] as of [Date]. Having fulfilled all the scheduled payments and obligations associated with this loan, I request the formal closure of the loan account.

To finalize this process, I would appreciate it if you could provide me with the following documents:

I want to take this opportunity to thank [Bank Name] for the support and service provided throughout the tenure of this loan. Should you require further information or documentation, please do not hesitate to contact me at [Your Phone Number] or [Your Email Address].

Loan Closure Letter 5: Sale of Collateral

Subject: Loan Closure Due to Sale of Collateral

I hope this letter finds you well. I have recently sold the collateral associated with my loan account number [Loan Account Number]. The proceeds from the sale have been used to settle the outstanding balance on this loan as of [Date]. Enclosed are the transaction details confirming the final payment, which has successfully settled the loan.

Given that the loan has been fully repaid through the sale of the collateral, I request your prompt assistance in closing the loan above account. Additionally, I would appreciate it if you could provide me with the following documents to finalize this process:

• The release of any lien or claim on your institution's collateral.

I would like to take this opportunity to express my gratitude for the support and service provided by [Bank Name] throughout the tenure of this loan. Should you require further information or documentation, please do not hesitate to contact me at [Your Phone Number] or [Your Email Address].

Loan Closure Letter 6: Refinancing

Subject: Loan Closure Due to Refinancing

I hope this letter finds you well. I am writing to formally request the closure of my loan account number [Loan Account Number]. After evaluating my financial situation and available options, I have refinanced this loan with [New Lender Name]. The refinancing process was completed on [Date], and the outstanding balance has been fully settled.

Enclosed are the transaction details confirming the final payment that has cleared the loan balance. Given the successful refinancing, I request your prompt assistance in closing the loan account. Additionally, I would appreciate it if you could provide me with the following documents to finalize this process:

I would like to take this opportunity to thank [Bank Name] for the support and service provided throughout the tenure of this loan. Should you require further information or documentation, please do not hesitate to contact me at [Your Phone Number] or [Your Email Address].

Loan Closure Letter 7: Relocation

Subject: Loan Closure Request Due to Relocation

I am writing to request the closure of my loan account number [Loan Account Number] as I am relocating to [New City/Country] due to [Reason for Relocation]. I have ensured that the outstanding balance has been paid in full as of [Date].

Please proceed with closing my loan account and provide a loan closure certificate and a No Objection Certificate (NOC). I would appreciate your cooperation in making this process smooth and prompt.

Thank you for your understanding and assistance.

Securing a loan closure letter is critical in the loan repayment process. It provides proof of full repayment and safeguards your financial standing and credit score. By following the outlined steps and being proactive in communicating with the lender, you can ensure a smooth closure of your loan account. Keep this document safe, as it is an essential financial responsibility record.

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First Steps in Liquidation and Collection of a 7(a) SBA Loan

While borrowers should repay their indebtedness in accordance with the terms and conditions of the loan, this is not always the case.  Borrowers default and, as a result, lenders must liquidate and commence collection in a prompt, cost-effective, and commercially reasonable manner.  However, when the defaulted loan is a Small Business Administration (“SBA”), guaranteed loan, the liquidation and collection must be consistent not only with prudent lending standards, but also in accordance with the applicable SBA Standard Operating Procedures (“SOPs”), and SBA Authorization issued at the time the loan was originated.

The SBA requires that lenders liquidate and exhaust all possible avenues of collection until a loan may be charged off and application made for payment on an SBA guaranty.   However, if the liquidation and collection efforts of a lender do not comply with the applicable SOPs and SBA Authorization, and a loss results, the SBA can either deny a request for purchase of its guaranteed portion, or reduce the amount of its purchase by the amount of the loss (commonly known as a repair).  Therefore, carefully adhering to the applicable SOPs during the liquidation and collection process can significantly decrease the chance of a denial or repair.  Accordingly, lenders should keep these initial steps in mind when liquidating and collecting on a defaulted SBA 7(a) loan.

Know when to accelerate

When there is a default on the note for SBA 7(a) loan, a lender needs to determine whether the loan should be accelerated.  Generally, a loan should be accelerated when it is clear to a prudent lender that, after a good faith effort to assist the borrower to bring the loan current, the default cannot be cured.  In making this determination, lenders should rely on their own policies and procedures for similarly-sized, non-SBA guaranteed commercial loans.

Special attention should be paid to the fact that a lender’s right to accelerate amounts due under the note are different than a lender’s right to request a guaranty purchase from the SBA. Generally, a borrower must be in default on a payment for more than sixty (60) calendar days before a lender can request a guaranty repurchase. A lender may not request a guaranty repurchase based solely on a non-payment default , however this limitation does not per se preclude the lender from accelerating the note. For example, there may be instances where there is sufficient collateral to fully compensate the lender for amounts due under the note, and no purchase request will be submitted to the SBA. In these cases it may be advisable, based on the value of the collateral, the terms of the underlying documents, and the lender’s internal policies, to accelerate amounts due under the note based on a non-payment based default.

Once a loan is accelerated, it is in “liquidation” status, and the SBA will need to be notified.  At this time, if the SBA guaranteed portion of the loan was sold in the secondary market, it must be repurchased.

After acceleration, a demand letter should be sent to all obligors under the loan, unless prohibited by applicable law.  If the default remains uncured, lenders are responsible for conducting all steps to recover the outstanding amounts due and owing under the SBA 7(a) loan, unless and until the SBA exercises its right to take over the liquidation of the loan.

Conduct Thorough Post-Default Site Visits

Once an SBA 7(a) loan is in default, lenders should conduct a thorough inspection of the borrower’s business premise.  The reason is twofold.  First, it provides lenders with the opportunity to identify the status of the available collateral.  An accurate assessment of the recoverable value of the collateral at an early stage of liquidation and collection is an invaluable tool that can significantly influence the recovery process, allowing the lender to quickly eliminate or solidify potential liquidation and collection options.

Second, lenders can assess whether out-of-court liquidation and collection avenues, such as workouts or repossession via self-help, are feasible.  The process of resolving a defaulted SBA 7(a) loan through a workout generally avoids the liquidation of collateral by the lender.  Post-default site visits may provide insight on whether an obligor can revitalize the business and possibly resolve the problems that caused the default.

A post-default site visit is mandatory unless specifically exempted. Generally, post-default site visits are required within sixty (60) calendar days of an uncured payment default.  For non-payment defaults (such as bankruptcy filing, business shutdown, or foreclosure by a prior lienholder), the site visit must occur within fifteen (15) calendar days of the occurrence of the adverse event.  Site visits should occur earlier if there is concern that the collateral could be removed, lost, or dissipated.

Certain loans are exempt from a post-default site visit.  If the loan is unsecured, a site visit is not required.  In addition, depending on the recoverable value of the collateral, a site visit may be unnecessary.  If the aggregate recoverable value of the personal property collateral is less than $5,000 or the recoverable value of each parcel of real property collateral is less than $10,000, a site visit is not required.

Whether or not a loan is exempt from a post-default site visit or the site visit was conducted, all lenders must prepare a post-default Site Visit Report, explaining why the site visit was not necessary or detailing the lender’s findings from the inspection, including an inventory of the remaining collateral and an assessment of its condition and value.

Identify Competing Interests

Often, lenders will have lending relationships with borrowers, other than the SBA loan. Lenders cannot take any action in the liquidation or collection of a SBA 7(a) loan that would result in an actual or apparent conflict of interest.  Any action taken by a lender must not favor recovery of the lender’s own loan over the SBA-guaranteed loan.  Therefore, early in the process, it is prudent to identify any non-SBA guaranteed loans to any obligor of the defaulted SBA 7(a) loan. Proper documentation of the justification for actions taken by the lender, supporting no actual or apparent conflict of interest, will reduce the risk of a repair or denial when the lender requests a guaranty purchase from the SBA in the event of a loss.

Prepare a Liquidation Plan

Prior to initiating liquidation or collection, a Liquidation Plan should be prepared.  A comprehensive liquidation plan is a great roadmap for lenders to pinpoint the specific steps it should take to maximize recovery.

Particularly, a Liquidation Plan should be prepared prior to taking any material action to liquidate an SBA loan.  The Liquidation Plan should consists of, among other things, site visit findings, feasibility of workout, expected recoverable value of the collateral, available methods of liquidation, the obligor(s) ability to repay the loan, and any non-SBA loans the obligor(s) has with the lender.  Unless the loan was authorized under the Certified Lender Program, a lender does not need to submit the Liquidation Plan for approval prior to implementing liquidation and collection proceedings.

Know when to submit a Litigation Plan for approval

In some cases, lenders will need to commence litigation to collect the obligations owed under the SBA loan.  Prior to taking any material legal action, lenders should prepare a Litigation Plan and determine whether SBA approval is necessary.  Routine litigation, such as uncontested litigation, non-adversarial matters in bankruptcy, and undisputed foreclosure actions, does not require the SBA’s prior approval, provided the estimated legal fees do not exceed $10,000 .

Conversely, non-routine litigation must be approved by the SBA.  Non-Routine Litigation includes:

i.   All litigation where factual or legal issues are in dispute;

ii.  Any litigation where legal fees are estimated to exceed $10,000;

iii.   Any litigation involving a loan where a lender has an actual or potential conflict of interest with the SBA; or

iv.   Any litigation where the lender has made a separate loan to the same borrower which is not a SBA 7(a).

Once legal fees exceed $10,000, all litigation is non-routine, and the Litigation Plan must be approved by the SBA.  As there is a threshold dollar amount, it is vital that routine litigation legal fees are closely monitored to ensure they do not exceed $10,000.

In addition, whenever there is a material change in the litigation, including changes which may affect legal expenses, an amended Litigation Plan should be prepared and a lender must determine whether SBA approval is necessary.

Adequately Document Every Action That Does Not Require SBA Approval

The Servicing and Liquidation Matrix for SBA 7(a) loans sets forth the liquidation-related actions that lenders are allowed to take without SBA approval (with or without notice to the SBA), as well as those actions that require approval. Lenders should always document the justification for liquidation-related actions, making sure to retain supporting documentation pursuant to the applicable SBA guidelines specific to the particular action. The Servicing and Liquidation Matrix in effect at the time of the action governs whether SBA approval is required. Thus, in order to properly document the justification for taking a certain action without SBA approval, a lender should keep a copy of the Servicing and Liquidation Matrix, which it relied upon in taking such action, in the loan file.

By recognizing and implementing these careful and considered initial steps, lenders who liquidate and collect defaulted SBA 7(a) loans can significantly reduce the risk of a repair or a denial from the SBA in the event of a loss.

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Applications , Request Letters

16 Loan Application Letter Samples | Writing Guide (+Template)

In life, many find themselves in situations where they need to seek financial aid, be it for personal reasons or business ventures. Applying for a loan often requires not just meeting specific criteria but also writing a compelling loan application letter. This letter should provide a detailed account of how you plan to utilize the funds and why you’re a trustworthy candidate. If you’re unsure about crafting such a crucial document, fear not. This article will guide you through the intricacies of writing a persuasive loan application letter, highlighting the essential elements you should include.

Loan Application Letters

Application Letter for Loan Officer

An Application Letter for a Loan Officer is a formal document submitted by an individual to a bank or financial institution, expressing interest in obtaining a specific loan. This letter outlines the purpose of the loan, provides personal and financial information, and might also detail the applicant's creditworthiness and repayment strategy. Typically, it's used when an individual seeks financial assistance for purposes such as buying a home, funding education, or other significant expenses, and aims to make a strong case for loan approval.

Loan Application Letter to Employer

A Loan Application Letter to Employer is a formal request made by an employee to their employer seeking financial assistance in the form of a loan. Typically used in situations where the employee faces unexpected financial burdens, such as medical emergencies, home repairs, or significant life events, this letter outlines the specific amount requested, the purpose of the loan, and a proposed repayment plan. It serves as an official record of the employee's intent and need while allowing the employer to assess and decide on the request.

Essential Elements of a Loan Application Letter

Crafting a compelling loan application letter involves several guidelines. Here’s a breakdown:

Header and Greeting

Whether you’re applying for a personal or business loan, always begin with a header and greeting. Your header should encompass:

• Business name (if applicable)
• Business address
• Business phone number
• Lender or loan agent’s contact details
• Lender or loan agent’s name and title
• A subject line stating the desired loan amount

Below the header, integrate a friendly greeting to set a positive tone.

Business Loan Request Summary

Offer your lender a snapshot of your loan request. Highlight the desired loan amount, key business information, your trustworthiness as a borrower, and the intended use of the loan. Ensure this section remains concise to guide your lender to the main content effortlessly.

Business Details

Start by clearly stating your loan request and the desired amount. Delve into specifics about your business:

• Legal business name and any DBA
• Business structure (e.g., LLC, Corporation)
• Duration of operation
• Business overview
• Number of employees
• Annual revenue and profit figures (if applicable)

Then, segue into the rationale behind the loan request and your repayment plan.

Lenders prioritize minimizing risks. They’ll keenly assess your repayment ability and the viability of your plans. Clearly define how you’ll utilize the funds and elucidate why this is a prudent financial decision. Showcase the potential benefits and returns from the granted loan.

Proof of Repayment Capability

Use figures from recent financial statements to illustrate your business’s financial standing. These numbers are pivotal in convincing the lender of your repayment capability. If your venture is profitable, spotlight this as a testament to your ability to honor the loan. If there’s existing business debt, provide a comprehensive debt schedule.

Authenticity

Lending carries inherent risks. Always present accurate and truthful information, including your credit history. Misrepresentation or omission of facts can be deemed fraudulent, bearing serious repercussions.

Sample Loan Application

Applicant’s Name

Bank Account Number

Applicant’s Address

City, State, Zip Code

Name of Loan Officer

Name of Financial Institution or Bank

Address of Financial Institution or Bank

RE: Loan Application for $100,000

Dear [Loan Officer’s Name],

I am writing to formally request a loan of $100,000. As a loyal customer for the past 20 years, I have always trusted this institution with my financial needs, both in my personal savings and checking accounts. Additionally, I am proud to have a proven track record with our bank, as evidenced by my previous loan of $10,000 ten years ago. That loan enabled me to establish my business, which I am pleased to say has thrived. Moreover, I ensured timely repayment of both the principal and interest.

The current loan request is aimed at expanding my business operations by constructing new offices in a strategic location within the city. I have already identified the property, and the funds will be allocated to equip the office for seamless business activities. I have attached the detailed loan application along with relevant supporting documents for your perusal.

Should you need any additional information or have questions, please do not hesitate to reach out via email or phone. Furthermore, I am more than willing to schedule a face-to-face meeting to discuss the specifics of this application, including the repayment plan.

Thank you for taking the time to review my request. I eagerly await a positive response and deeply value the ongoing relationship with [Bank Name].

[Applicant’s Signature]

Applicant’s Printed Name

Enclosures: [List of enclosed documents]

Loan Application Letter (Word Template)

Personal Loan Application to Boss

Business Loan Application

Student Loan Application

Loan Application Letter for House Renovation

Loan Application Samples and Templates

Securing a loan can be crucial for personal emergencies or to bolster business operations. However, obtaining approval isn’t always straightforward, given lenders’ concerns about potential defaults. This article has equipped you with the knowledge to craft a compelling loan application letter. By following the outlined steps, you enhance the likelihood of swift loan processing and approval.

How did our templates helped you today?

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Application Letter

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Loan Closure Letter Format & Sample In Word, Pdf

Loan Closure Letter Format:  Are you searching for some of the Best Loan Closure Letter Format Sample In Word & Pdf? If Yes, then here you will get these types of application letter sample.

Let me tell you first, To close an account with the bank from which you took your loan, follow & read their terms and conditions very carefully.

Then write the account closure request letter using the application samples given below. Submit with it some documents (e.g. Personal Loan account number, approval letter, other documents issued by the bank) and Identity proof (e.g. Passport, PAN card, Aadhar).

If the bank has any pre-closure amount, then they have to pay it. Then in a few days, the bank will send you the loan completion document. After that all the process of closing your loan account will be completed.

The letter samples given below can be used for any bank without any problem. For example, you can use them in the case of HDFC personal loan closure letter format or SBI home loan closure letter format.

Personal Loan Closure Letter Format

To, The Branch Manager (Bank Name), (Bank Address), (Date).

Subject: Request Letter For Loan Closure.

Dear Sir/Madam,

I, ___________(Write Your Name) have a personal loan in my account on your _______ (Mention Your Bank Name) bank. I am writing this application letter to request you to close my personal loan account bearing account number ____________ (Mention Your Loan Account Number). The reason for closure is ___________ (Mention the reason for the closure correctly here).

I would like to inform you that I have paid all the EMI, loans. You can check your records. As per the requirements of the bank, I am attaching the applicable documents with this application.

Kindly consider this request letter and do the needful as soon as possible.

Thanking you,

Yours Faithfully, (Your Legal Name), (Your Address), (Your Email), (Your Mobile).

Car Loan Closure Letter Format

To, The Bank Manager (Name of the Bank ), (Branch Address), (Date).

Subject: Closure of the car loan account.

Respected Sir/Madam,

I am writing this letter to state that, I am holding an auto/vehicle/car loan bank account in your ________ (Mention Your Bank Branch Name) branch.

All details of my account are listed below: Loan Account Holder Name:- Loan Account Number:- Loan Approved Amount:- My PAN Number:-

Currently, I am willing to pay all my remaining amount and at the same time, I want to close my loan account.

So I request you, please let me know the detailed process and necessary documents for it. So that I can pay the remaining amount quickly and close the account.

Thank you in advance.

Yours Truly, (Your Name), (Full Address), (Your Contact Details).

Home Loan Closure Letter Sample

To, The Branch Manager, (Bank Name), (Branch Name), (Branch Address), (Date).

Subject: Application for home loan.

With due respect, I Beg to say that I hold a loan account & account no is ___________ [Mention Your Bank Account No] with your __________ [Mention Your Branch Name] branch. For some personal reason, I want to close my home loan account. (You can specify the reason for this closure)

Therefore, you are requested to kindly close my account. I will always be grateful to you. If any other information or documents is required for it, kindly contact me on my mobile number. my mobile number is ____________ (Mention Your mobile Number).

Thanking You.

Yours Sincerely, (Your Name), (Address), (Your Account Details), (Contact Details).

Loan Closure Letter HDFC, SBI & ICICI

To The Bank/Branch Manager, [Bank Name], [Bank Address], [Date:__/__/__].

Subject: Personal/Home/Car loan closure application letter.

With due respect, I ______ [Your name], I am writing this letter to request that I want to close my personal/home/car loan associated with loan account no _______ [Mention your loan account no].

Now, that I am already paid my total due & I request you to please go through the process of pre-closing my loan.

If you need any additional information or documents to complete this process, you can let me know at the phone number below.

Yours Sincerely, [Your Name], [Phone Number], [E-mail Address].

Read Also: Application For Closing Bank Account Letter

Application For Closing Loan Account

To The Branch Manager, [Name of the Bank], [Branch Address],

Date: Day/Month/Year.

Subject: Loan account close application.

Most respectfully I beg to state that, I ______ [Your name], I am a saving account holder in your branch. Also, I have a loan account & my loan account number is ________ [Mention your account no]. I want to close my loan account for some personal reasons.

Therefore, I request you to close my loan account and provide me with all the original documents that I submitted when applying for the loan account.

We hope you’ll consider my request properly and begin the process of closing the account as soon as possible.

Yours Sincerely, [Signature], [Contact Details], [Address].

Loan Closure Letter Format Sample In Word & PDF

👉 [Download In Word / PNG / PDF ] 👈

FAQ’s On Loan Closure Letter Format Sample

How do you close a loan account? You can easily close your loan account by following the steps given below –

• Visit the bank with all required documents.
• Write a loan closure letter to the bank manager OR, You may be required to fill a form.
• If there is a pre-closing amount, then pay it.
• Return your credit card. (If issue)
• Take acknowledgment paper from your bank.
• Then your loan account will be closed automatically in a few days.

Which bank is best for personal loan? Below we have mentioned the names of some of the best banks in India for taking loans –

• State Bank of India (SBI): Interest Rate- 9.60% onwards , Loan Amount- Up to Rs. 20 lakh .
• ICICI Bank:  Interest Rate- 11.25% onwards , Loan Amount- Up to Rs. 20 lakh .
• HDFC Bank: Interest Rate- 10.75% onwards , Loan Amount- Up to Rs. 40 lakh .
• Bajaj Finserv:  Interest Rate- 12.99% onwards , Loan Amount- Up to Rs. 25 lakh .
• Axis Bank: Interest Rate- 12% onwards , Loan Amount- Up to Rs. 15 lakh .

Can we close HDFC loan online? Unfortunately, you cannot close our HDFC Bank loan online, for this, you need to visit your nearest HDFC Bank and close the loan account. Also, you need to pay a certain amount to pre-close your loan.

Is there any pre-closure charges for home loan in SBI? No, you don’t have to pay any penalty for pre-closing your SBI home loan on fixed and floating rate interest. However, you may have to go to any branch of SBI and fill up some forms for it.

Online receipt makers can help you create professional receipts for loan closings. These tools let you customize the template, add your logo, and track receipts. Using a Zintego online receipt maker can help you create a clear and concise receipt that meets all of the necessary requirements.

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Loan Liquidation Meaning & How to Liquidate Your Loan

Last updated on jun 20th, 2024.

Elizabeth Ifeoluwa

Are you drowning in debt? Or feeling like you’re stuck in a financial black hole?

Hold on, there’s light at the end of this tunnel!

This guide will help you understand what loan liquidation is and how you can navigate your way out of debt.

So buckle up, and let’s get you back on solid financial ground!

What is Loan Liquidation?

A liquidated loan is a type of self-liquidating loan, meaning it repays itself through the cash flow generated from selling the financed asset. Loan liquidation involves selling off assets used as collateral to repay the loan if the borrower defaults.

This can also be beneficial for several reasons, such as saving on interest and improving your credit score.

Benefits of Loan Liquidation

• You’ll save money on interest payments in the long run.
• Paying off a loan early can improve your credit score by lowering your debt utilization ratio (the amount of credit you’re using compared to your total credit limit).

Self-Liquidating Loans

Self-liquidating loans are a type of short-term loan where the borrowed funds are used to purchase assets that are then sold to repay the loan.

This can be a good option for businesses that need to purchase inventory or other assets that will be quickly sold and generate cash.

How to Liquidate Your Loan

Before you liquidate your loan…

• Prepayment Penalty: Check your loan agreement for any prepayment penalties. Some lenders may charge a fee for paying off the loan early.
• Benefits: There are advantages to liquidating a loan early. You’ll save money on interest payments, improve your credit score by lowering your debt utilization ratio, and be free of loan obligations.

Steps to Take in Liquidating Your Loan:

• Contact Your Lender: Get in touch with your lender and express your intention to liquidate the loan.
• Calculate the Payoff Amount: Ask for the payoff amount which includes the outstanding principal balance and any accrued interest up to the date of liquidation.
• Make the Payment: Choose a payment method that works for you and ensure you have sufficient funds to cover the payoff amount.

Here are some tips you must keep in mind to experience a successful loan liquidation process:

• Make your repayment or liquidation plan a priority: When your repayment plan is your priority, you get to make a conscious effort toward it. These efforts include saving ahead to cover your EMI (Equated Monthly Installment) even before it becomes due.
• Focus on repaying your high-interest loans first: Most people often focus on paying the smaller debts first and gradually move up to the bigger ones. However, research has shown that this would only prolong your repayment period and increase the interest you get to pay. Therefore, try to direct the maximum amount you can afford to pay to your high-rate loans while securing necessary payments on the smaller ones.
• The higher your income gets, the higher your repayment percentage: This is another factor that can help you go through a successful liquidation process. Make a conscious effort to increase your repayment percentage each time you obtain an income increase. This would cut short the time that your repayment plan would have lasted and put your mind at ease.
• Use bonuses and windfall gains to pay larger debts: Rather than spend your bonuses on the latest gadgets and explore your desires, settle your costly debts.
•  You can also use existing investments to repay debt : While it may seem unwise to use your investment for loan liquidation, it goes beyond that in reality. Not only does your indebtedness reduce your total credit worth, but it also ends up making the top of your expenditure list. Therefore, to avoid being clogged by debts, it is better to clear them off when you have what it takes.

I hope you conquer your debt!

For more information on debt, you should check out my guide on debt consolidation loans in Nigeria and how you can navigate your finances in a tough economy .

Conquering your loans is achievable, especially with the right lenders offering liquidation options (I’m talking banks!).

So, are you ready to kickstart your debt-free future? Get informed, explore your options, and get ready to celebrate!

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WTO / Applications / 20 Best Loan Application Letter Samples (Guide and Format)

20 Best Loan Application Letter Samples (Guide and Format)

An application letter for a loan is a formal letter written to a financial institution by a borrower requesting a loan, payable in a specified amount of time.

The letter helps lenders get acquainted with the borrowers better to determine if they qualify for the loan based on the information provided or not. Writing it is important because it helps convince lending institutions to lend you a specific amount of money. It is their first impression of you, which is why it should be written with great care. In this article, we will guide you on how to write it, the type of information you should provide, and some pointers that will help you highlight your strengths in the letter.

Brief Overview- What to Include

There are no strict rules for writing an application for a loan. It depends on the borrower to decide what information to include, but the following items are typically included in it:

• Contact information
• Explanation of why money is needed
•  Amount of money being requested
• Purpose of the money
• Details about employment history
• Personal references
• Company information
•  A list of supporting documents

When to Write?

Two main situations warrant this letter. The first instance is when you are seeking a loan from a conventional bank lender. Conventional bank lenders are financial institutions that do not offer loans but make them available to the general public. Conventional banks usually require applicants to submit this application to prove their creditworthiness.

The second situation that warrants its use is when applying for an SBA-guaranteed loan. An SBA-guaranteed loan involves the federal government; applicants must undergo additional screening before they are approved for funding. Applicants can improve their chances of getting an SBA guarantee by submitting a personalized, formal loan application with supporting documentation.

There are situations when you do not necessarily need to write this letter, such as when you are borrowing from friends and family, from an alternative lender who may only require your bank statements or pay slips, when seeking equipment financing, and lastly when you are requesting a business line of credit.

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Pre-writing Considerations

Applying for a loan involves being prepared for anything, so it is important to have the things you need before writing. Do some research on your lender, and write down notes about why they are suitable for you and what you would like them to know about your project. Write those questions that may arise during the process of applying for your loan. Check your credit score and know your rights as a borrower when you apply for a loan.

After you have done all of the above, review everything and ensure that what you’ve written is easy to understand by someone who has not read your notes or audited your finances. When applying for a loan in a major financial institution or applying for an SBA loan, you will almost always be required to write an application letter for a loan. It is important to note that unless it is supported by a sound credit situation or proper financial planning, it may not be enough to help you secure the loan. 

Fortunately, there are two things that you can do to increase your loan limit and increase your chances of getting a loan. You can first check your business and personal credit scores from accredited credit reporting bureaus such as TransUnion, Equifax, and Experian and take the necessary steps to improve them.

The second thing that you can do is to prepare your business financial statements, i.e., your profit and loss statement , cash-flow statement , balance statement, etc., for the past six months and attach them to your letter. These documents are essential when applying for a loan as they help the financial institution assess your creditworthiness and increase your chances of securing a loan.

How to Write a Loan Application?

Writing it can seem daunting, but it can be a simple process if you follow the proper format and include all the required information.

The following is a summary of the information you must provide in your letter:

The header is an integral part of the standard business letter format . It should include:

• Your name and contact information : Make sure to include your full name, address, and contact information. This should include a mailing address with a zip code, a business email address, and your cell phone number where you can be reached.
• The date : Include the month, day, and year of the letter. You must ensure that you write the date on which the letter was created.
• The name of the recipient : This will be a bank representative in many cases, but it can also be an SBA representative or another financial institution to whom the borrower is addressing the letter.

Subject line

When writing it, make sure to include a clear subject line that will help the recipient understand the purpose of the letter. Make sure to include whether the loan is for personal or professional use in the subject line.

“Loan Request Application Letter.”

Address your letter correctly. If you do not know who will be reading it, write “ To Whom It May Concern . ” If you are trying to get a business loan, address it to the company’s representative issuing the loan. If you are applying for a personal loan , address it to the bank or whoever provides it.

Introduction

It should begin with a brief statement of the goal and amount you are requesting. It should also state your qualifications for the loan and any other pertinent information that can be used for your evaluation as a borrower such as your financial status , your work history, the length of time you have been in business, etc.

The body is the main part of the letter, and it should contain all the information the recipient will need to decide whether to grant the loan or deny the request.

Some of the information that must be covered in the body includes:

• Basic business information : If you are writing it, the first item to include in the body of the letter is details about your business. This information will help the lender understand who you are and will serve as the foundation for your loan application. Some of the information that you should cover in this section includes your business’s registered name, business type (i.e., partnership , sole proprietorship, LLC , etc.), nature of your business (i.e., what you do), main services and products, your business model, the number of employees that you have, and your annual generated revenue.
• The purpose of the loan : You must explain why you need the loan and the purpose for which it is being requested. This can be to purchase or expand a business, for a personal reason, or to pay some debt.
• Present yourself as being trustworthy : To get a loan, you need to establish trust with the lender. This can be achieved by explaining what you do for a living, providing some identity documents, and demonstrating why you deserve to be trusted.
• Explain how you intend to pay back : Explain briefly how you plan on repaying the loan. This should include a timeline for repayment and be supported by evidence such as a business plan, personal financial statement, or credit report .
• Proof of financial solvency : In some cases, you will be asked to provide evidence that the funds requested are not your only source of income. Documents like bank statements or tax returns can help you prove that you have other sources of funding, which will increase the likelihood that your request will be granted.

In the conclusion, you must thank the lender for considering your request. Briefly mention all the attached financial documents. Remember that each lender has their own set of loan application requirements and may request different information or documentation from borrowers, so make sure to double-check the specific instructions provided by the lender.

Once you have finished writing the letter, be sure to sign it at the bottom. You may include phrases such as:

“Respectfully yours” or “Sincerely yours”.

Place your name and contact information directly above the signature line.

SBA Loan Application Letter Template

[Your Name]

[Your Address]

[City, State ZIP Code]

[Your Phone Number]

[Your Email Address]

[Loan Officer’s Name]

[Bank Name]

[Bank Address]

Dear [Loan Officer’s Name],

I am writing to apply for a Small Business Administration (SBA) loan to help fund my [business name]. I am excited to have the opportunity to present my business plan to you and explain why I believe my business is a great candidate for an SBA loan.

[Provide an introduction to your business, including its history, products or services offered, and unique selling proposition. Explain why you started the business and what sets it apart from competitors. This should be no more than two paragraphs.]

I am seeking an SBA loan in the amount of [$ amount], which will be used to [briefly explain how the funds will be used]. My business has experienced steady growth in recent years, but we need additional capital to take advantage of new opportunities and expand our reach.

[Provide a detailed explanation of how you plan to use the funds, including any expected return on investment. Be specific about the amount of money you need, how long you will need it for, and how it will be used.]

As part of my loan application, I have included the following documents for your review:

• Business plan
• Financial statements for the past three years
• Tax returns for the past three years
• Cash flow projections
• Articles of incorporation
• Personal financial statements for all owners

A list of collateral that will be used to secure the loan, if applicable

[Provide a comprehensive list of all the documents you have included with your application. Make sure you have included everything the bank has asked for, and any additional documents that may be relevant.]

I am confident in the future success of my business and believe that an SBA loan is the right choice for us. I understand that the loan application process can be lengthy, and I am committed to providing any additional information or documentation that may be required to support my application.

Thank you for considering my loan application. I look forward to hearing from you soon.

Loan Application Letter Sample

Make your small business loan application more polished with our simple sample letters. They’re crafted to help you convey your needs professionally and improve the impact of your request. 

Sample letter 1

Dear Sir/Madam,

I am writing to apply for a Small Business Administration loan to support my growing business, GreenTech Innovations. Established in 2018, we specialize in eco-friendly technology solutions. Our recent market analysis indicates significant growth potential in sustainable energy products.

To capitalize on this opportunity, we require additional funding for research and development, marketing, and expanding our team. An SBA loan would enable us to invest in these critical areas, fostering innovation and job creation. Our business plan, attached to this application, outlines our strategy for a sustainable and profitable future.

GreenTech Innovations has a strong financial track record, with consistent revenue growth over the past three years. We have maintained a healthy cash flow and have a solid plan for loan repayment, as detailed in our financial projections. Our commitment to financial responsibility and strategic growth makes us an ideal candidate for an SBA loan.

Thank you for considering our application. We are committed to contributing positively to the economy and the environment. Your support would be instrumental in helping us achieve our goals.

Jordan Smith

Owner, GreenTech Innovations

Sample letter 2

Dear Business Loan Officer,

I am reaching out to request a business loan for my company, Bella’s Boutique, a unique clothing and accessories store located in downtown Springfield. Since our opening in 2019, we have become a beloved part of the local community, known for our exclusive designs and personalized customer service.

This loan is sought to enhance our inventory, upgrade our in-store technology, and expand our online presence. These improvements are essential for keeping pace with the evolving retail landscape and meeting the growing demands of our customers. Our detailed business plan is attached for your review.

Financially, Bella’s Boutique has demonstrated resilience and growth, even amid challenging economic times. Our sales figures have shown a steady increase, and we have a clear plan for managing the loan and ensuring its repayment. We believe these factors make us a strong candidate for a loan.

Your consideration of our loan application is greatly appreciated. This funding will not only help Bella’s Boutique thrive but will also support the local economy by providing more employment opportunities and enhanced retail experiences.

Thank you for your time and consideration.

Warm regards,

Isabella Martinez

Founder, Bella’s Boutique

The effectiveness of these sample letters as a guide for someone seeking to write a loan application lies in several key aspects. Firstly, they demonstrate the importance of a clear and concise introduction, where the purpose of the letter is immediately stated, ensuring the reader understands the intent from the outset. This is crucial in any formal business communication. Both samples skillfully describe the nature and background of the respective businesses, providing just enough detail to give the reader a sense of the company’s identity and market position without overwhelming them with unnecessary information. This balance is vital in maintaining the reader’s interest and establishing the context of the request.

Moreover, the letters excel in explicitly stating the purpose of the loan, which is a critical component of any loan application. They outline how the funds will be utilized to grow and improve the business, demonstrating not only a clear vision but also a strategic approach to business development. This helps in building a sense of trust and reliability with the lender. Furthermore, the inclusion of financial health indicators, such as past revenue growth, cash flow management, and a repayment plan, adds to this trust by showing financial responsibility and foresight.

The writers also incorporate attachments like business plans and financial projections, which provide additional depth and substantiation to their claims. This shows thorough preparation and professionalism, which are highly regarded in the business world. Finally, the tone of the letters is appropriately formal yet approachable, and they conclude with a note of gratitude, reflecting good business etiquette. This combination of clarity, conciseness, relevance, and professionalism makes these letters exemplary guides for anyone looking to draft an effective and persuasive business loan application.

Tips for Writing

Following are some tips for writing this letter:

Be specific

Be sure to include specific details in it to keep the reader’s attention. Ensure that you include information about the purpose of the loan, how much money you need, and the reason why you are a good candidate for a loan.

Brevity is essential when writing this letter. Stick to the essential points and avoid extraneous details. This will help to ensure that your letter is easy to read and that the reader is not distracted by irrelevant information.

Address the appropriate person

Ensure that you address your letter to the most relevant party for your particular situation.

Consider contacting the bank to find out to whom it should be addressed. This is how you can be sure that it will get to the right person.

Use a proper format and layout

As with all letters, you should use clear, concise paragraphs and avoid unnecessary jargon. Make sure to use the appropriate format for formal letter writing and use a professional, polished layout.

Include business financial statements

The financial statements for your company must be attached to your letter if you are a business owner. In this way, the reader will better understand your overall financial situation and help demonstrate that you are a good candidate for a loan.

The following are some of the purposes for which you may request a small business administration loan: to start a new business, to buy new equipment or inventory for your company, to upgrade or expand an existing business, to cover unanticipated expenditures, to pay off high-interest debt, to fund marketing campaigns, to move your office to a new location, to buy insurance for your business, to purchase stock, to buy out shareholders, and for any other lawful reason authorized by the lender.

Key Takeaways

Here are the key takeaways from this article:

• When writing an application for a loan, be sure to provide specific details about the purpose of the loan, how much money you need, and why you are a good candidate for a loan.
• Use the standard business letter format and use clear, concise paragraphs.
• Brevity is vital when writing such a document, so mention only the essential points and avoid extraneous details.
• Address your letter to the most relevant party for your situation, and be sure to include your company’s financial statements.

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5-3: updated federal perkins loan assignment and liquidation guide now available.

Posted Date: May 3, 2019

Subject: Updated Federal Perkins Loan Assignment and Liquidation Guide Now Available

The updated Assignment and Liquidation Guide is now available on the  Campus-Based Processing Information Page  on the  Information for Financial Aid Professionals (IFAP) website . From the IFAP website’s home page, click on the Processing Resources box, and then click on the Campus-Based Processing Information link.  Perkins Liquidation and Assignment  information is highlighted in an orange box on the right side of the page.  Note:  We encourage schools to bookmark the Campus-Based Processing Information Page for easy reference.

The Assignment and Liquidation Guide (Guide) has been updated and restructured. It has been updated to reflect necessary changes due to the transition of the business processes for the Campus-Based programs to the Common Origination and Disbursement (COD) System. In addition to making changes relating to the system transition, the Guide was updated to provide further clarity and detail on various steps in the process of assignment and for liquidation.

The Guide is divided into two parts and includes three appendices:

Part I provides schools that are not liquidating with the procedures for assigning loans to the Department for any reason.

Part II provides schools that may have questions about liquidation or schools that wish to begin liquidation with complete information and procedures about the process.

Appendix A provides contact information.

Appendix B is a quick reference guide for the liquidation process (see more below).

Appendix C provides an “Assignments at a Glance” table, showing what documentation is required or not required when submitting loans for assignment to the Department.

Schools may find the following new items particularly helpful:

An Assignment Submission Checklist on page 21.

A Perkins Loan Liquidation Steps Checklist on page 44.

Appendix B is a quick reference guide to the complete liquidation process. The “quick guide” is an overview of the different steps under the Perkins liquidation process and explains how schools use the functionality of the COD Web Site to complete each step of the liquidation process.

Contact Information

If you have questions regarding the Perkins Assignment and Liquidation Guide, contact the COD School Relations Center at 1-800-848-0978. You may also email  [email protected] .

Publication Date: 5/6/2019

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An economic crisis may emerge anytime in our life whether it is before starting a business or organizing an event. Understanding that financial institutions have started the loan services to help people with monetary support. Make a request to get a loan for your upcoming plans writing an effective letter. Do not worry about how to start and grab any fitting template from our gallery of ready-made Loan Letters. This collection of templates contains all sorts of loan letters that you need in multiple file formats like Microsoft Word , Apple Pages , and Google Docs . Each template in this range is 100% editable, customizable, shareable, and printable. Use them and save yourself valuable time and money as they are cost-effective and time-efficient. Subscribe now to start downloading!

How to Write a Loan Letter?

A loan letter is a document that states a person's request or intention to borrow money from a bank account for some specific reasons. The bank manager decides whether to approve the person's request or not.

Statista said that banks in the USA granted loans amounting to $14.3 trillion in March 2020. These loan transactions stated various reasons. If you need a loan from a bank for your business or other needs, writing a letter is a great way to communicate your intention. In case you don't know where and how to start, read our tips below.

1. Get Info

You've seen loan offers in advertisements for sure. Banks offer these loans at heavily discounted rates at times. With that, get all the information you need to write this letter like, who to address, his or her name, designation, etc.

2. Share Your Intention

Begin your letter by introducing yourself and telling the bank manager the amount of money that you need to borrow. Give a brief explanation of your intention as to why you need the money. Remember that honesty is one of the keys to loan application transactions. Be transparent in writing this part; it serves as an appeal for you to get the money.

3. Give More Details

Write your professional background and significant work experience to support your intention for borrowing a huge amount of money. Bank managers need to know about the occupation or plan to determine if you can pay the borrowed amount back or not. If you'll lend money to start a business, add a market overview, and reasons why your chosen business will be profitable.

4. State Assets

Provide some information on your assets. You can use them as collateral in exchange for the money you need. These should be accurate or else you'd get into trouble.

5. Add Documents

Attach credible documents to your letter, such as financial statements and business plans. This allows bank managers to assess if you can pay the loan. Leave your contact information, so you can get updates regarding your transactions.

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Self-Liquidating Loan: What it is, How it Works

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

What Is a Self-Liquidating Loan?

A self-liquidating loan (or self-liquidating offer) is a form of short- or intermediate-term credit instrument that is repaid with money generated by the assets it is used to purchase. The repayment schedule and maturity of a self-liquidating loan are timed to coincide with when the assets are expected to produce income. These loans are intended to finance purchases that will quickly and reliably generate cash.

Key Takeaways

• A self-liquidating loan is a type of short term loan whereby the funds borrowed are used to buy some asset, which is in turn sold at the loan's maturity to repay the loan.
• Cash-producing assets or projects are often the target of these loans since they can easily be repaid by selling the capital purchased, and pocket the cash generated as profit in the interim.
• Some types of financial scams that seem too good to be true utilize self-liquidation as a hook to lure unsuspecting marks.

How a Self-Liquidating Loan Works

Although few loans are legally named "self-liquidating," the term is commonly used by bankers to refer to lending arrangements that work in this manner. It is also used by some scam artists, as we explain below.

A retail business might use a self-liquidating loan to purchase extra inventory in anticipation of the holiday shopping season. The revenue generated from selling that inventory would then be used to repay the loan. Self-liquidating loans are not always a wise credit choice for businesses. For example, they do not make sense for buying fixed assets , such as real estate, or depreciable assets, such as machinery or office equipment.

In many ways, a self-liquidating loan is much like a revenue bond with a sinking-fund feature. Revenue bonds are secured by specific revenue sources, such as tolls in the case of a highway, and a sinking fund dedicates money to be set aside for debt settlement.

Self-liquidating loans don't make sense for buying fixed or depreciable assets.

Self-Liquidating Loan Scams

There are also a number of investment scams that call themselves "self-liquidating loans" or "self-liquidating assets." Most of these use the vagaries surrounding "self-liquidating" to give the appearance of less risk or more security than is justified. An unsuspecting or financially inexperienced investor or business owner can fall victim to good salesmanship and misrepresentation.

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How To Write A Personal Loan Application Letter

by Mahindra Finance

August 27, 2024

5 mins read

Are you in need of a personal loan but unsure how to approach the process of applying for a loan or how to write an application for a loan? Don't worry! Writing a compelling loan request letter can greatly improve your chances of getting approved. 

In this article, we'll break down the key elements of a well-written personal loan application letter and provide you with practical tips to create an effective one. 

By writing a clear and informative loan application letter, you can showcase your creditworthiness and increase your chances of securing the funds you need and a good personal loan interest rate.

Let's dive into the details of how to write a personal loan request letter that stands out!

Add basic information about yourself and the lender

Start your loan request letter with a header that includes all relevant information. Begin by providing your name, address, and contact details. Then, include the name of the lender or loan agent along with their contact information. This ensures that your letter reaches the right person and allows them to easily get in touch with you if needed.

For example:

Your Address

City, State - PIN Code

Phone: XXXXXXXXXX

Email: [email protected]

Lender’s Name

Lender’s Title

Lender's Institution Name

In the subject line, clearly state the purpose of the letter and mention the requested loan amount. 

For instance:

Subject: Request for a Personal Loan of INR [Loan Amount]

By including this information upfront, you demonstrate professionalism and make it easier for the lender to process your application for the loan.

Clearly state the purpose of the loan

After introducing yourself and the lender, it's time to explain why you need a personal loan . Clearly outline the purpose of the loan and how it will be used. This helps lenders understand your financial goals and assess whether granting you the loan is a sound investment.

Assure the lender of repayment

A critical aspect of any loan application letter is assuring the lender that you have a feasible plan for repaying the loan amount. Outline your repayment strategy in detail, including how much you can afford to pay monthly or in instalments.

To showcase financial responsibility, mention any existing assets or collateral that can serve as security for the loan. This gives lenders additional confidence in your ability to repay.

Highlight your creditworthiness

To further strengthen your application for the loan, highlight your creditworthiness and responsible financial behaviour. Mention any positive credit history, such as timely repayment of previous loans or credit card bills. This helps build trust with the lender, increases your chances of approval, and may get you the best personal loan interest rate .

Additionally, if you have a high credit score, make sure to mention it in your letter.

Close the loan request letter professionally

As you conclude your loan application letter, maintain a professional and courteous tone. Express gratitude for considering your personal loan request letter and convey eagerness to discuss further details or provide additional documentation if required.

End the letter with an appropriate closing phrase followed by your name and signature.

Writing an effective personal loan application letter is crucial in securing the funds you need. By following these steps and incorporating all essential elements into your letter, you can present a compelling case to lenders. Remember to clearly state the purpose of the loan, provide a repayment plan, highlight your creditworthiness, and maintain a professional tone throughout the letter. Using a personal loan EMI calculator can help you accurately project your monthly payments and demonstrate your preparedness to the lender.

Mahindra Finance is a trusted financial partner which offers competitive personal loan interest rates, flexible repayment options, and personalised solutions tailored to your specific requirements. You can use their personal loan EMI calculator to explore different scenarios and find the most suitable personal loan interest rates for your financial situation.

Q: How long should a personal loan application letter be?

Your personal loan application letter should be concise and to the point. Aim for a length of one page or less. 

Q: Do I need to attach any documents with my loan application letter?

Yes, it's advisable to include supporting documents along with your loan application letter.

Q: Can I submit my personal loan application online?

Yes. Many financial institutions now offer the option to apply for personal loans online . 

Q: What should I do if my loan application gets rejected?

If your loan application is rejected, take some time to understand the reasons behind it. Review your financial situation and credit history, making any necessary improvements before reapplying. 

Q: How long does it take for a personal loan application to be processed?

The processing time for a personal loan application varies depending on the lender and their internal procedures.

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Home » Letters » Bank Letters » Application for Closure of Fixed Deposit (FD) Account – Sample Application for Fixed Deposit Withdrawal After Maturity

Application for Closure of Fixed Deposit (FD) Account – Sample Application for Fixed Deposit Withdrawal After Maturity

Table of Contents:

• Sample Letter

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How to use live assistant, additional template options, download options, share via email, share via whatsapp, copy to clipboard, print letter, request for closure of fixed deposit (fd) account.

To, The Branch Manager, _______ (Bank Name) _______ (Branch) _______ ( Branch Address)

Date: __/__/____

Subject: Closure of FD No. _______ (Fixed Deposit Number which you want to close) on Maturity

I am holding a Fixed Deposit A/C No. _______ (FD Number) in the name of _______ (Name) which got matured on ______ (date of maturity). I am writing this letter to break my FD due to ____________ (reason for breaking fixed deposit and proceeding with FD withdrawal).

I request you to kindly close the FD and credit the fixed deposit amount in my _______ (type of account) account No. _______ (Account Number). I am hereby enclosing FD Receipt/ FD Bond / FD Advice and KYC document with an application for fixed deposit closure.

Thanking You,

Signature: _______ Name: _______ Contact: _______

Note: While closing the FD, Bank may ask for FD BOND /Advice (If taken at the time of FD creation or in later stage). Bank may also ask for other supporting documents like KYC documents, account information in which you want to proceed with credit of the FD maturity amount/any other supporting documents. If you want to break your FD (Fixed deposit) after maturity please visit your Bank Branch with FD details or contact your Bank for more details.

Live Preview

The Live Assistant feature is represented by a real-time preview functionality. Here’s how to use it:

• Start Typing: Enter your letter content in the "Letter Input" textarea.
• Live Preview: As you type, the content of your letter will be displayed in the "Live Preview" section below the textarea. This feature converts newline characters in the textarea into <br> tags in HTML for better readability.

The letter writing editor allows you to start with predefined templates for drafting your letters:

• Choose a Template: Click one of the template buttons ("Start with Sample Template 1", "Start with Sample Template 2", or "Start with Sample Template 3").
• Auto-Fill Textarea: The chosen template's content will automatically fill the textarea, which you can then modify or use as is.

Click the "Download Letter" button after composing your letter. This triggers a download of a file containing the content of your letter.

Click the "Share via Email" button after composing your letter. Your default email client will open a new message window with the subject "Sharing My Draft Letter" and the content of your letter in the body.

Click the "Share via WhatsApp" button after you've composed your letter. Your default browser will open a new tab prompting you to send the letter as a message to a contact on WhatsApp.

If you want to copy the text of your letter to the clipboard:

• Copy to Clipboard: Click the "Copy to Clipboard" button after composing your letter.
• Paste Anywhere: You can then paste the copied text anywhere you need, such as into another application or document.

For printing the letter directly from the browser:

• Print Letter: Click the "Print Letter" button after composing your letter.
• Print Preview: A new browser window will open showing your letter formatted for printing.
• Print: Use the print dialog in the browser to complete printing.
• Start with a clear subject line indicating the purpose of the letter.
• Include important details like the FD number, account holder's name, and maturity date.
• Clearly state the reason for closing the FD and provide instructions on how the maturity amount should be credited.
• Attach necessary documents such as the FD receipt and KYC documents.
• End the letter with a polite thank you and appropriate signature.
• The subject line should mention the closure of the FD account along with the FD number and maturity date.
• Yes, it is essential to attach documents like the FD receipt, FD bond, and KYC documents to facilitate the closure process.
• Address the letter to the Branch Manager of the bank where the FD account is held.
• Clearly mention the account number and type where you want the maturity amount to be credited in the letter.

Incoming Search Terms:

• FD withdrawal application sample
• fixed deposit withdrawal after maturity letter
• application for breaking a fixed deposit
• FD closure letter / application for FD close

By lettersdadmin

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