application letter for a loan facility

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.

Free Templates

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.

About This Article

Was this helpful?

Great! Tell us more about your experience

Not up to par help us fix it, keep reading.

Applications

Free membership form templates | what to include (examples).

Applications , Education

11 best college application essay examples (format guide).

10 Good Examples of Sports Sponsorship Proposal

Thank you for your feedback.

Your Voice, Our Progress. Your feedback matters a lot to us.

Applications , Request Letters

Loan Request Letter (Format & Sample Applications)

A Loan Request Letter is a letter written by a loan applicant and addressed to a lending institution, generally sent as a part of the loan application process. A loan request letter introduces you to the bank or other lending institution, clearly describes your planned use for the loan funds, and describes how you will pay back the loan. It is the part cover letter and part resume because you demonstrate the qualities that make you a good candidate for a loan by outlining your qualifications.

Anyone who applies for personal or business loan should write a loan request letter and enclose it with their loan application. This letter is often the lending institution’s first impression of you as a borrower. Therefore, it should be professional, clear, and concise, easily fitting into one page.

Important: Write using a professional format and in a professional tone. Banks and other lending organizations are concerned about your ability to repay the loan. Pointing out your financial problems works against you – instead, point out your qualifications as a borrower. Remember, this letter is your first contact with the lender and uses it to showcase your company as a reliable borrower.

What a Lender Needs to Know

In order to consider your loan request, a lender needs some information about you or your company. Although this information is included in detail in your loan application, your letter should formally introduce your request. Here is what you should include in your loan request letter:

• Your name and/or your company name, including any DBA
• Your contact information
• Your business entity structure
• Brief description of your business
• Your number of employees
• How long you have been in operation
• Annual revenue and profits if your company is profitable
• Amount of loan requested
• How the funds will be spent
• Your financial security
• A list of enclosures

The bank or lending institution is primarily concerned with how the money they are lending will be spent and repaid. Be sure to include information on these two critical points in your letter.

In addition to the loan application, you should enclose applicable financial documents, such as tax returns. Send your business plan, cash flow statement, and profit and loss (P&L) statement.

Loan Request Letter (Format)

{your name}

{your company’s name}

{your address}

{lender name}

{lender title}

{lender institution name}

{lender address}

RE: {(Small business) or (Personal)} loan request for {amount}

Dear {lender name}:

The purpose of this letter is to request a {(small business) or (personal)} loan in the amount of {amount} for the purpose of {purpose}. {Use this space to discuss your small business. Include name, business structure, and industry.}

{Business name} began operation on {date}, with {number} employees. As a {business structure type}, {business name} has consistently grown and now employs {number} individuals. {Use this space to discuss your marketing presence.}

{Use this area to briefly discuss your most recent year’s revenue and profit, if profitable. Discuss revenue and profit consistently over time when possible.}

{Use this area to describe the reason for the loan request.} {Use this area to explain that the opportunity is immediately available, but you lack sufficient immediate funds.}

Attached, please find our business plan, our annual profit and loss statement, and our most recent cash flow statement for your review. These financial documents and our strong credit score of {number} combine to make us a safe credit risk for {lending institution name}.

I would greatly appreciate the opportunity to speak with you about a {(small business) or (personal)} loan. I can be reached at {phone number} or by email at {email address}.

Thank you for your time and your consideration of my request.

{your signature}

Sample Loan Application Letter

Matthew Dobney

Entirely Electronics

3048 West First Street

Spavinah, OK 89776

EntirelyElectronics.com

June 22, 2048

Mr. James Burrows

SBA Loan Administrator

Bank of American Businesses

New York, NY 65782

RE: Small business loan request for $20,000

Dear Mr. Burrows:

The purpose of this letter is to request a small business loan in the amount of $20,000 for the purpose of enlarging our warehouse.

Entirely Electronics began operation on June 1, 2020, with two employees. As a partnership, Entirely, Electronics has consistently grown and now has 20 full-time employees. Entirely Electronics has been quite successful in obtaining a proportionate share of the online electronic retail community. Our online presence has grown from our website alone to Facebook, Instagram, and Yelp. Our marketing techniques consistently drive new customers to Entirely Electronics, and we boast a high customer retention rate.

Last year, Entirely, Electronics saw a growth of 25% in revenue over the previous year. Our profit margin remained stable at 18% throughout the year.

Our growth has created a significant shortage of available warehouse space, and market research shows we will continue to grow. As we look to the future, we understand we must create more warehouse space to continue growing. Although our revenue is consistent, we do not have the immediate large amount needed to complete the necessary expansions to our warehouse.

Attached, please find our business plan, our annual profit and loss statement, and our most recent cash flow statement for your review. These financial documents and our strong credit score of 790 combine to make us a safe credit risk for Bank of American Businesses.

I would greatly appreciate the opportunity to speak with you about a small business loan. I can be reached at 983-744-6597 or by email at [email protected] .

Loan Request Letter Template

Writing a loan request letter takes a bit of time and research, but does not have to be difficult. Using the above format, you can easily request a loan for your small business or a personal need. The sample letter demonstrates how to make a great first impression on a lending institution.

How did our templates helped you today?

Opps what went wrong, related posts.

Boyfriend Application Forms

Rental Application Forms & Templates

Rental Application Denial Letter: Template and Example

Leave Application Cancellation Letter

Cancellation Letter for House Purchase – Sample & Template

Sample Application Cancellation Letter (Tips & Template)

How to Write a Maternity Leave Letter

Leave of Absence Letter for Personal Reasons

Thank you for your feedback.

How to Write a Loan Application Letter

Table of Contents

Sometimes, taking out a loan can become inevitable. Whether dealing with piled-up medical bills or a financial emergency, it’s common to turn to fast and convenient borrowing options. According to statistics, advances and loans accounted for more than 60% of bank assets in the European Union in 2021. 

If you wish to take out a loan, you’ll have to fill out a loan application or request letter that details what you need the money for and how you’ll use it. The best way to appeal to a lender is by using a convincing tone and showcasing a clear plan for the money. Keep reading as we look at ways you can achieve this and ensure that your loan is granted successfully. 

What is a Loan Application Letter?

A loan application letter is a typed or handwritten letter provided to your lender, helping them decide whether to approve your loan request. This letter is written when the borrower is seeking financial assistance from a lender to pay off some bills or other expenses. 

When Do You Need One?

You might require a loan application letter in the following financing situations:

• When you wish to borrow money from the SBA (Small Business Administration) since it recommends and encourages applicants to start their loan proposals with an executive summary or a loan application letter
• When a borrower opts for a loan from a conventional bank lender and has to demonstrate that their business is financially viable and experiencing growth

In some situations, you aren’t required to write a loan application letter. These include scenarios like when a borrower is seeking equipment financing and said equipment serves as collateral, when someone requests a business line of credit with business bank statements or financial statements, and when a borrower seeks a term loan online using alternative lenders who want to go over your recent bank statements. 

Essential Loan Application Elements

There are specific guidelines you need to follow when writing a loan application:

1. Header and Greeting

Whether you’re filling out a loan application letter for a personal or business loan, it’s crucial that you start with a header and greeting. Include several sentences that outline the necessary, accurate details of your loan request in the header. If you’re opting for a business loan, then you need to include the following details:

• Company name
• Company phone number
• Company address
• Loan agent or lender’s name and title
• Loan agent or lender’s contact details
• A subject line stating the desired loan amount

Follow this by incorporating a greeting right below the header so that you introduce your application with a friendly tone. 

2. Loan Request Summary

You will have to provide your lender or loan agent with an overview of your loan request in this section. Ensure this section is concise, detailing only crucial information that’ll enable the lender to reach the letter’s body quickly. Entrepreneurs applying for a business loan should state why they are trustworthy borrowers, basic business details, the ideal loan amount, and the use of the loan. 

3. Basic Business Details

It would be best if you started by making a clear loan request which includes the amount you wish to borrow. When you write a few sentences about the workings of your business, they should include the following information:

• The legal business name 
• Any DBA used by the organization
• The amount of time the business has been operating
• The business structure
• Number of employees
• An overview of what the company does
• Profits and annual revenue, if applicable

Once this is done, you can move on to the next step, which is explaining why you need a loan. Don’t also forget to outline how you plan to repay the owed amount if the lender grants the loan.

4. Loan Usage

Every lender’s goal is to minimize risk as much as possible, so don’t be surprised if they carefully scrutinize your application before deciding whether to accept or disapprove it. They will assess whether you can pay back the loan entirely on time. Make a solid outline of how you intend to use the loan and why granting you the funds is a wise investment. It’s essential to inform the lender that you have clear goals you will accomplish if the loan application is approved. 

5. Proof of How You’ll Pay Back the Loan

In order to show your company’s financial health, you’ll need to use figures from the latest balance sheet or income statement. These records are essential because they demonstrate that you can repay the loan. 

Additionally, you must include any additional business finances to prove you’re a low-risk investment. State down any existing debt and a schedule detailing how you’ll pay it back if you owe someone else money. Perhaps, you’re a new business, but profits are stable. In that case, ensure you mention this, as it proves your ability to repay the loan. 

Once you achieve this, you can add a particular cash flow prediction to give the lender an idea of your payback plan, including the principal and interest amount. 

6. Give Accurate Information

There’s no doubt that lending money is a risky investment. You can make your lender’s life easier by providing factual and correct details to ensure both parties agree with the terms of the deal. For example, include your accurate credit history. If you are dishonest during the loan application process, you will be considered a fraud, and there will be repercussions for your actions. 

Tips for Writing a Loan Application Letter

• Before sending a loan letter request, check your business and personal credit scores and whether you need to take specific steps to improve them
• Provide transparent, genuine, and concise explanations
• Ensure all information is factual and relevant
• Keep all your financial statements ready, such as business balance sheets, cash flow statements, PSL statements, etc
• Submit every relevant credential with your loan application request letter
• Include the date, time, method, and manner you’ll use to make your payment
• Avoid writing a letter that is unnecessarily wordy and long
• Follow the rules available online on writing formal letters, so you don’t use an informal tone while assembling your loan application letter
• Whether including your business’s current assets, liabilities, or financial health, don’t jot down false information that can get you into legal trouble.

Loan Terms and Penalties

If you fail to pay your loan on time, cancellation fees or penalties may apply that depend on the number of days you’re overdue on the payment. For example, if you’ve looked into how to get a title loan with a lien , you know that your car will be used as collateral. In case you default on payment or provide false information, you are likely to lose ownership of the vehicle.

You should go through the loan terms and conditions as this will enable you to determine how many days your payments can be delayed, how much penalties are for late payments, and the amount you’ll be charged if you cancel your loan. Choosing a loan provider that offers the lowest and most amenable terms is recommended. 

Whatever reason you have for acquiring a loan, writing a solid loan application letter will improve your chances of obtaining the financial help you need. This application letter should be composed in a polite, convincing tone and include accurate information. You can do thorough research to pick a lender whose provided options align with your requirements. Consider beforehand how much money you need and apply for the relevant loan. 

Join the thousands who have sharpened their business writing skills with our award winning courses.

Copyright © 2024 Businesswritingblog.com.

• [email protected]
• Call (866) 670-7483

• Business Loans
• Posted on December 12, 2022
• Kortney Murray

A business loan application process often requires numerous documents, one of which is a request letter. This letter is a significant part of your application as it is written to request financial assistance from the financial institution.

In most loan application cases, the success of your application process hinges on your ability to craft a convincing and professional business loan request letter. However, to do this, you need to know what the letter entails, the necessary information to include, and, of course, how to write one. 

To help you with your application process, below we have compiled everything you need to know about writing a request letter for a business loan.

What Is A Business Loan Request Letter?

During your loan application process, whether you are getting a business loan for your beauty salon or trucking company, your lender or financial institution will request information from you. This information is to help the lender or institution trust you enough to know that you will be able to pay back their loan.

Many times, the request for this information comes in the form of a business loan request letter. A request letter is a formal letter or a document that is written to request anything from an official. It can be seen as a way of asking for a favor from officials.

In this case, a business loan request letter is a letter to the bank or lending institution that supports your business loan request. During the loan request review process, the bank underwriter will pay attention to the content of your business loan request letter to see if you deserve to get your loan approved.

In essence, your loan request letter is the difference between your loan being approved or refused. A loan request letter usually commits elements such as the loan amount requested, detailed planned use of money if disbursed, reasons why you think you should receive the funds, and a detailed description of how you plan to repay the loan.

The loan request letter is usually requested when asking for financial help in the form of a loan. This can be when you’re applying for a loan from a conventional financial institution or bank lender, or when you’re requesting a loan from the SBA ( Small Business Administration ).

In both cases, you are trying to demonstrate to the lender that your business can repay the borrowed amount, and you have a plan for using the loan when disbursed. Although loan request letters are usually a part of loan application processes, they do not necessarily need to be a part of every loan application process.

Some situations require loan letters, and some can do without them. Some situations that do not require loan request letters are:

• Situations where you require a loan from specific lenders whose only concerns are your bank statement
• Situations where you request a business line of credit and the only requirements are recent business financial statements
• Situations where you request equipment financing and the equipment will be the collateral you need.

Regardless, writing a request letter for a business loan is an essential step to securing your loan. However, simply writing a letter is not enough. It is crucial to write an excellently detailed loan request letter that passes your message across quickly to the money lender.

What You Need To Know About Writing A Loan Request Letter

Many elements go into writing a loan request letter. These request letters are a form of well-documented proposal that accompanies other loan application documents, which is why they should convey specific information. When writing a loan request letter, your letter must have specific information. This information includes: 

1. Basic Business Information

Money lenders and financial institutions do not give out loans to businesses or individuals who walk up their doorsteps. They do not accept and disburse loans without knowing who the borrower is. A detailed business loan request letter should begin with a proper introduction that communicates the borrower’s basic personal and business details.

It is a great way to not only break the ice but also get the lender to be familiar with you and know you’re genuine. The basic business information should include the following:

• Your address
• Your business name
• Your business address
• Name of the money lender or loan agent
• Contact information of the loan agent
• Requested loan amount
• Current business project
• Current annual revenue
• Turnover of the previous financial year
• Current number of employees

These details tell the institution all they need to know about you, your financial needs, and your business. Needless to say, all information given should be legal and up-to-date.

2. Purpose Of The Loan

What is the loan for? How does the lender know you will use the loan for the right things? After offering the basic business information, it is essential to the money lender your plan for the loan when approved. Approving a loan to a business (especially small businesses) is a considerable risk for many financial institutions.

It would be best if you showed the institution that you plan to use the loan for the right things. When talking about the purpose of the loan, briefly tell the lender how you plan to use the business loan. Be concise and professional, yet offer enough details for total insight.

Be persuasive enough to help the lender see your vision and show them you have what it takes to use the loan properly.

3. Provide Repayment Assurance

Before money lenders approve business loss, they want to ensure they receive their money and interest at the due date. Without proper assurance, they will be skeptical and might refuse to approve the loan for disbursement. After drawing out the purpose of the loan you are requesting, it is essential to detail how you mean to repay the money on or before the duration of repayment. 

What are your plans to make back the money? How soon can you make money? Are there any risks that are expected? Still being persuasive yet professional, describe how you expect to pay the loan back. However, don’t just draw out a plan using words. Offer evidence to support your plan.

This will build your credibility and increase your chances of the loan being approved. Your evidence can include a business plan, personal finance and credit history (do you have bad credit? Here is all you need to know about getting a business loan with bad credit ), past business financial decisions and results, and any other relevant financial details.

As with any other letter, it is essential to close your business loan request letter. Your closing is your last chance in the letter to persuade the money lender to approve your application and agree on specific loan terms if possible. In the closing part, you can convey what approving the loan will mean to your business without sounding desperate.

Remain professional yet courteous at this point in your letter. The closing part of your business loan request letter is also an excellent opportunity to negotiate for specific terms, such as a certain interest rate or a longer repayment term. However, don’t just tender your requests.

Back them up with compelling reasons why the lender should take on these terms.

How To Write A Request Letter For A Business Loan

Now that you are familiar with the essential elements of a professional business loan request letter, it is essential to know how to write a convincing and successful request letter. Because your request letter plays an integral role in the success of your business loan application process, knowing the best way to write one is vital to your ability to win a loan.

Business loan request letters are usually about one page in length. However, they should be written professionally and in great detail.

1. Heading And Greeting

When writing a letter, it is a formality to have the heading and greeting first. The loan request letter is not left out. At the top of your business loan application letter, you are expected to leave a formal greeting and belief introduction of yourself. This is where the basic business information comes into play.

• Begin by writing your name and contact information
• Date the letter correctly (when the letter was written)
• Include the name, title, and other important contact information of your loan agent
• Include a subject line that states you are applying for a loan and the amount of loan you are applying for 
• Include a formal greeting.

Below is an example of a format for the heading and greeting section of your letter:

[Company/Business Name]

[Business Address]

[Lender Name]

[Lender Title]

[Lender Institution Name]

[Subject]: 

Dear Mr/Miss/Ms./Mrs [Name],

At a glance, the heading and creating part of your letter will tell the lender what they need to know about your business and the type of loan you need.

2. Summary of Your Business Loan Request Letter

What do you need the loan for? The second step and the second element when writing a business loan request letter is to briefly tell your money lender what the purpose of your letter is, the type of loan you need, and the amount you want to borrow. The summary of your business loan request letter is usually only a few sentences short.

The length may vary from letter to letter as every request letter is unique. Regardless, it should be nothing more than a summary.

For example: 

I am writing this to request a [kind of loan] loan in the amount of [amount] for the purpose of [purpose]. 

This is straight to the point but immediately tells the lender what you need and why.

3. Basic Information About Your Business

Following the summary of your business loan request letter, it is essential to tell your lender all they need to know about your business. To do this, you will provide basic information about your company. Although lenders want to know as much as they can about you and your business, they do not have the time to read pages upon pages of all information about your company.

They spend so much time processing other loan applications that a long introduction can be a big turn-off. So, instead of an entire file on your business history, write out the following:

• Your business’s recognized, registered, and legal name
• Your business’s legal structure (is it a sole-proprietorship company , partnership, or limited liability company?)
• Years of operation or how many years you have been in business for
• A concise description about what your business does or operates in
• Your company’s annual revenue and profit
• Number of employees

4. Description Of The Purpose Of The Loan

After offering the basic introductions, you must tell your lender why you need the loan. In this section, explain to your lender how you plan on using the loan when it is approved. Give them a great but brief insight on the plan and show them you have mapped out the use of the finances every step of the way.

For example, don’t just say you need to buy more stock. Instead, state what stock(s) you need, how much they are, how much you plan to re-sell, and how much revenue you plan to make back from this.

5. Show Your Ability to Repay the Loan

Show the lenders that you are more than capable of repaying the loan given by including several documents that show your current financial ability. Highlight your credit history and present financial disposition using financial statements such as:

• Summaries of up-to-date profit-and-loss or balance statements. This will show the lenders that your business is growing
• Schedules to show repayment plan for other outstanding debt that your company might owe to other lenders
• Future cash-flow projections . This will show your budget for the repayment terms and your ability to pay back.

6. Concluding Elements

As with any other kind of letter, you need to end your request letter with a concluding part. This concluding part should include several elements, such as:

• A final paragraph that refers the lender back to your attached documents and financial statement
• A paragraph persuading the lender to review your package
• A sentence showing the lender that you anticipate speaking to them soon
• Your signature
• A list of all included documents.

Sample Of Business Loan Request Letter

ABC Crescent Street

Miami, FL 12345

Jan. 1, 2022

Jack Stephen

Senior Loan Officer

678 Spring Road

Florida, FL 67890

Re: Small business loan request for $350,000

Dear Mr. Stephen, 

I am writing this to request a small business loan of [input loan type] of $150,000 for the purpose of [input your purpose of the loan]. 123 Movers is a successful business that is well-established in the transportation and shipping industry. Our success is recounted on our official website [input website URL].

123 Movers started operation in April 2018 in one location with just [input number] workers and [input number] trucks. Serving local and international clients, we have grown consistently over three years and now have over [input number] with [input number] of trucks in our services. 

Last year, our annual revenue totaled $1.2 million—[input more information about the growth of the business]. To promote our growth, increase efficiency, and improve the quality of our services, we plan to hire more staff and expand into new market sectors.

We request a [input loan type] to continue our expansion efforts and supplement our growth as a business. [Input more reasons/purpose for the loan application]. A loan in the sum of $350,000 will enable us to [state how the loan will help your business in this paragraph]. 

Attached below, please find our recent financial statements and our business plan for your review. I have also attached other necessary documents [state documents] to highlight how strong our financial disposition is. With a credit score of [input credit score], we are confident in our ability to adhere to the necessary loan terms.

Thank you for reviewing our letter and the attached financial documents. I look forward to a favorable response from you at your convenience.

John Doe [signature]

John Doe, Owner

123 Movers.

Perfecting The Art Of Writing Business Loan Request Letters

Writing request letters for business loans can be an intimidating process, especially if you have no practice doing so.

However, all you need is a few trials, and you will undoubtedly master the art of writing business loan request letters like a pro. Request loan letters are essential in many loan application processes, which is exactly why you need to put your best foot forward while writing.

Optimize your letter by including the necessary documents, highlighting your best assets, and following the proper format mentioned above. Include a header and greeting, a concise description of your request, your business’s basic information, a description of the purpose of your loan application, your ability to repay the loan, and a proper concluding element.

Although mastering the art of writing business loan request letters is one of the many steps in making sound financial decisions for your business, the first step begins with finding a financial company dedicated to offering the solutions you need.  With relationships with over 150 different programs and an aim to maximize your business’s growth, we at Coastal Kapital offer innovative financial solutions to business owners with all credit types. 

From equipment leasing to merchant processing, collateral asset and real estate-backed funding, we have all you need to grow your business. Contact us at 866-670-7483 to discuss your financial options!

Home > Finance > Loans

How to Properly Write a Business Loan Request

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .

Have to submit a business loan request letter as part of your loan application? Not sure how to get started?

We don’t blame you. These kinds of letters aren’t as common as they used to be. While online lenders don’t usually ask for small-business loan requests, some traditional banks and credit unions still do. And if you apply for an SBA business loan (a loan backed by the US Small Business Administration), you’ll need a small-business loan request as part of your loan application package.

No matter which lender you’re applying with, this guide will help you write a strong business loan request letter―and to get the business loan you need.

How to write a business loan request letter

• Start with the easy stuff
• Write a brief summary
• Add information about your business
• Explain your financing needs
• Discuss your repayment plan
• Close the letter

1. Start with the easy stuff

Writing a loan request can feel overwhelming. After all, it’s not an everyday part of being a small-business owner. What do you say when applying for a bank loan? How do you write a business proposal for your loan application? What’s your lender even looking for in a business loan request letter?

That’s why we suggest starting your request writing process with the easy bits: formatting.

You’ll want to begin your business loan request with some pretty standardized formatting that includes your contact information, the date, your lender’s contact information, a subject line, and a greeting.

Typically, you’ll want to format the beginning of your small-business loan request roughly like this:

First and last name

Business’s name

Business’s phone number

Business’s address (this one is optional)

Lender name (or loan agent’s name and title, if you have one)

Contact information for your lender or loan agent

Subject line

Obviously you can simply plug in the relevant information for most of this. Easy peasy, right?

You’ll really only have to come up with your own subject line and greeting. But don’t overthink it. Something like this will work just fine for your subject line:

• Re: [Your business’s name] business loan request for [loan amount]

Likewise, keep your greeting simple. “Dear [lender]” or “Dear [loan agent]” will do quite nicely.

Got all that? Then you’re ready to get into the actual loan request.

By signing up I agree to the Terms of Use.

2. Write a brief summary

Before you dive into the meat of your loan request, you should give a brief summary of your letter. Just write a short paragraph that says why you’re writing and what you want.

So you’ll probably want to include the following details:

• Business name
• Business industry
• Desired loan amount
• What you’ll use the loan for

No need to get fancy with this. You’re trying to condense the most important information into one or two sentences.

For example, your summary might look something like this:

• I’m writing to request a [loan amount] loan for my small business in the [industry name] industry, [business name]. With this loan, [business name] would [describe your intended business loan use].

As you can see, you don’t need much detail here. You’re just giving the reader a quick overview of what’s to come.

And now that you’ve given them that preview, it’s time to get more in depth.

Remember, your lender isn’t here to grade your writing. Try to use good spelling, grammar, and punctuation―but don’t stress about crafting beautiful sentences.

3. Add information about your business

Your next section should add more detail about your business. You’ll want to include information like this:

• Business’s legal name (if different than name used)
• Business’s legal structure (LLC, partnership, S corp, sole proprietorship, etc.)
• Business’s purpose
• Business’s age (or date it began operating)
• Annual revenue
• Annual profit (if applicable)
• Number of employees

Now, keep in mind that you’re not trying to give your reader an encyclopedic history of your business. Instead, you’re trying to show that you have a well-established business―one that’s solid enough to deserve a business loan. So focus on relevant details that show your business’s maturity.

You can keep this section as short as a few sentences or as long as a few (brief) paragraphs. Just make sure you leave plenty of room for the next two sections.

4. Explain your financing needs

After discussing your business, it’s time to explain why you need a bank loan.

That means you’ll want to offer some details about how you plan to use your business financing. For example, you can talk about the employees you plan to hire, the building you want to expand, or whatever else you intend to do with your term loan .

Take note, though, that you also need to explain why your loan request makes sense. Because your lender doesn’t really care that you want a loan―it cares whether or not it makes sense to lend to you. You need to convince your lender that you have a good plan for your loan―one that will make it easy to repay the money you borrow.

Try to answer questions like these as you write this section:

• Why should your lender want to approve your loan application?
• What happens to your business if you get your small-business loan?
• What kind of growth will your business loan allow for?

Dig into your business plan and projections to find some good stats. Explain how hiring those additional employees will increase your revenue by a certain percentage or dollar amount. Break down how opening that add-on to your restaurant will allow you to seat a number of additional customers, and how much revenue you expect that to bring in.

The more specific you can get, the better. Because again, you’re trying to convince your lender that you’re borrowing as part of a thoughtful business plan ―not just because you want some cash.

And take your time with this part. In most cases, this section and the next one will form the meat of your business loan request letter. 

As a rule, you should keep your business loan request letter to one page.

5. Discuss your repayment plan

By this point, your lender should understand what your business does and why a loan would help it grow. Now you need to prove to your lender that you can repay your small-business loan.

This doesn’t mean you have to show precise calculations breaking down your desired interest rate and monthly payment. (After all, your bank probably hasn’t even committed to a specific interest rate yet.)

Instead, talk about things like your business’s past finances, other existing debts, and any projections can you offer.

So if you have a profitable business, point that out, and discuss how that will free up cash flow to repay your loan. Offer summaries of profit-and-loss statements that show your business has been growing. Tell your lender how you’ll pay off that existing loan within a few months, so they don’t need to worry about it interfering with repayment of your new term loan.

Put simply, this is your chance to convince your lender of your creditworthiness. Especially if you have a slightly low credit score or some other concern, you want to use this section to show that you will absolutely repay your loan.

6. Close the letter

Finally, you can add a few finishing touches.

Usually you should close with a short paragraph or two that refers the reader to any attached documents (like financial statements) and asks them to review your loan application.

You may also want to include a sentence expressing willingness to answer any questions―or just saying you’re looking forward to hearing back.

Then end things with your signature, list any enclosed documents, and you’re done!

Well, sort of.

At this point, we strongly recommend you print off your business loan request letter and read it―out loud, if possible. This will help you catch any errors. Because no, your lender isn’t a writing teacher, but you still want to make a good impression.

Plus, if you make typos on something like your business name or desired loan amount, that inaccuracy could lead to confusion from your lender―slowing down your loan approval process.

Once you’ve proofread your loan request letter, you’re ready to submit it to your lender. With any luck, your thoughtful letter will help convince your lender to give you that loan you want.

Loan proposal letter template

So how do all those steps look when you put them together? Something like this:

            First and last name

            Business’s name

            Business’s phone number

            Business’s address (this one is optional)

            Date

            Lender name (or loan agent’s name and title, if you have one)

            Contact information for your lender or loan agent

            Subject line

            Greeting

This first paragraph should summarize the rest of your letter. Keep it to just a couple sentences.

The next one to three paragraphs add more detail about your business. Include facts about its age, revenue, profit, employees, and other relevant information.

Then explain why you need financing and how you’ll use it to grow your business. This section can be a little longer (but remember your whole letter  should fit on one page).

Next, talk about how your business will repay your loan. You may want to mention how financial documents show your business’s financial health, for example.

Finally, close with a short paragraph or two that list any enclosed documents and invite the lender to consider your loan application.

Printed name

List of enclosed financial documents

That’s not so hard, is it? With this basic business loan request letter template, you can easily write your own personalized business loan proposal.

The takeaway

So there you have it―that’s how to properly write a business loan request.

Get your formatting right, include a short summary, talk about your business, explain your loan needs, prove you can repay your loan, and close things off. (And don’t forget to proofread.)

We believe in you. You can write this thing.

And good luck getting your loan application approved!

Don’t just tell your lender you can repay your business loan―make sure you can with our business loan calculator .

Related reading

Best Small Business Loans

• How to Get a Small Business Loan in 7 Simple Steps
• 6 Most Important Business Loan Requirements
• How Long Does It Take To Get a Business Loan?
• Commercial Loan Calculator

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

5202 W Douglas Corrigan Way Salt Lake City, UT 84116

Accounting & Payroll

Point of Sale

Payment Processing

Inventory Management

Human Resources

Other Services

Best Inventory Management Software

Best Small Business Accounting Software

Best Payroll Software

Best Mobile Credit Card Readers

Best POS Systems

Best Tax Software

Stay updated on the latest products and services anytime anywhere.

By signing up, you agree to our Terms of Use  and  Privacy Policy .

Disclaimer: The information featured in this article is based on our best estimates of pricing, package details, contract stipulations, and service available at the time of writing. All information is subject to change. Pricing will vary based on various factors, including, but not limited to, the customer’s location, package chosen, added features and equipment, the purchaser’s credit score, etc. For the most accurate information, please ask your customer service representative. Clarify all fees and contract details before signing a contract or finalizing your purchase.

Our mission is to help consumers make informed purchase decisions. While we strive to keep our reviews as unbiased as possible, we do receive affiliate compensation through some of our links. This can affect which services appear on our site and where we rank them. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. For more information, please see our  Privacy Policy Page . |

© Business.org 2024 All Rights Reserved.

superworks logo

Streamline business processes with Superworks

Get started with a free trial!

Easy to set up

Seamless configuration

Quick customer support

Super Payroll

Super Project

Super Recruit

Super Asset

Super Survey

Super Track

I think Superworks is an exciting platform with a company that has forward-thinking and built around objectives.

Krunal Vaghasiya

CEO of Tatvam Cloud Solutions

Increasing productivity & helping us to manage employees. Keeping an eye on what team works on has never been easier.

Jatin Lathiya

CEO of 16 Pixel

Book a free demo

Talk to our expert and know how it will work in your system

Table of contents

What Is an Employee Loan Application Letter?

When you need  loan application letter, what to include in while writing this letter to organization, what are the terms and conditions for pre-writing considerations, 1. make header relevant, 2. mention the purpose or reason of the loan, 3. add basic information about the job, 4. assure borrowed repayment, 5. closing a personal loan application letter, loan application letter sample, personal loan application letter sample, wrapping up with bonus offer.

• BLOG DETAILS

What HR & Employees Need to Know about Loan Application Letter?

• personal loan application letter sample
• 10 min read
• October 5, 2023

Need of money? Whenever it is required, the only way to adopt is to advance or loan! However, most companies provide loans to employees, when needed. As an employee, if you’re worried about asking for a loan, you need a perfect loan application letter and process for that.

If you are one who wants a loan and, doesn’t know how to ask or how to draft the letter loan application request then superworks provides a letter format for loan application, which makes the process easy and hassle-free.

So, don’t stress about it. Use personal loan application letter templates to confidently approach your employer and request financial help whenever needed.

Here’s what you need to know about writing an employee loan application letter, including when you need it, what information you need before writing it, examples to look at, what format to use, and a template to help you write your own.

Note: You can download directly from here and edit as per your need.

A loan application letter for an employee is correspondence an employee writes and submits to the organization as part of the loan application process.

It basically includes,

Loan amount

Explanation of cause

Details about the repayment of the loan

Use of funds

Loan application letters are needed in two main situations:

1. You can consider the loan application letter to bank when you want to borrow money from a regular bank and want to show that your business is doing well.

2. You can consider the loan application letter to other organizations or your own organization for a personal loan.

In both cases, you need a perfect loan application letter to bank or organization. Whether you want loan from a third party or bank.

There are no strict rules while writing this HR document – an application letter for a loan. It’s up to the person who wants the loan to decide what to put in it while approaching. However, a usual loan application has these things:

Contact number

The reason why you need a loan

How much amount you want?

What you will use the money for?

Work history

The salary you are earning right now

Names of people who can say good things about you

Info about your job or business

A list of papers that prove what you said.

Before approaching for the loan, you need to be ready! There are some terms and conditions, pre pre-writing considerations regarding loan application.

Before you start, do some homework about the loan you’re getting the loan from.

Consider multiple reasons why you are a good fit for a loan .

Also, think about what you want to tell them about your project.

Write down any questions you might have during the loan application process.

Check your credit score and know your rights as you are borrowing money.

Once you’ve done all that, look over everything you’ve written and then collect the papers regarding that. Make sure it makes sense to someone who hasn’t seen your notes or looked at your finances. If you’re applying for a big loan, you’ll usually need to write  loan application letter for that you need to collect sample letter for loan application from company like Superworks . But remember, just the letter alone might not be enough to get you the loan unless you have good credit so check it as well.

Remember these 2 things if you need the loan:

1. Check your personal and business credit scores for loans.

2. Get your financial records together, like your profit and loss statement. However, if you are applying to your company then consider your salary statement.

Read more: An Ultimate Guide Of Easy-To-Use Joining Letter Format For Employee

Want to take a step towards the HR revolution? – Superworks is here!

Access a library of HR letters instantly. Take control of your HR tasks with just one click – download for free! These HR letters are designed to simplify your HR operations.

Transform the way you manage HR tasks within your organization. Take the first step towards a more streamlined HR process.

How To Write Loan Application Letter?

Knowing how to write a letter asking for a loan is important, as it helps to borrow money from the employer via HR. Whether you want from the organization or from outside, you can get the loan application letter sample from a good HR software provider and use it for your process.

Writing a loan request letter might seem a bit scary, but download it free or check these steps to write it.

The header is very important before writing this letter to your company for a personal loan, you should include these details.

You need to add the date, month, day, and year when you’re writing the loan application letter. Make sure the date is correct.

Your name is necessary of course. Add your full name, contact info & address . You need to include a mailing address with a work email, a zip code, and your phone number.

Mention the name of the organization or person, Usually, it is someone from the finance department, or higher authority, or a bank.

After you’ve mentioned everything on the header, you need to add the purpose of the loan. So for that, you need to make it clear and short how you’ll spend the money you want from the loan.

Use a tone like convincing when you explain why this is a smart move for your business or project.

To write a good personal loan application letter that’s clear, helpful, and convincing, start with a header and a friendly greeting.

Include these things:

Your address

The name of the person asking for a loan

How to contact you

A subject line with how much money you want

After you’ve talked about what you’ll do with the loan money, now give them a surety about the repayment. Use facts and good reasons to explain this. You can also mention the history of making smart money decisions to prove you’re responsible with your finances.

Explain your plan to repay the loan: You need to describe shortly what is your business or job and how you repay this. Include a timeline and back it up with things in your salary .

Show the proof of your money: Sometimes, you’ll need to give proof of your earnings. You need to submit evidence regarding your salary, bank statements, tax papers, etc. Things like bank statements or tax papers can help you prove you have other sources of money.

Make yourself seem trustworthy: To get a loan, you need the lender to trust you. You can do this by telling them about your job, showing some ID, and explaining why they can trust you.

It’s important to close the personal loan application letter with wise and grateful words. Be polite and professional to increase your chances of approval. You might even be able to talk about getting a lower interest rate in your loan request letter.

Every company should take care of their employees as they provide a personal loan to them. In that case, there are several documents needed and an application letter is one of them. This problem can easily solved by a good HR management tools provider if you don’t want to make any application letter and all. You can directly approach the loan from one of the features of the HR & payroll software . We are here to solve all HR-related problems, so contact our expert to know more! Don’t forget to leverage miss punch functionalities to streamline the loan application process and ensure efficiency.

The main goal of sending a loan application letter to an employer is to formally request financial help for your required things. It serves to provide a clear and professional explanation of why the loan is needed & when you repay it.

To structure a loan application letter for an employer, begin with a polite greeting and introduction explaining the purpose of the letter. The body of the letter should detail the reason for the loan, specify the desired loan amount, and propose a repayment plan.

You can download this letter from the Superworks website, by getting the HR toolkit access free. You just need to fill out the form and get the document for free.

Written By :

Alpesh Vaghasiya

The founder & CEO of Superworks, I'm on a mission to help small and medium-sized companies to grow to the next level of accomplishments. With a distinctive knowledge of authentic strategies and team-leading skills, my mission has always been to grow businesses digitally. The core mission of Superworks is Connecting people, Optimizing the process, Enhancing performance.

Share this blog

Subscribe to our Newsletter

Employee Rewards And Recognition- Everything Big You Need To Know!

5 Important Professional Email Templates You Can Use For Your Organization 

A Step By Step Process Of Recruitment In HRM: Essential Guide

Ready to simplify your loan management?- Check Superworks!

Integrated software solution for effortless payroll management.

• Comprehensive
• Customizable
• Time-saving

Download Loan Application Letter

• Home  
• Consumer Letters  
• Bank Loan Request

How to Write a Bank Loan Application Letter: Example and Writing Tips

Last updated on January 02, 2023 - © Free-Sample-Letter.com

What is Bank Loan Application?

A bank loan application is a request made to a financial institution , such as a bank, to borrow a specific amount of money. The purpose of the loan can vary, such as to fund a business venture, pay for education expenses, or make a large purchase.

In order to apply for a loan, an individual or business must complete an application that includes personal and financial information, as well as details about the purpose of the loan and the requested amount . The lender will use this information to evaluate the borrower's creditworthiness and determine whether to approve the loan and at what terms.

Step-by-Step Guide: Crafting a Successful Loan Request Letter

Here are some tips on how to write a bank loan application letter:

• Identify the purpose of the loan and the amount you’re requesting . Be specific and clearly state your financial needs. For example: "I am writing to request a loan of $10,000 to cover the costs of my daughter's tuition at XYZ University." or "I am writing to request a loan of $50,000 to fund the expansion of my small business, XYZ Company."
• Explain your current financial situation and provide evidence of your ability to repay the loan. This may include income statements, tax returns, and other financial documents. For example: "I have been self-employed as the owner of XYZ Company for the past 5 years and have consistently earned a net profit of $30,000 per year / I have been employed as a software engineer at ABC Company for the past 8 years and have a stable income of $75,000 per year. Attached, you will find my tax returns and financial statements as evidence of my ability to repay the loan."
• Describe the specific use of the loan proceeds and how they will benefit you or your business. Be sure to include a detailed plan for how you will use the funds and how you will generate the income to repay the loan. For example: "The loan funds will be used solely for my daughter's tuition and other education-related expenses. I have a budget in place and am confident that I can make the monthly loan payments while still being able to cover my other financial obligations." or "The loan funds will be used to purchase additional inventory and hire two additional employees, which will allow us to increase our sales and profitability. I have a solid business plan in place and am confident that these investments will enable us to repay the loan within 3 years."
• Include any supporting documents that may help your case , such as financial statements or a business plan. For example: "In addition to the documents mentioned above, I have also included a copy of my budget plan, which shows my projected income and expenses for the next 3 years." or "In addition to the documents mentioned above, I have also included a copy of my detailed business plan, which outlines my marketing strategy and projected financial performance."
• Request a specific repayment plan and timeline. Be realistic and considerate of the lender's needs when proposing a repayment schedule . For example: "I am requesting a loan repayment period of 3 years, with monthly payments of $1,500. I understand that this may be negotiable and am open to discussing alternative repayment terms that work for both parties."
• Express your appreciation for the lender's consideration and provide contact information for follow-up. Thank the lender for their time and make it easy for them to get in touch with you if they have any questions. For example: "Thank you for considering my loan request. I am confident that this investment will help my business grow and thrive / I am confident that this investment in my daughter's education will pay off in the long run. If you have any questions or would like to discuss further, please don't hesitate to contact me at 555-555-5555 or by email at [email protected]."

➤ You May Also be Interested in Our Sample Letter to Request an Alternative Payment Plan from a Creditor

Need to Write a Bank Loan Request Letter? Use Our Free Templates for Success

For applying loan in a bank or financial institution.

Dear (mr/miss etc. + Loan manager name),

Following my visit to the bank yesterday where all necessary papers were filed regarding my loan request, here are a few more details pertaining to the loan.

I have been a long-standing customer with (name of bank) for over (number) years now and I recently applied for a (personal/company) loan of ($/€ amount). This loan will allow me to pay for (reason needed) which I have been planning for some time now.

My preferred loan structure, after much thought, is a (secured/unsecured) loan. I believe this is the best option for me and I also hope to be able to pay it off within (X years).

I prefer to take out a shorter loan period rather than the popular long term packages, and therefore hope that you will be able to see this as a positive factor in granting me this loan.

I am currently employed at (company name) and have been the (name of position) for (No. of years). Should you require any references or further information, please do not hesitate to contact (my boss/the HR Dept. etc.) at any time. They can be reached on (tel. no.) or via email on: ([email protected]).

As requested by (Mr./Miss X), please find (enclosed/attached) copies of my most recent bank statements for the last (3/6) months.

I am available to come in and speak with you at any time, I do hope that you will look favorably on my request and I very much look forward to hearing from you.

(name/signature)

Bank Loan Request Letter for Small Business (SBA)

Dear [Loan Manager's Name],

I am writing to request a loan of $50,000 from the Small Business Administration (SBA) to fund the expansion of my small business, XYZ Company.

I have been self-employed as the owner of XYZ Company for the past 5 years and have consistently earned a net profit of $30,000 per year. Attached, you will find my tax returns and financial statements as evidence of my ability to repay the loan.

The loan funds will be used to purchase additional inventory and hire two additional employees, which will allow us to increase our sales and profitability. I have a solid business plan in place and am confident that these investments will enable us to repay the loan within 3 years. In addition to the documents mentioned above, I have also included a copy of my detailed business plan, which outlines my marketing strategy and projected financial performance.

I am requesting a loan repayment period of 3 years, with monthly payments of $1,500. I understand that this may be negotiable and am open to discussing alternative repayment terms that work for both parties.

Thank you for considering my loan request. I am confident that this investment will help my business grow and thrive. If you have any questions or would like to discuss further, please don't hesitate to contact me at 555-555-5555 or by email at [email protected].

[Your Name]

You may also find these examples useful:

• Expert Advice: How to Write a Successful Administrative Letter
• Sample Bad Check Notice Letter: How to Request Payment for a Bounced Check
• Get Your Security Deposit Back: Use This Sample Letter for Claiming It
• Winning Grants: A Step-by-Step Guide to Crafting a Successful Request Letter
• Write a Winning Refund Request Letter with These Tips
• How to Write an IOU Letter (Writing Tips and Samples)
• How to Write a Successful Sponsorship Proposal Letter
• Email Template to Advise Customer of a Returned Check

We also recommend:

• IOU Template and Promissory Note - Sample & Free Download
• Payment Plan Request Letter - Sample & Free Download
• Bank Customer Service Representative Sample Cover Letter
• Banking Internship Sample Cover Letter
• Bank Teller Sample Cover Letter - Tips & Free Download
• Annual Leave Request Letter - Sample & Free Download
• Funeral Leave Request Letter - Sample & Free Download
• Refund Request Letter - Sample & Free Download
• Claiming Back a Security Deposit Letter (Tips & Samples)

Find the best business loan rates (2024)

How to Write a Loan Request Letter to Get Your Small Business Funded

TABLE OF CONTENTS

If you want to get business financing from your bank or the Small Business Administration (SBA), you’ll need to know how to write a loan request letter. 

Indeed, your bank’s underwriter will look for your business loan request letter when reviewing your application. The SBA expects you to have one, too.

A well-written letter requesting a loan can make the difference between having your application approved and it getting turned down.

Here’s what you need to know about how to write a loan letter, including when you need one, what you’ll need before writing one, what format you should use, examples to review and a loan request letter template to write your own.

What Is a Business Loan Request Letter?

A business loan request letter is correspondence a borrower writes and submits to a bank as part of the loan-application process. 

Business loan request letters include the following:

• Loan amount 
• Planned use of funds
• Explanation of why you should be funded 
• Details about how you plan to repay your loan 

When You Need a Loan Request Letter

There are 2 main financing situations when loan request letters are called for:

• When you’re requesting a loan from a conventional bank lender and you want to demonstrate that your business is growing and financially viable
• When you’re applying for a loan from the SBA , which recommends you begin your loan proposal with a cover letter or executive summary

If either situation applies to you, you should know how to write a loan letter.

There are situations when you don’t necessarily need a loan letter, including:

• You’re requesting a term loan online from an alternative lender, who may only require recent bank statements  
• You’re seeking equipment financing , in which case the equipment itself will serve as collateral
• You’re requesting a business line of credit , which only may require recent financial statements or business bank statements

Prerequisites for Writing Loan Request Letters

While a loan request letter may be needed for bank and SBA loans , it won’t be enough for approval unless it’s supported by a sound credit situation and solid financial planning. For your request to be persuasive to lenders, you should do 2 things before preparing your business request letter and loan application package:

• Check your personal and business credit scores and take any steps you can to improve them
• Prepare the business financial statements you’ll need for your loan package

Your personal and business credit scores and business financial statements will help lenders assess whether you’re a good financial risk and will lend weight to your loan request letter. Business financials should be submitted with your loan application along with your cover letter. 

Essential financial statements you will need include:

• Profit-and-loss statement (also called an income statement)
• Balance statement
• Cash-flow statement

Business Loan Request Letter Format

When you write your loan request letter, it’s recommended to keep it to 1 page while including the following key elements:

Heading and Greeting

The very top of your letter for a loan application should include contact information, a subject line as a header and a greeting as follows:

• Your name and contact information
• The date of your letter
• The name, title and contact information of your loan agent
• A subject line stating that you’re writing about a loan and specifying the dollar amount you’re requesting

Summary of Your Small Business Loan Request Letter

Start by briefly stating the purpose of your letter and the amount you’re asking to borrow.

Basic Information About Your Business

This should include:

• Your company’s legal name
• Your company’s legal structure ( sole proprietorship , partnership, limited liability company, S corporation, etc.)
• A brief description of what your business does
• How many years you’ve been in business
• How many people you employ
• Your annual revenue and profit

Explanation of the Purpose of Your Loan

Tell your lender how you plan to use the loan. Be as specific as possible, citing numbers to quantify your goals. For instance, instead of saying you plan to use the loan for advertising, specify what types of advertising you’ll use, how much each will cost and the percentage of new customers or increased revenue you hope to gain.

Summarize Your Ability to Repay the Loan

Touch on your credit history and highlight key data from your financial statements that reflect your ability to repay your loan, including:

• Summaries of recent profit-and-loss or balance statements demonstrating that your business is financially healthy and growing
• Schedules for repaying any other business debts you already owe
• Cash-flow projections that indicate when you’ll be able to budget repayments for your loan’s principal and interest

Concluding Elements

The end of your letter should include:

• A paragraph referring to your attached financial statements
• A concluding paragraph asking the loan officer to review your package and expressing your anticipation of speaking with them soon
• Your signature
• A list of enclosures, including your financial statements and any other documents that are required for your loan application. You may also need to provide your business partners’ financials, including for SBA-backed loans .

Don’t want to write a loan request letter? We’ve got you covered.

Loan request letter templates and samples.

Here are loan request letter samples and templates you can use to create your own letter. 

Sample Request Letter for a Working Capital Loan to Support Expansion

ABC Builders

123 Park Lane

Miami, FL 33145

Jan. 1, 2020

Senior Loan Officer

987 Spring Road

Philadelphia, PA 19115 

Re: Small business loan request for $100,000

To Mr. Doe,

ABC Builders is a successful business that is well established in the building and renovation industry. We began operation with 3 employees in January 2010 as a small company offering renovation services to local businesses and homeowners. We now have 20 employees. We advertise on our website, ABCBuilders.com, and market on social media channels as well as at home building expos. 

Last year, our annual sales totaled $3.5 million. In the first year of business, we earned a net profit of $1 million. Additionally, we have maintained a steady balance in the past 10 years.

Because of increasing interest from prospective clients in neighboring cities, we have decided to open a second location. The loan we are requesting is for this additional location, which we anticipate will increase revenue by $300,000 in the first quarter following opening.

Startup costs can be costly, and we require funding to purchase supplies and equipment. However, we anticipate strong sales for the new branch and have immediate work opportunities, which will contribute to our loan repayments. 

The loan of $100,000 we are requesting will provide us with the funding we need to help successfully open our second location. I have attached the contracts we have in the new location, pending equipment availability and ability to complete the project as well as our business plan with a breakdown of costs and detailed market analysis. 

Thank you for reviewing this letter and the accompanying financial documents. I look forward to hearing from you at your convenience.

Jack Smith [signature]

Enclosures: Business plan, profit-and-loss statement, balance statement, cash-flow statement 

Sample Loan Request Letter to Fund the Salary of a New Hire

Chief Executive Officer

Dear Mr. Smith:

I am writing this letter to request a small business loan in the amount of $100,000 for the purpose of hiring additional staff. 

My business, ABC, Inc., is a growing company that serves clients in the food-service industry. You can follow our success online at www.ABCInc.com.

ABC, a corporation, began operation in January 2016 with 5 workers and 1 location. We have grown consistently in the past 4 years. We now employ 15 workers and have expanded to 2 locations.

Last year, our annual sales revenue was $2.8 million and we generated a net profit of $975,000. We have maintained our cash flow consistently over the past 2 years and have generated a net profit each year we’ve been in business.

To promote our continued growth, we plan to hire a full-time manager this year to oversee our business operations. We are requesting working capital funding to continue our expansion efforts and cover the cost of the new manager’s salary and benefits. In addition, in an effort to retain top talent, we plan to offer an enticing relocation package and signing bonus. This new hire will streamline operations and lead to efficiencies totaling $150,000. 

We would like to pursue this endeavor in the second quarter of 2020, but this venture will require more funding than our current cash flow can sustain. Although we lack a lump sum large enough to cover this additional expense, our budget can allow for monthly payments over time given sufficient financing.

A loan in the amount of $100,000 will enable us to acquire the right talent to facilitate our expansion. Our projections, which are enclosed, indicate that increased efficiency and sales will generate enough increased revenue to repay this loan by 2023.

Attached, please find our business plan and our most recent financial statements for your review. Based on these strong financials and our business credit score of 90, we are confident that you will find us a safe credit risk.

Thank you for reviewing this request letter and the accompanying financial documents. I look forward to hearing from you at your convenience.

Jane Doe [signature]

Jane Doe, Chief Executive

Enclosures: Business plan , profit-and-loss statement, balance statement, cash-flow statement

Additionally, you can use the following example to create your own term loan request letter format.

Loan Request Letter Template

[Your name]

[Your title]

[Your business name]

[Your business address]

[Your city], [Your state] [Your ZIP code]

[Loan officer’s name]

[Loan officer’s title]

[Loan officer’s company]

[Loan officer’s address]

[Loan officer’s city], [Loan officer’s state] [Loan officer’s ZIP code]

Re: Small business loan request for $[amount]

Dear [loan officer’s name]:

I am writing this letter to request a small business loan in the amount of $[amount] for the purpose of [summarize the purpose of the loan here]. My business, [your business name], is a growing company that serves clients in the [type of business] industry. You can see our success online at [list your website and any social media profiles you want to showcase].

[Your business name], a [business legal structure], began operation in [date you began operation] with [number] workers [if applicable], and has grown consistently over the past [number] years. We now employ [number] workers [if applicable].

Last year, our annual sales revenue was $[amount], with a net profit of $[amount]. [If you are not profitable, you can omit mention of net profit here.] We have maintained our cash flow consistently over the past [number] years, and have generated an annual net profit each year we’ve been in business [if applicable].

[Explain the reason for the loan request here. For example: To promote our continued growth, we plan to hire a full-time administrative assistant and a sales representative this year. We are requesting funding to cover the cost of their salaries and benefits. (Substitute appropriate language applicable to your business plan.)]

We would like to pursue this next quarter [specify time frame], but this will require more funding than our current cash flow can sustain. Although we lack a lump sum large enough to cover this additional expense, our budget can easily cover monthly payments over time given sufficient financing. A loan in the amount of $[amount] will enable us to cover labor costs for our two new employees. Our projections indicate that increased efficiency and sales will generate enough increased revenue to repay this amount by [date].

Attached, please find our business plan and our most recent financial statements for your review. Based on these strong financials and our business credit score of [score], we are confident that you will find us a safe credit risk.

[Your signature]

[Your name printed]

Enclosures: Business plan, profit-and-loss statement, balance statement, cash-flow statement [list other documents included.]

You also can find loan request letter templates and sample letters online.

Here are a few websites offering examples of business loan application letters you can refer to when writing your own loan request letter:

• If you’re wondering how to write a letter to a bank manager for a loan, check out RequestLetters.com .
• LiveCareer offers a loan application sample letter as well.
• Refer to these loan request samples , too. 

Mastering the Loan Request Letter Format

A loan request letter is essential if you’re applying for a loan from a conventional lender or the SBA. Add weight to your request by optimizing your personal and business credit scores and including your business financial statements. 

Follow the proper format when writing your letter, including a header and greeting, a summary of your request, basic information about your business, an explanation of the purpose of your loan, a summary of your ability to repay your loan and, finally, appropriate concluding elements. Use a template to make writing your loan request letter a little easier.

• About the Author
• Latest Posts

Why Is the Federal Reserve Raising Interest Rates (and What to Expect)?

When Are Small Business Taxes Due?

48 Ecommerce Statistics to Know This Year

13 Best Industries to Invest in for 2024

On a similar note..., you may also like..., explore our most popular tools.

You’re subscribed!

Loan Application Letter to Bank Manager for Quick Approval (with Samples & PDFs)

I have listed sample templates to help you craft an effective and professional loan application letter to bank manager for quick approval.

Also, I would like to point out that you can also download a PDF containing all the samples at the end of this post.

Quick Loan Approval through Application to Bank Manager

First, find the sample template for loan application letter to bank manager for quick approval below.

Subject: Request for Quick Loan Approval

Dear Sir/Madam,

I am in need of a personal loan amounting to INR [Loan Amount] due to [briefly explain the reason for the loan]. I have explored various financing options and after comprehensive consideration, I feel that your bank offers the most beneficial terms and conditions. Hence, I am applying for this loan through your reputed institution.

I have been a customer of your bank for the past [number of years] years and have maintained a good financial record with regular transactions. I believe this will assure you of my sincerity and capability in repaying the loan on time. I am ready to provide any necessary documents, such as proof of income, identity proof, address proof, and other relevant documents, to support my loan application.

I kindly request you to consider my application and process it at the earliest for quick approval. I am hopeful that your bank can assist me during this financial need. I assure you that the loan will be serviced as per the repayment terms and conditions laid down by your bank.

Please let me know about the next steps to be taken from my end to expedite the loan approval process.

Thank you for considering my request. I look forward to your positive response.

Yours faithfully, [Your Name] [Your Address] [Your Contact Number] [Your Email Address] [Date]

Below I have listed 5 different sample applications for “loan application letter to bank manager for quick approval” that you will certainly find useful for specific scenarios:

Loan Application Letter for Urgent Medical Emergency Approval

Respected Sir/Madam,

The estimated cost of the surgery/treatment, as per the medical reports and hospital quotation, is INR [Amount required]. Unfortunately, my savings are insufficient to cover the entire expense, and I need financial assistance to ensure timely and quality medical care for my beloved [Relationship to the patient].

Therefore, I request you to kindly approve a personal loan of INR [Amount required] to be disbursed as soon as possible. I am ready to complete all the necessary formalities and documentation required for the loan processing.

I hope you will understand the urgency of this situation and grant your approval without delay. I assure you that I will make the loan repayments promptly as per the terms and conditions set by the bank.

Thank you for your understanding and support in this critical time.

Yours faithfully,

[Your Full Name] [Your Address] [Contact Number] [Date]

Education Loan Application Letter Highlighting Academic Achievements

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

I, [Your Name], a resident of [Your Address], am writing this letter to apply for an education loan for pursuing my higher studies at [Name of the University/Institute]. I have recently been admitted to the [Name of the Course] program, which is scheduled to begin on [Start Date of the Course]. The duration of the course is [Duration of the Course] and the total expense, including tuition fees, accommodation, and other miscellaneous costs, is approximately INR [Amount Required].

1. I have successfully completed my Class 12th from [Name of the School] with an aggregate score of [Percentage/CGPA] in [Year of Passing]. I secured a [State/National] rank of [Your Rank] in the [Name of the Competitive Exam].

2. I have received numerous accolades and awards for my academic excellence throughout my schooling years, including [Mention any significant awards or honors received].

4. I have also volunteered in community service programs, such as [Mention Program/Project], which has honed my leadership and teamwork skills.

My parents have always supported my education, but given the present financial situation, it has become challenging for them to bear the expenses of my higher studies. Therefore, I sincerely request you to consider my application for an education loan of INR [Amount Required] for the entire duration of the course.

Kindly find enclosed the necessary documents, including my admission letter, fee structure, and other relevant documents supporting my academic achievements for your reference. I assure you that I am committed to excel in my studies and will be diligent in repaying the loan as per the bank’s terms and conditions.

I am hopeful that you will find my application worthy of your consideration and grant me the necessary financial assistance to pursue my dreams. I shall be grateful for your support.

Thanking you,

[Your Name] [Contact Number] [Email Address] [Date]

Small Business Loan Application Letter Emphasizing Entrepreneurial Potential

We have developed a comprehensive business plan, which outlines our objectives and strategies to achieve success in the [Your Industry] market. Our project has strong potential for generating substantial revenues and contributing to India’s economic growth. We are seeking a loan of INR [Loan Amount] to cover the initial costs of setting up our operations, including office space, equipment, inventory, and working capital.

Our team has successfully completed a pilot project in the [Your Target Market], which has received positive feedback from our customers and demonstrated our ability to deliver the proposed product/services efficiently. We are confident that our venture will be profitable and sustainable in the long run, and we assure you of our commitment to repaying the loan within the agreed tenure.

We eagerly look forward to your positive response and support in helping us realize our entrepreneurial dream.

Thank you for your time and consideration.

Yours sincerely,

[Your Name], [Your Designation], [Your Business Name], [Your Business Address], [Your Contact Number], [Your Email Address]

Home Renovation Loan Application Letter Outlining the Property Value Increase

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

The estimated cost of the proposed renovation is INR [Amount], and I would like to avail a loan of INR [Loan Amount] to cover the expenses. I have already obtained quotations from reputed contractors and suppliers to ensure that the renovation work is of high quality and aligns with the latest market trends. The new additions and improvements to the property will include [Mention planned renovation work, e.g., new flooring, kitchen remodeling, etc.].

Thanking you in advance for your valuable support and cooperation.

Debt Consolidation Loan Application Letter to Improve Financial Stability

I, [Your Name], a long-standing customer of your esteemed bank with account number [Account Number], am writing this letter to apply for a debt consolidation loan. The purpose of availing this loan is to improve my financial stability and merge multiple debts into a single manageable loan.

I kindly request you to consider my loan application, and I assure you of my commitment to maintaining a healthy credit score and timely repayments. The following are the details of my outstanding loans and credit facilities:

1. Credit Card Debt – INR [Amount] with [Bank/Institution] 2. Personal Loan – INR [Amount] with [Bank/Institution] 3. Vehicle Loan – INR [Amount] with [Bank/Institution] 4. [Other Loans] – INR [Amount] with [Bank/Institution]

I humbly request you to process my loan application at the earliest and guide me on the next steps required to complete the loan process. Your support in helping me consolidate my debts and achieve financial stability is highly appreciated.

Yours faithfully, [Your Name] [Your Address] [Your Contact Number] [Your Email Address]

How to Write Loan Application Letter to Bank Manager for Quick Approval

Some writing tips to help you craft a better application:

Related Topics:

View all topics →

And if you have any related queries, kindly feel free to let me know in the comments below.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

All Formats

Table of Contents

5 steps to make a loan letter, 1. free loan guarantee letter, 2. free loan request letter template, 3. free loan sanction letter, 4. bank loan application letter template, 5. personal loan letter format, 6. request for loan letter template, 7. education loan letter format, 8. student loan letter template, 9. bank loan application letter example, 10. sample loan application letter template, 11. student loan letter format, 12. loan application letter template, 13. loan letter example, 14. sample student loan letter, 13+ loan letter templates.

A loan letter is a letter issued by a bank or any other financial institution to a borrower or an applicant who has applied for the loan. The loan letters are very necessary these days. Because you need to apply for the loan in a particular procedure. But do you keep on writing the loan letter every time you need one? If yes, you need not do that from now. Because we have the letter templates designed for you, to make you design the loan letter in minutes. With the templates, you can very easily make the letters.

Step 1: The Subject

Step 2: the language, step 3: know the procedure, step 4: the reason, step 5: check.

• Google Docs

More in Letters

Mortgage Loan Commitment Letter Template

Request for business loan letter template, cancellation of housing loan letter template, confirmation of loan letter template, closure of home loan letter template, loan balance confirmation letter template, loan application letter to company for medical treatment template, loan settlement letter template, loan application letter to employer template, loan sanction letter template.

• FREE 26+ Covid-19 Letter Templates in PDF | MS Word | Google Docs
• Thank You Letter for Appreciation – 19+ Free Word, Excel, PDF Format Download!
• 69+ Resignation Letter Templates – Word, PDF, IPages
• 12+ Letter of Introduction Templates – PDF, DOC
• 14+ Nurse Resignation Letter Templates – Word, PDF
• 16+ Sample Adoption Reference Letter Templates
• 10+ Sample Work Reference Letters
• 28+ Invitation Letter Templates
• 19+ Rental Termination Letter Templates – Free Sample, Example Format Download!
• 23+ Retirement Letter Templates – Word, PDF
• 12+ Thank You Letters for Your Service – PDF, DOC
• 12+ Job Appointment Letter Templates – Google DOC, PDF, Apple Pages
• 21+ Professional Resignation Letter Templates – PDF, DOC
• 14+ Training Acknowledgement Letter Templates
• 49+ Job Application Form Templates

File Formats

Word templates, google docs templates, excel templates, powerpoint templates, google sheets templates, google slides templates, pdf templates, publisher templates, psd templates, indesign templates, illustrator templates, pages templates, keynote templates, numbers templates, outlook templates.

Loan Facility Letter

Notification.

• Search Search Please fill out this field.

Pre-Qualification vs. Pre-Approval

Requirements for pre-approval, pre-approval vs. approval.

• What If You Don't Get Pre-Approved?

The Bottom Line

• Personal Finance

5 Things You Need to Be Pre-Approved for a Mortgage

Learn what you need to speed up the approval process

Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.

• When to Buy a Home Based on Mortgage Rates
• Shopping for Mortgage Rates
• Pre-Approvals You Need CURRENT ARTICLE
• Mistakes to Avoid
• Locking In the Rate
• Points and Your Rate
• How Much Do I Need to Put Down on a Mortgage?
• Understanding Different Rates
• Fixed vs. Adjustable Rate
• When Adjustable Rate Rises
• Commercial Real Estate Loans
• Best Mortgage Rates Today
• Best Jumbo Mortgage Rates
• Closing Costs
• Avoiding "Junk" Fees
• Negotiating Closing Costs
• Lowering Refinance Closing Costs
• Types of Lenders
• Applying to Lenders: How Many?
• Broker Advantages and Disadvantages
• How Loan Offers Make Money
• Quicken Loans
• Lending Tree

Tetra Images / Getty Images

Most sellers expect buyers to obtain pre-approval for financing and are commonly willing to negotiate only with those who prove they can get a loan. Pre-approval in this context is more meaningful than in other situations—such as credit card offers—when the term is used. In this case, it means a lender has verified the buyer's qualifications and that the pre-approval is good for two or three months.

The key things necessary for pre-approval are proof of income and assets, good credit, verifiable employment, and documentation necessary for a lender to run a credit check.

Key Takeaways

• A home seller often asks for a mortgage pre-approval letter before negotiating with a buyer.
• Pre-approval requires proof of employment, assets, income tax returns, and a qualifying credit score.
• Mortgage pre-approval letters are typically valid for 60 to 90 days. 
• Upon pre-approval, the lender will provide the maximum loan amount, which helps set a price range for the home shopper.

A mortgage pre-qualification can be useful as an estimate of how much someone can afford to spend on a home, but a pre-approval, often valid for 60 to 90 days, is more valuable. It means the lender has checked the buyer's credit, verified assets, and confirmed employment to approve a specific loan amount.

Buyers benefit by consulting with a lender, obtaining a pre-approval letter, and discussing loan options and budgeting. The lender will provide the maximum loan amount, which will help set the price range for the home shopper. A  mortgage calculator  can help buyers estimate costs.

Mortgage pre-approval requires a buyer to complete a mortgage application and provide proof of assets, confirmation of income, good credit, employment verification, and important documentation.

Pre-approval is based on the buyer's FICO credit score , debt-to-income ratio (DTI) , and other factors, depending on the type of loan.

Except for jumbo loans , all loans conform to Fannie Mae and Freddie Mac guidelines. Some loans are designed for low- to moderate-income homebuyers or first-time buyers. Others such as Veterans Affairs (VA) loans, which require no money down, are for U.S. veterans and service members.

Upfront fees on Fannie Mae and Freddie Mac home loans changed in May 2023. Fees were increased for homebuyers with higher credit scores, such as 740 or higher, while they were decreased for homebuyers with lower credit scores, such as those below 640. Another change: Your down payment will influence what your fee is. The higher your down payment, the lower your fees, though it will still depend on your credit score. Fannie Mae provides the Loan-Level Price Adjustments on its website.

Investopedia / Emily Roberts

1. Proof of Income

Potential homebuyers must provide W-2 wage statements and tax returns from the past two years, current pay stubs that show income and year-to-date income, and proof of additional income sources such as alimony or bonuses.

2. Proof of Assets

A borrower's bank and investment account statements prove that they have funds for a required down payment, closing costs , and cash reserves. The down payment, expressed as a percentage of the selling price, varies by loan type. Many loans require the buyer to purchase private mortgage insurance (PMI) if they are not putting down at least 20% of the purchase price.

3. Good Credit

Most lenders require a FICO score of 620 or higher to approve a conventional loan or 580 for a Federal Housing Administration loan . Lenders typically reserve the lowest interest rates for customers with a credit score of 760 or higher.

The chart below shows a monthly principal and interest payment on a 30-year fixed interest rate mortgage based on a range of FICO scores for three common loan amounts. An interest rate tool from the Consumer Financial Protection Bureau lets buyers see how credit score, loan type, home price, and down payment amount can affect the interest rate.

On a $250,000 loan, an individual with a FICO score in the lowest (620–639) range would pay $1,879 per month, while a homeowner in the highest (760–850) range would pay just $1,607, a difference of $3,264 per year.

*Rates based on the FICO Loan Savings Calculator , which assumes one discount point .

4. Employment Verification

Lenders not only verify employment through a buyer's pay stubs but will likely call the employer to confirm a borrower's employment and salary.

Self-employed buyers provide additional information such as the stability of the borrower’s income, the location and nature of the business, the financial strength of the business, and the ability of the business to continue generating and distributing sufficient income to enable the borrower to make the payments on the mortgage.

5. Other Documentation

Personal documents and identification required for pre-approval include the borrower's driver's license, Social Security number, and authorization to allow the lender to pull a credit report .

A lender is required to provide a document called a  loan estimate  within three business days of receiving a completed mortgage application. It outlines the pre-approved loan amount and maximum loan amount, terms and type of mortgage, interest rate, estimated interest and payments, estimated closing costs, an estimate of property taxes, and homeowner’s insurance.

The loan file will eventually transfer to a loan underwriter who will also ensure that the borrower meets the guidelines for the specific loan program to determine full approval. If nothing has changed in the buyer's financial situation since pre-approval, the buyer and lender can then move forward with the closing of the loan. Final loan approval occurs when the buyer has an appraisal completed for the home and the loan is applied to the property.

What If You Don't Get Pre-Approved?

After reviewing a mortgage application, a lender will provide a decision to pre-approve, deny, or pre-approve with conditions. These conditions may require the borrower to provide extra documentation or reduce existing debt to meet the lending guidelines. If denied, the lender should explain and offer options to improve a borrower's chances for pre-approval.

How Far in Advance Should I Get Pre-Approved for a Mortgage?

Getting pre-approved for a mortgage is best before you start looking for houses as it helps determine a maximum loan approval amount. Pre-approval also determines obstacles like excessive debt or poor credit scores.

Why Is It Important to Get Pre-Approved?

Getting pre-approved for a mortgage gives a home buyer bargaining power since they already have mortgage financing and can therefore make a reasonable offer to the seller of a home in which they are interested. Otherwise, the prospective buyer would have to apply for a mortgage before making an offer and potentially lose the opportunity to bid on a home.

What Is LTV Ratio?

The loan-to-value (LTV) ratio is an assessment of lending risk that financial institutions and other lenders examine before approving a mortgage and compares the loan value to the market value of the property. Typically, loan assessments with high LTV ratios are considered higher-risk loans. Therefore, if the mortgage is approved, the loan has a higher interest rate.

What Is DTI Ratio?

The debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes to paying your monthly debt payments and is used by lenders to determine your borrowing risk.

Mortgage pre-approval is an examination of a home buyer's finances and lenders require five items to ensure borrowers will repay their loan. Potential borrowers complete a mortgage application and provide proof of assets, confirmation of income, credit report, employment verification, and important documentation to obtain pre-approval.

Consumer Financial Protection Bureau. " Exploring Loan Choices ."

U.S. Department of Veterans Affairs. “ VA Home Loans .”

Fannie Mae. “ Loan-Level Price Adjustment Matrix ,” Page 2.

U.S. Bank. “ Mortgage Loan Process .”

Consumer Financial Protection Bureau. " What Is Private Mortgage Insurance? "

My FICO. " Home Purchase Center ."

My FICO. " How Your FICO Score Can Affect an FHA Loan ."

Consumer Financial Protection Bureau. “ Buying a House: Explore interest rates .”

My FICO. " Loan Savings Calculator ."

Fannie Mae. " B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (12/04/2018) ."

Century 21. " How Far In Advance Should I Get Pre-Approved for a Mortgage? "

• Terms of Service
• Editorial Policy
• Privacy Policy

Press Release

Gannett Announces Commitment Letter to Secure New Credit Facility to Refinance Existing Debt

NEW YORK, NY--(BUSINESS WIRE)-- Gannett Co., Inc. (“Gannett”, “we”, “our”, or the “Company”) (NYSE: GCI) announced today it has entered into a commitment letter for a comprehensive debt refinancing that is expected to extend our debt maturities and significantly reduce future dilution from the Company’s 6.0% Senior Secured Convertible Notes due 2027 (the “2027 Notes”).

The commitment letter provides for a new senior secured credit facility (the “Term Loan Facility”) with funds managed by affiliates of Apollo (NYSE: APO) (“Apollo Funds”) of up to $900 million, to be comprised of an initial term loan facility of approximately $675 million (the “Initial Term Facility”), to be funded at the time of closing, and a delayed draw term loan facility of approximately $225 million (the “Delayed Draw Facility”), which will be available at the Company’s discretion at closing and during the six months following closing, subject to certain customary funding conditions. Net proceeds from the Term Loan Facility will be used to repay in full the outstanding principal of the Company’s five-year senior secured term loan facility maturing October 15, 2026, to purchase or redeem the 6.0% first lien notes due November 1, 2026 (the “2026 Notes”) and to repurchase for cash up to 50% of the outstanding 2027 Notes. The Term Loan Facility will mature five years after the closing date and will bear interest at an annual rate equal to SOFR plus a margin of 5.0% with a floor of 150 basis points.

Gannett intends to make an offer to the holders of outstanding 2026 Notes for, at the election of holders, cash consideration at a price of $1,000 for each $1,000 principal amount of 2026 Notes tendered or loans under the Term Loan Facility on a par-for-par basis. As part of these overall transactions, the Apollo Funds have agreed to tender for cash all the 2026 Notes held by such Apollo Funds (having an aggregate principal amount of approximately $81 million) in the exchange offer. The proceeds of the Delayed Draw Facility may be used to repurchase any additional 2026 Notes that are tendered for cash at the time of closing in connection with the exchange offer or to later redeem the outstanding balance of the 2026 Notes in accordance with the terms of the indenture for the 2026 Notes.

In addition, as part of the refinancing transactions, Apollo Funds have agreed to exchange approximately $441 million principal amount of 2027 Notes, with 50% of the aggregate principal amount to be exchanged for cash at a rate of $1,110 per $1,000 principal amount of 2027 Notes and 50% of the aggregate principal amount to be exchanged for new 6.0% Senior Secured Convertible Notes due 2031 (the “2031 Notes”) and otherwise having substantially similar terms to the existing notes. Gannett may redeem up to 30% of the outstanding principal amount of the 2031 Notes at a redemption price of 140% prior to December 1, 2030 (or, under certain circumstances, prior to December 1, 2028). Subject to applicable law, Gannett may repurchase and exchange additional 2027 Notes in individually negotiated, private transactions.

The transactions are expected to close later this fall, subject to any required approvals and customary closing conditions. Other than the tender and exchange transactions with Apollo Funds, there can be no assurance that the exchange offer for the 2026 Notes or that any offer we make to repurchase and exchange any 2027 Notes will be successful.

“This committed plan of refinancing is a significant milestone and the next step on our path towards anticipated sustainable long-term growth and value creation,” said Michael Reed, Chairman and Chief Executive Officer. “We believe our ability to successfully refinance our existing facilities, while extending the term loan maturity date to 2029 and significantly reducing the future impact of the 2027 Notes, reflects Gannett's long-term strategy and the progress made against the strategy from an execution standpoint. We believe this refinancing shows Apollo's commitment to being an excellent partner to Gannett, especially as it relates to our capital structure. We believe this new financing gives the Company generous runway to repay its debt, and the reduced future dilution from the convertible notes is expected to be significant for our shareholders. We believe this transaction announced today creates the time and flexibility for further investment in growth in order to achieve our transformation and fully unlock value for our shareholders.”

Apollo Partner and Head of Portfolio Strategy Robert Givone said, “We continue to be supportive of Gannett. We believe this comprehensive refinancing will enable Gannett to further strengthen its balance sheet and enhance its financial flexibility, and that the transactions demonstrate the creative capital solutions that Apollo is able to provide to great companies.”

About Gannett

Gannett Co., Inc. (NYSE: GCI) is a diversified media company with expansive reach at the national and local level dedicated to empowering and enriching communities. We seek to inspire, inform, and connect audiences as a sustainable, growth focused media and digital marketing solutions company. We endeavor to deliver essential content, marketing solutions, and experiences for curated audiences, advertisers, consumers, and stakeholders by leveraging our diverse teams and suite of products to enrich the local communities and businesses we serve. Our current portfolio of trusted media brands includes the USA TODAY NETWORK, comprised of the national publication, USA TODAY, and local media organizations in the United States, and Newsquest, a wholly-owned subsidiary operating in the United Kingdom. Our digital marketing solutions brand, LocaliQ, uses innovation and software to enable small and medium-sized businesses to grow, and USA TODAY NETWORK Ventures, our events division, creates impactful consumer engagements, promotions, and races.

Our website address is www.gannett.com. We use our website as a channel of distribution for important company information, including press releases and other news and presentations, which is accessible on the Investor Relations and News and Events subpages of our website.

Cautionary Statement Regarding Forward-Looking Statements

Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our ability to enhance our capital structure and refinance our debt facilities, maturity of debt, dilution, tender offers, note repurchases, exchanges and redemptions, availability of future financing, interest expenses, long-term growth and value creation, investments in growth, our partnerships, our runway and ability to repay debt, our transformation and shareholder value. Words such as "expect(s)", "will", “believe(s)”, “anticipate(s)” and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties. These and other risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. The Company can give no assurance its expectations regarding the proposed financing and liability management transactions, or otherwise, will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time in the Company’s 2023 Annual Report on Form 10-K, and other filings with the Securities and Exchange Commission. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Except to the extent required by law, the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

For investor inquiries, contact: Matt Esposito Investor Relations 703-854-3000 [email protected]

For media inquiries, contact: Lark-Marie Anton Chief Communications Officer 646-906-4087 [email protected]

Birth and Death Records

• Birth/Death Records
• Vaccine Records
• Dog Licenses
• Lost and Found Pets
• Food Establishment Inspections
• Rat Prevention: Training
• NYC Health Map

Birth Certificates

Go to: Pre-adoption Certificates | New and Expectant Parents | Types of Certificates

VitalChek: Only Authorized Online Vendor

For the fastest service, order certified copies online through VitalChek , which is the only vendor authorized by the Health Department to process birth certificate orders.

To order or correct a marriage certificate, visit the Office of the City Clerk .

You can order a birth certificate online, by mail or in person . You cannot order by email. We recommend ordering online through VitalChek , which is the fastest way to receive your certificate.

You may apply for a New York City birth certificate if:

• You were born in New York City
• You are listed on the birth certificate (as parent or registrant/child)
• You are 18 or older

If you were born outside of New York City, including elsewhere in New York State, the CDC has information on how you can order a certificate .

For more information on applying , see Birth and Death Records: How to Apply

Each certificate costs $15, and may have an additional processing fee. For more information on fees, see Birth and Death Records: Fees .

There are two types of birth certificates:

• Short Form : The short form is the most commonly requested certificate. It can be used for most domestic purposes. This form includes your child's first and last name, place of birth, date of birth, sex at birth and mother and father's first and last names.
• Long Form : The long form includes additional information and is generally used for international purposes, such as dual citizenship, international adoption, international marriage, time of birth and apostille certificates.

The following application is required for all orders of both short and long forms:

• Birth Certificate Application (PDF) Other Languages: Español | Русский | 繁體中文 | 简体中文 | Kreyòl ayisyen | 한국어 | বাংলা | Italiano | Polski | ײִדיש | العربية | Français | اردو

If you are unable to schedule an appointment and have an emergency request related to travel, health care coverage, government services, military, housing or employment, call 311 or email [email protected] . In your email, include current photo ID and documents showing that you have an emergency, such as a paid plane ticket, letter from an employer with a job start date, or letter from a government agency with an appointment date. You will receive an email confirming whether your in-person emergency appointment to purchase the birth certificate is approved.

New and Expectant Parents

Parents receive a free birth certificate for newborns about four weeks after birth. Your baby's birth certificate will be based on information you provide at the hospital when you deliver. It will be automatically mailed to the parents listed on the certificate.

At the hospital, you will be asked to fill out a Mother/Parent Worksheet (PDF). You can complete this ahead of time and bring it to the hospital or give it to your midwife. The worksheet collects important information and helps your baby get a Social Security Card.

Be careful when you fill out your baby’s full name and your mailing address. Correcting a birth certificate can cost money or even require a trip to court. A mistake in the mailing address can delay delivery.

Married parents, regardless of sex, have the right to have both their names on their child's birth certificate. Some hospitals require proof of marriage. Check with the hospital to find out if you need to bring a copy of your marriage license with you.

An Acknowledgment of Parentage is a document that unmarried parents must both sign voluntarily to establish the child's legal father/parent.

Certified copies of an Acknowledgment of Parentage are free of charge. Complete the New York State Acknowledgment of Parentage application and submit by mail or in person.

For questions about certificates for newborns (born within the past 30 days),call 646-632-6563 or email [email protected] .

Resources for Expecting Parents

There is no fee to add a child's given name to a birth certificate if you submit the application within 60 days of birth.

You may add a given name and submit corrections if you find missing or incorrect information at the hospital. There is no fee for changes made by the hospital if sent within 12 months of birth.

Once the baby is named, it is official. Changing a baby's name may require you to go to court and pay applicable fees. Visit the certificate corrections page for more details.

Types of Birth Certificates and Requests

How to Obtain an Apostille on a NYC Birth Certificate

Step 1: Get the Long Form Birth Certificate or Death Certificate with a Letter of Exemplification.

• Order Online: Visit VitalCheck and select "Apostille/Authentication" from the request reasons drop-down.
• Order by Mail:
• For Birth Certificates: Download the application (PDF) and answer "Yes" to question 11b.
• For Death Certificates: Download the application (PDF) and answer "Yes" to question 10. After filling out and signing the application, make sure to notarize it.
• Order In-Person: Set up an appointment online . At the customer kiosk, select "Apostille/Authentication" from the request reasons drop-down.

Step 2: Authentication by the County Clerk.

• Bring your certificate and the Letter of Exemplification to:
• County Clerk Office 60 Centre Street, Room 141B, New York, NY 10007
• View the latest operational hours .
• Cost: $3.00

Step 3: Acquiring the Apostille or Certificate of Authentication.

• For detailed information and to schedule an appointment, visit New York Department of State: Apostille or Certificate of Authentication .
• Contact: New York State Department of State Division of Licensing Services 123 William Street, 19th Floor, New York, NY 10038
• Hours: 9 a.m. to 3:30 p.m.
• Phone: (518) 474-4429

Attorney Request

An attorney requesting a birth certificate on behalf of a registrant, registrant's mother or registrant's father/parent (if named on the certificate) can order a birth certificate. To submit a request, an attorney must:

• Submit the Attorney Protocol for NYC Birth Certificates form (PDF).
• Sign and notarize the birth certificate application.
• Include the required fee.
• Provide copies of the attorney's current photo identification.
• Provide proof of attorney licensure.
• Label the addressed envelope "Attn: Attorney Protocol Request".

The information on the forms must match the Birth Certificate record on file.

Ordering a Deceased Person's Birth Certificate

• Domestic partner
• Parent (if the deceased was 18 or younger)
• Niece/Nephew
• Grandniece/Grandnephew
• Great grandchild
• A Birth Certificate Application (PDF)
• A Family Tree/Link to Decedent (PDF) Other Languages: Español | Русский | 繁體中文 | 简体中文 | Kreyòl ayisyen | 한국어 | বাংলা | Italiano | Polski | ײִדיש | العربية | Français | اردو
• If the person died in NYC, a copy of the death certificate or the death certificate number
• If the person died outside NYC, the original death certificate
• A check or money order payment of $15 for each copy of the certificate
• A legible copy of your valid, unexpired photo identification

Orders can only be made by mail.

Ordering an Existing Acknowledgement of Parentage (AOP)

Certified copies of an existing acknowledgment of parentage are available for free. Complete the Application for a Copy of an Acknowledgment of Parentage (PDF) form and submit your request by mail or in person. You must include a copy of your current photo identification.

All in-person orders require an appointment. Click here to schedule an appointment online . If you schedule an appointment and make your request in person, you may be able to walk away with a certified copy of the acknowledgement of parentage that same day.

Send mail requests to:

Office of Vital Records 125 Worth Street, Room 119 New York, NY 10013

Non-Profit Organization Request

Non-profit groups that provide services to minor children or developmentally disabled adults may get birth and death certificates on behalf of their clients through a mailed application. For instructions on how to make this request, email the following to [email protected] :

• Name of your organization
• Description of your clients and the clients served (adults/minors).
• Reason that the birth certificate is needed.

Pre-1910 Birth Certificates

To request a birth record from before 1910, order online through the NYC Department of Records and Information Services Municipal Archives website or call 311 .

If that agency is unable to locate your record, email [email protected] .

Certificate Security Features

As of 2019, NYC birth and death certificates no longer have a raised seal. The certificates are issued on certified paper that includes numerous security features that ensures the integrity and acceptance of the certificates. Refer to the back of the certificate, which describes several of these security features in detail.

Pre-adoption Certificates

For information on requesting a pre-adoption birth certificate, see Birth and Death Records: Pre-Adoption Certificates .

Try the Recipe Analyzer to measure any dish’s nutritional value.

AARP daily Crossword Puzzle

Hotels with AARP discounts

Life Insurance

AARP Dental Insurance Plans

LIMITED TIME OFFER: Labor Day Sale!

Join AARP for just $9 per year with a 5-year membership and get a FREE Gift! 

Get instant access to members-only products, hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. 

• right_container

Work & Jobs

Social Security

• AARP en Español

• Membership & Benefits
• Members Edition
• AARP Rewards
• AARP Rewards %{points}%

Conditions & Treatments

Drugs & Supplements

Health Care & Coverage

Health Benefits

AARP Hearing Center

Advice on Tinnitus and Hearing Loss

Get Happier

Creating Social Connections

Brain Health Resources

Tools and Explainers on Brain Health

Your Health

8 Major Health Risks for People 50+

Scams & Fraud

Personal Finance

Money Benefits

View and Report Scams in Your Area

AARP Foundation Tax-Aide

Free Tax Preparation Assistance

AARP Money Map

Get Your Finances Back on Track

How to Protect What You Collect

Small Business

Age Discrimination

Flexible Work

Freelance Jobs You Can Do From Home

AARP Skills Builder

Online Courses to Boost Your Career

31 Great Ways to Boost Your Career

ON-DEMAND WEBINARS

Tips to Enhance Your Job Search

Get More out of Your Benefits

When to Start Taking Social Security

10 Top Social Security FAQs

Social Security Benefits Calculator

Medicare Made Easy

Original vs. Medicare Advantage

Enrollment Guide

Step-by-Step Tool for First-Timers

Prescription Drugs

9 Biggest Changes Under New Rx Law

Medicare FAQs

Quick Answers to Your Top Questions

Care at Home

Financial & Legal

Life Balance

LONG-TERM CARE

​Understanding Basics of LTC Insurance​

State Guides

Assistance and Services in Your Area

Prepare to Care Guides

How to Develop a Caregiving Plan

End of Life

How to Cope With Grief, Loss

Recently Played

Word & Trivia

Atari® & Retro

Members Only

Staying Sharp

Mobile Apps

More About Games

Right Again! Trivia

Right Again! Trivia – Sports

Atari® Video Games

Throwback Thursday Crossword

Travel Tips

Vacation Ideas

Destinations

Travel Benefits

Beach Vacation Ideas

Fun Beach Vacations

Road Trips For Every Personality

Passport Access

Passports Can Be Renewed Online

AARP National Park Guide

Black Canyon of the Gunnison

Entertainment & Style

Family & Relationships

Personal Tech

Home & Living

Celebrities

Beauty & Style

Movies for Grownups

Summer Movie Preview

Jon Bon Jovi’s Long Journey Back

Looking Back

50 World Changers Turning 50

Sex & Dating

7 Dating Dos and 7 Don'ts

Friends & Family

Veterinarians May Use AI to Treat Pets

Home Technology

Caregiver’s Guide to Smart Home Tech

Virtual Community Center

Join Free Tech Help Events

Creative Ways to Store Your Pets Gear

Meals to Make in the Microwave

Wearing Shoes Inside: Pros vs. Cons

Driver Safety

Maintenance & Safety

Trends & Technology

AARP Smart Guide

How to Clean Your Car

We Need To Talk

Assess Your Loved One's Driving Skills

AARP Smart Driver Course

Building Resilience in Difficult Times

Tips for Finding Your Calm

Weight Loss After 50 Challenge

Cautionary Tales of Today's Biggest Scams

7 Top Podcasts for Armchair Travelers

Jean Chatzky: ‘Closing the Savings Gap’

Quick Digest of Today's Top News

AARP Top Tips for Navigating Life

Get Moving With Our Workout Series

You are now leaving AARP.org and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply.

Go to Series Main Page

Brought to you by

Open Enrollment

Medicare Open Enrollment Ends on Dec. 7

It's time to check your coverage

7 Medicare Changes You Can Expect in 2025

Lower drug costs, coverage changes and new benefits

10 Things Medicare Doesn’t Cover

You’ll need to plan ahead to pay for some common medical expenses

10 Things to Know About Medigap Plans

Your guide to buying Medicare ​supplemental health insurance

How Much Do You Know About Medicare?

Take this quiz and discover how knowledgeable you are about the health insurance program

Taking Stock

Medicare Open Enrollment: Everything You Need to Know

When it starts, when it ends, and how it works for original Medicare and Medicare Advantage

How Much Does Medicare Cost?

Monthly premiums, other out-of-pocket expenses can add up

Understanding Medicare’s Options: Parts A, B, C and D

Making sense of the alphabet soup of health care choices

12 Things Free Under Medicare

Vaccines, screenings, counseling and more

The Big Choice: Original Medicare vs. Medicare Advantage

Which path you take will determine how you get your medical care — and how much it costs

How to Sign Up: A Guide to Medicare Enrollment

When you can enroll for health coverage, the best ways to do it and how to avoid penalties

What Is Medicare?

How the federal health insurance program covers seniors and people with disabilities

5 Steps to Help You Sign Up for Medicare Benefits

When to enroll and what decisions you need to make

10 Things You Didn’t Know About Medicare

How the program works for older adults and those with disabilities

When 9 Biggest Medicare Changes Under New Rx Law Go Into Effect

A year-by-year implementation timeline of the Inflation Reduction Act’s health provisions

Follow the Rules

10 Common Medicare Mistakes to Avoid

Errors can prove costly to new enrollees

What You Need to Know About Part D Prescription Drug Plans

How to make sure that the medicines you take are covered by the plan you choose

How to Get Help Paying for Medicare

Savings programs can help cover premiums, copays and deductibles

Getting Coverage

Medicare Eligibility: Age, Qualifications, Requirements

Here are the requirements to be eligible for health care coverage

7 Ways to avoid higher medicare premiums

Major life events can exempt enrollees from surcharges

7 Medicare Changes You’ll See in 2025

Expensive medications you’ll save thousands. dementia or mental health care more options.

Kimberly Lankford,

Key takeaways

• Changes from Inflation Reduction Act will take effect next year.
• Lower out-of-pocket limit in Part D drug plans erases old “donut hole.”
• You may find weight loss drugs covered to treat other medical conditions.
• Your Medicare Advantage plan may not stay the same.
• Look for a midyear statement from your MA plan.
• Caregivers for loved ones with dementia may be eligible for respite care .
• More mental health counselors are encouraged to enroll as providers.

You can thank the Inflation Reduction Act of 2022 for some of the biggest Medicare changes in the past few years — including a welcome reprieve from the high costs of prescription drugs.

Join AARP for just $9 per year with a 5-year membership and get a FREE Gift!

Among the changes:

In 2023 , Medicare capped covered insulin costs in Part D prescription drug plans at $35 a month and eliminated out-of-pocket costs for recommended vaccines.

In 2024, the government expanded eligibility for financial assistance from the Part D Extra Help program and announced results Aug. 15 of negotiations to reduce the costs of 10 of Medicare’s most expensive drugs . Those prices will take effect in 2026.

One of the biggest changes takes effect in 2025, when Part D plans must cap out-of-pocket spending on covered drugs at $2,000 a year. That change will have a ripple effect on Part D and Medicare Advantage plans’ other costs and coverage, making it especially important to review your options during open enrollment this year.

The Part D rules overshadow other Medicare changes that can make a difference in 2025, including Medicare Advantage midyear coverage notices and stricter marketing rules, expanded benefits for family caregivers and access to more mental health providers.

1. $2,000 out-of-pocket spending cap for prescriptions

The $2,000-a-year out-of-pocket limit for prescription medications applies to stand-alone Medicare Part D policies and drug coverage in Medicare Advantage plans.

“It’s the first time in the history of the Medicare program that people have a cap on how much they could have to pay out of pocket,” Meena Seshamani, M.D., the director of the federal Center for Medicare, said in an interview with AARP. “And such a significant change means that in open enrollment, it is so important to shop. Because with such big changes, there very well could be a plan that better suits your health and financial needs.”

The $2,000 cap includes deductibles, copayments and coinsurance for covered drugs. It doesn’t apply to premiums or to drugs a plan doesn’t cover.

“It doesn’t apply to their Part B drugs,” such as injections they get at their doctor’s office, says Gretchen Jacobson, vice president of Medicare for the Commonwealth Fund. The amount of the cap can be adjusted in subsequent years if Part D costs rise.

2. No more Part D ‘donut hole’ or coverage gap

This change simplifies the way Part D works. Before 2025, plans had four coverage phases.

• Deductible. You pay the full cost of drugs until you meet your deductible, up to $545 in 2024.
• Initial coverage with copayments that vary by medication.
• Coverage gap , which occurs when you and your drug plan reach $5,030 spent on covered medications in 2024. It was known as the “donut hole.” Plans pay less in this gap, especially for brand-name drugs, and have dispensing fees. You may pay more out of pocket for the same meds than in your initial coverage period.
• Catastrophic coverage begins at $8,000, based on your out-of-pocket costs, not the insurer’s share, and manufacturers’ discounts in the coverage gap. In the catastrophic phase in 2024, you pay nothing for your covered prescriptions until the new year, Jan. 1, 2025.

In 2025, Part D plans can have a deductible up to $590. Then you pay copayments for your medications until your total out-of-pocket costs reach $2,000.

The cap is expected to help millions of people. By April 1, 2024, more than 1.7 million people, about 3.5 percent of people covered in drug plans, had already reached $2,000 in out-of-pocket costs on their prescriptions, according to the Centers for Medicare & Medicaid Services (CMS). More certainly will surpass that by the end of the year.

People with high drug costs tend to pay a lot at the beginning of a year. The Medicare Prescription Payment Plan will let enrollees opt to pay their prescription costs monthly rather than all at once.

“This will enable people to spread out the out-of-pocket drug costs over the course of the year so that you don’t experience that sticker shock and those cash flow issues at the pharmacy,” Seshamani says.

The payment plan doesn’t reduce the total cost, but it can help with budgeting. You can opt into the plan by contacting your Part D company.

The caveat. “There was some concern that changes in the Medicare Part D benefit design that lower costs for beneficiaries, like the $2,000 cap, would lead to higher premiums for 2025,” says Tricia Neuman, executive director for KFF’s program on Medicare policy. The $2,000 cap doesn’t include premiums.

“The Inflation Reduction Act included a 6 percent cap on base Part D premiums, but the cap does not apply to the total premium that individual plans may charge,” she says. Part D plans will have to cover a larger share of the costs beyond the cap. Drug manufacturers and Medicare also contribute to the cost beyond the cap.

The 2025 Part D base premium is $36.78, but actual premiums vary depending on your location and plan.

“They [CMS officials] don’t want beneficiaries to have to end up paying more in premiums because they get a cap on their out-of-pocket expenses,” the Commonwealth Fund’s Jacobson says.

The bottom line: You may see a big variation in premiums, copayments and covered drugs during open enrollment this year. Look at the annual notice of change that your plan must send in September outlining changes to your plan for 2025.

Starting Oct. 1, you can compare coverage and costs for all the plans in your area using the Medicare Plan Finder and choose a 2025 plan during open enrollment from Oct. 15 to Dec. 7. You can get help for free from your State Health Insurance Assistance Program (SHIP).

AARP NEWSLETTERS

%{ newsLetterPromoText  }%

%{ description }%

Privacy Policy

ARTICLE CONTINUES AFTER ADVERTISEMENT

3. More ways to get weight loss drugs

Medicare is prohibited from covering drugs prescribed specifically for weight loss . But Part D plans can cover popular weight loss drugs when they’re ordered for other purposes, such as Ozempic and Mounjaro for type 2 diabetes.

In March, the Food and Drug Administration approved Wegovy for people with cardiovascular disease who are overweight. Few Part D plans added the drug to their approved lists because they can’t change premiums midyear.

AARP® Vision Plans from VSP™

Vision insurance plans designed for members and their families

“I looked at 83 stand-alone Part D plans and 235 Medicare Advantage plans in four cities, and only two plans covered Wegovy,” says Diane Omdahl, author of Medicare for You: A Smart Person’s Guide. She’s president of 65 Incorporated in Mequon, Wisconsin, which helps people with Medicare decisions.

However, you may find more weight loss drugs covered in 2025.

“We estimate that roughly 1 in 4 Medicare beneficiaries with obesity or who are overweight could be eligible for Wegovy to reduce the risk of serious heart disease,” Neuman says. “On the one hand, Wegovy is likely to be subject to relatively high cost-sharing because of its high price, but on the other hand, Part D enrollees who take these drugs will benefit from having the new $2,000 cap on their drug expenses.”

Part D plans can expand coverage as the FDA approves other uses for weight loss drugs.

Medicare does not cover Zepbound (tirzepatide) because the FDA has approved it only for weight loss. If the agency OKs tirzepatide for treatment of moderate to severe obstructive sleep apnea and obesity, which pharmaceutical giant Eli Lilly requested, Part D plans could cover the drug for that purpose.

4. Subtle changes to your Medicare Advantage coverage

The $2,000 out-of-pocket spending cap applies to deductibles, copayments and coinsurance in the prescription drug portion of Medicare Advantage plans.

Medicare Advantage plans may make changes in 2025 to help cover their additional expenses. They are less likely than Part D plans to adjust premiums, especially if they charge nothing in addition to the Part B premium , says Meredith Freed, senior policy manager with KFF’s program on Medicare policy.

No extra premium? Probably safe. “The zero-dollar premium is really attractive to people and one of the easiest ways to compare across plans,” she says. But a plan may change its formulary , which is its list of covered drugs; reduce its out-of-pocket maximum spending limit; increase the percentage you pay for some services, called coinsurance; or reduce some of the extra benefits that drew you to the plan in the first place.

“If you still have a dental benefit, for example, maybe it’s a little less generous than in prior years,” Freed says.

The devil’s in the details . Review your plan’s annual notice of change carefully. Don’t just rely on the general description of coverage in the Medicare Plan Finder when comparing Medicare Advantage plans.

Look at the details in the Explanation of Benefits on the plan’s website before making a final decision. Also reconfirm that your providers are in the plan’s network.

LIMITED TIME OFFER: Labor Day Sale!

Join AARP for just $9 per year with a 5-year membership and get a FREE Gift! Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP The Magazine. 

5. Midyear statement from your Medicare Advantage plan

This will matter to Medicare beneficiaries who have chosen Advantage plans instead of original Medicare, 50.4 percent as of April 2024. The midyear statement will show available benefits that you haven’t used — important since those extras are often what persuades a Medicare enrollee to sign up with a particular plan.

“For example, if they haven’t used any of their dental, vision, hearing or fitness benefits, plans are required to notify them if they have any benefits left,” Jacobson says.

You’ll continue to see more realistic TV ads from Medicare Advantage plans, the private insurance alternative to original Medicare. Rules that took effect last year before open enrollment prohibited Medicare Advantage ads from mentioning benefits not available in the area where the ad appears. The ads also can’t mislead you into thinking you’re contacting a government employee when you call with questions.

6. Expanded program for family caregiver services

A program for dementia patients and their caregivers that launched this year will quadruple in 2025, serving more of the country.

The program, called Guiding an Improved Dementia Experience (GUIDE), provides a 24/7 support line, a care navigator to find medical services and community-based assistance, caregiver training and up to $2,500 a year for at-home, overnight or adult day care respite services. Patients and their caregivers typically won’t have copayments.

Adding 294 to original 96 . CMS selected 96 organizations to participate starting July 1, 2024, including academic medical centers, hospitals, small and large group practices and community-based organizations already providing programs for dementia patients. The agency chose 294 organizations to join next July.

“We’re very excited about this,” says Janet LeClair, CEO of Memory & Movement Charlotte (North Carolina), a nonprofit medical practice that has focused on dementia patients for 11 years. “The caregiver is really the pivotal person ensuring the quality of life of the patients.”

Important criteria. Participants must be enrolled in original Medicare and have a dementia diagnosis. They can’t be in hospice or a nursing home.

“We know intuitively that respite is so critical to the health and well-being of the caregiver, which directly correlates to the health and wellness of the patient,” LeClair says.

To see if a program is available in your area, go to the CMS GUIDE program fact sheet and the link to the CMS Innovation website . Click GUIDE Model in the drop-down models list | Display selected .

Programs that will begin in July 2025 are listed. Contact the program to learn more about eligibility and request an assessment.

7. A push to add more mental health providers to Medicare

Although the percentage of adults 65 and older reporting they used mental health services increased by only 1 point to 20 percent from 2019 to 2022, according to a KFF study , access to care may have affected those numbers. 

Before this year, licensed marriage and family therapists, mental health counselors and addiction counselors couldn’t bill Medicare because they weren’t allowed to enroll as Medicare providers. Now they can, and some have.

A paperwork process. “But it’s not just automatic. There are steps they need to take,” Freed says.

Medicare Advantage plans must meet stricter standards to improve access to behavioral health specialists.

“We’ve had such tremendous excitement and interest with tens of thousands of clinicians enrolling in the Medicare program, which will make a big difference for access to care,” Seshamani says. More than 400,000 behavioral health clinicians nationwide are eligible, but you’ll need to ask any provider you seek if they accept Medicare.

Positive development: Even though many telehealth expansions that took effect during the COVID-19 pandemic will expire at the end of 2024, Medicare permanently expanded access to telemedicine for behavioral health services. That can help with access to providers, especially in rural areas.

Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at  Kiplinger’s Personal Finance  and has written for  The Washington Post  and  Boston Globe . She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State Society of CPAs’ excellence in financial journalism award for her guide to Medicare.

Unlock Access to AARP Members Edition

Already a Member? Login

More From AARP

What Caregivers Should Know About Medicare Coverage

25 Great Ways to Build Healthy Habits

Recommended for You

Benefits recommended for you.

SAVE MONEY WITH THESE LIMITED-TIME OFFERS

• What You Need to Know About the U.S. Department of Transportation’s Build America TIFIA Loan

The U.S. Department of Transportation’s Build America Bureau recently announced its first Transportation Infrastructure Financing and Innovation Act (“TIFIA”) loan for transit-oriented development projects.  Such loans support transportation development with a variety of financing structures, including public-private partnerships and private activity bonds. 

What types of projects can TIFIA loans be used for?

TIFIA loans provide financing for capital projects public infrastructure projects located within walking distance of, and accessible to, a transit facility, passenger rail station, intercity bus station, or intermodal facility.  Projects must be within a ½ mile walking distance of a qualifying station/facility.

TIFIA funds are available for projects relating to economic development, including commercial and residential development. Eligible elements could include property acquisition; demolition of existing structures; walkways; pedestrian and bicycle access to a public transportation facility; construction, renovation, and improvement of intercity bus and intercity rail stations and terminals; renovation and improvement of historic transportation facilities; open space; safety and security equipment and facilities; facilities that incorporate community services such as daycare or health care; capital projects for a facility for an intermodal transfer facility or transportation mall; and construction of space for commercial uses.

How much of project costs could be covered by a TIFIA loan? 

Financing is available for up to 49% of eligible project costs.  To be considered for a TIFIA loan, a project must have eligible costs reasonably anticipated to total at least $50 million ($10 million for rural infrastructure projects).

What types of borrowers are eligible for TIFIA loans?

Entities eligible for TIFIA funding could include local governments; transit agencies; special authorities; special districts; or private firms or consortia that may include companies specializing in engineering, construction, materials, and/or the operation of transportation facilities.

What types of credit facilities are available?

The TIFIA credit program offers three distinct types of financial assistance, including secured (direct) loans, loan guarantees, and standby lines of credit.

What are the terms of a TIFIA loan?

Interest rates for TIFIA loans are set at the U.S. Treasury rate for a security of similar maturity.  Such loans include flexible terms including, amortization with repayment periods of up to 35 years, deferred payment up to 5 years after substantial completion of the project, and no prepayment penalty.

Latest Posts

• Breaking News: Federal Judge Blocks Nationwide Implementation of the FTC’s New Rule Banning Noncompete Agreements
• September 4th is Almost Here: How Employers Can Prepare for the Upcoming Effective Date of the FTC’s Non-Compete Rule
• Florida’s New Statutory Home Warranty: What Home Builders Need to Know
• Orange County Proposes Temporary Suspension Ordinance on New Development Applications

See more »

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

Refine your interests »

Written by:

PUBLISH YOUR CONTENT ON JD SUPRA NOW

• Increased visibility
• Actionable analytics
• Ongoing guidance

Published In:

Shutts & bowen llp on:.

"My best business intelligence, in one easy email…"

• Best Extended Auto Warranty
• Best Used Car Warranty
• Best Car Warranty Companies
• CarShield Reviews
• Best Auto Loan Rates
• Average Auto Loan Interest Rates
• Best Auto Refinance Rates
• Bad Credit Auto Loans
• Best Auto Shipping Companies
• How To Ship a Car
• Car Shipping Cost Calculator
• Montway Auto Transport Review
• Best Car Buying Apps
• Best Sites To Sell a Car
• CarMax Review
• Carvana Review (July 2024)
• Best LLC Service
• Best Registered Agent Service
• Best Trademark Service
• Best Online Legal Services
• Best Accounting Software
• Best Receipt Scanner Apps
• Best Free Accounting Software
• Best Online Bookkeeping Services
• Best Mileage Tracker Apps
• Best Business Expense Tracker Apps
• Best CRMs for Small Business
• Best CRM Software
• Best CRM for Real Estate
• Best Marketing CRM
• Best CRM for Sales
• Best Mortgage CRM
• Best SEO Services
• Best Mass Texting Services
• Best Email Marketing Software
• Best SEO Software
• Best HR Software
• Best Payroll Services
• Best Global Payroll Services 2024
• Best Payroll Software for Accountants in 2024
• Best HR Outsourcing Services
• Best HRIS Software
• Best Free Time Tracking Apps
• Best Project Management Software
• Best Construction Project Management Software
• Best Task Management Software
• Free Project Management Software
• Best Personal Loans
• Best Fast Personal Loans
• Best Debt Consolidation Loans
• Best Personal Loans for Fair Credit
• HOME EQUITY
• Best Home Equity Loan Rates
• Best Home Equity Loans
• Best Checking Accounts
• Best Online Checking Accounts
• Best Online Banks
• Bank Account Bonuses
• Best High-Yield Savings Accounts
• Best Savings Accounts
• Average Savings Account Interest Rate
• Money Market Accounts
• Best CD Rates
• Best 3-Month CD Rates
• Best 6-Month CD Rates
• Best 1-Year CD Rates
• Best 5-Year CD Rates
• Best Hearing Aids
• Best OTC Hearing Aids
• Most Affordable Hearing Aids
• Eargo Hearing Aids Review
• Best Medical Alert Systems
• Best Medical Alert Watches
• Best Medical Alert Necklaces
• Are Medical Alert Systems Covered by Insurance?
• Best Online Therapy
• Best Online Therapy Platforms That Take Insurance
• Best Online Psychiatrist Platforms
• BetterHelp Review
• Best Mattress
• Best Mattress for Side Sleepers
• Best Mattress for Back Pain
• Best Adjustable Beds
• Best Home Warranty Companies
• Best Home Appliance Insurance
• American Home Shield Review
• Liberty Home Guard Review
• Best Moving Companies
• Best Interstate Moving Companies
• Best Long-Distance Moving Companies
• Cheap Moving Companies
• Best Window Brands
• Cheap Window Replacement
• Window Replacement Cost
• Best Gutter Guards
• Gutter Installation Costs
• Best Solar Companies
• Best Solar Panels
• How Much Do Solar Panels Cost?
• Solar Calculator
• Texas Electricity Companies
• Texas Electricity Rates
• Best Car Insurance Companies
• Cheapest Car Insurance Companies
• Compare Car Insurance Quotes
• Best Car Insurance for New Drivers
• Best Pet Insurance
• Cheapest Pet Insurance
• Pet Insurance Cost
• Pet Insurance in Texas
• Pet Wellness Plans
• Is Pet Insurance Worth It?
• Best Life Insurance
• Best Term Life Insurance
• Best Whole Life Insurance
• Term vs. Whole Life Insurance
• The Best Travel Insurance Companies
• Best Homeowners Insurance Companies
• The Best Renters Insurance Companies of September 2024
• Best Motorcycle Insurance
• Cheapest Homeowners Insurance
• Cheapest Renters Insurance
• Travel Medical Insurance

MarketWatch Guides is a reviews and recommendations team, independent of the MarketWatch newsroom. We might earn a commission from links in this content.  Learn More

How To Get a Mortgage Preapproval

Divyakshi Sharma is a professional copywriter and a proud North Carolina State University graduate. Divi is the CEO and founder of Writeable: A Copywriting Agency and works with a variety of different brands, including Atlas Obscura, Bigmouth Copy and Gale Creative Agency. While her 9-to-5 is running her own business, her weekends are filled with hiking, yoga, reading Letterboxd reviews and conducting mostly successful food experiments.

Mortgage preapprovals can be essential for homebuyers, especially if you’re buying a home for the first time. That’s because they can help strengthen your offer on a property by showing sellers that you’re financially ready to buy.

This guide covers critical preapproval information, such as the right time to get preapproved, the difference between preapproval and prequalification, and the documents you’ll need to provide.

• Starting the mortgage preapproval process about six to 12 months before house hunting is ideal because it gives you time to assess your finances and make any necessary improvements.
• Prequalification is a quick, informal assessment of your finances, while preapproval is more thorough and requires documentation.
• Before applying for preapproval, be prepared with essential documents such as recent pay stubs, tax returns and credit reports.
• To get a clear picture of what you can afford, talk to a loan officer.

When To Apply for Mortgage Preapproval

You should initiate the preapproval process about six to 12 months before you plan to buy a property.  This time frame allows for a comprehensive assessment of your financial health, giving you a clear idea of what you can afford. It also provides ample time to address any issues that might arise, such as the need to improve your credit score or save for a larger down payment. This is a proactive approach that positions you as a serious buyer, making you more appealing to sellers.

Balancing the timing of mortgage preapproval is critical to a smooth home-buying experience. Starting the preapproval process too early can leave you with an expired preapproval letter before you actively start house hunting, requiring you to redo paperwork and reassess your financial situation.

On the other hand, waiting too long can limit your housing options and weaken your offers. Sellers often prefer buyers who have secured preapproval because this indicates financial readiness and reliability.

Preapproval vs. Prequalification

Prequalification is usually quick and involves a basic review of your financial situation, including your income, debts and assets. This is a simple and informal process that you can usually do online without submitting any documents.

Preapproval is a more serious and detailed process. The mortgage lender checks your financial background, and you’ll need to provide documents such as pay stubs, tax returns and bank statements. Preapprovals give you a more accurate idea of how much you can borrow and carry more weight with sellers. They show that you’re serious and ready to buy because a lender has closely reviewed your finances and deemed you a qualified buyer.

Step-by-Step Process for Getting Preapproved

Getting preapproved for a mortgage is a key step in buying a home. Here’s a step-by-step guide to help you navigate this process:

• Research lenders and loan officers: Look for lenders with a positive reputation and competitive rates. It’s a good idea to compare a few options to find the best fit for your financial situation.
• Complete the application: Once you’ve selected a lender, you’ll need to gather and submit several important documents to complete the mortgage application . These include proof of income, tax returns from the past two years, bank statements and details of your debts (such as car loans or credit cards).
• Verification for preapproval: After you submit your application, the lender will begin verifying your information. This includes conducting a hard credit check to assess your creditworthiness. Your credit score and history play a significant role in determining your eligibility and the terms of the mortgage.
• Receive a preapproval letter: If the lender is satisfied with your financial standing and credit history, you’ll get a preapproval letter. This letter indicates the amount the lender is willing to lend you and shows sellers that you’re a serious buyer with the financial backing to complete the purchase.

Documents Needed for Mortgage Preapproval

To obtain mortgage preapproval, lenders typically require a range of documents to verify your financial standing and ability to repay a mortgage loan. Here’s what you’ll need to provide:

• Recent pay stubs: Provide copies of your pay stubs for the past two or three months to demonstrate your current income and employment stability.
• W-2s and tax returns: Submit W-2 forms and tax returns for the past two years to verify your income history and tax compliance.
• Credit reports: Lenders will review your credit reports from all three major credit bureaus to assess your creditworthiness and debt management practices.
• Bank and asset statements: Provide statements for your checking, savings, investment and retirement accounts to demonstrate your ability to cover the down payment and closing costs. 

Pros and Cons of Getting a Mortgage Preapproval

If you’re considering getting preapproved for a mortgage, here are some advantages and drawbacks to consider as you move forward:

Verification of loan amount: Preapproval gives you a clear idea of how much you can borrow based on your financial situation, which can help you narrow down your home search to properties within your budget.

Stronger buying power: With a preapproval letter in hand, you’re viewed as a serious buyer. This can be beneficial in a competitive real estate market as sellers are more likely to consider offers from pre-approved buyers.

Faster closing process: Because the lender has already done much of the financial vetting during your preapproval, the closing process can occur quicker.

Temporary impact on credit score: When lenders perform a credit check for preapproval, it can result in a hard inquiry on your credit report. While this typically causes only a temporary dip in your credit score , a small change could impact your rate offers.

Time limit: Preapproval letters are usually valid for a limited time, often 60 to 90 days. If you don’t find a home within that time frame, you might need to go through the preapproval process again, which could involve another credit check.

Should I Get Multiple Mortgage Preapprovals?

It’s generally a good idea to get two to three preapprovals from different lenders. This approach allows you to compare the various details of each offer, such as interest rates and fees. By doing so, you can make an informed decision and potentially save a significant amount of money over the life of your mortgage.

However, it’s important not to go overboard and apply for preapproval with too many lenders. Each preapproval application typically involves a hard inquiry on your credit report, which can temporarily lower your credit score. The good news is credit bureaus often recognize when you’re shopping for the best mortgage rates and will typically treat multiple inquiries made within a short period as a single inquiry, minimizing the impact on your credit score.

How Long Does It Take To Get Preapproved?

The preapproval process can vary in length, typically taking anywhere from a few days to a couple of weeks. This time frame depends on factors such as the lender’s efficiency, the complexity of your financial situation and how quickly you can provide the required documents.

It’s also important to note that preapproval isn’t indefinite. Most preapproval letters have an expiration date of around 60 to 90 days from the date of issuance. This is because lenders want to ensure your financial situation hasn’t changed significantly since they evaluated your application.

If your preapproval expires before you find a home, you can usually renew with the same lender. This might involve providing updated financial documents and undergoing another credit check. Remember, maintaining a stable financial situation will help ensure that your renewed preapproval is similar to the original.

Tips for First-Time Homebuyers

As a first-time buyer , there are several strategies you can employ to potentially increase the amount you’re approved for:

• Adding a cosigner : If your financial history isn’t very strong or your income is on the lower side, a cosigner can be beneficial. A cosigner , such as a parent or close relative with a solid financial background and good credit, can add strength to your application, potentially increasing the amount you can borrow.
• Improving your credit score : Before applying for preapproval, take steps to improve your credit score. Pay down debts, avoid taking on new debts and make sure you pay all your bills on time. A higher credit score can lead to better loan terms and higher approval amounts.
• Reducing debt-to-income ratio : Lenders look at your debt-to-income ratio, which is the percentage of your income that goes toward paying debts. Lowering this ratio by paying off debts can make you a more appealing borrower.
• Maintaining stable employment : Lenders prefer borrowers with a stable job history. Avoid changing jobs, if possible, during the preapproval process.

The Bottom Line

With a verified mortgage preapproval letter, you position yourself as a credible and attractive buyer in the housing market as it shows sellers you have the financial backing to complete the property purchase. Start applying for preapproval about six to 12 months before you plan to buy a home to give yourself enough time to thoroughly evaluate your financial health.

Frequently Asked Questions About Mortgage Preapproval

How far in advance should i get preapproved for a mortgage.

You should get preapproved for a mortgage around six months to a year before you start house hunting. This will give you time to shop around for the best interest rates and terms.

Does preapproval affect my credit score?

Getting preapproved for a mortgage will typically result in a hard inquiry on your credit report. A hard inquiry can temporarily lower your credit score by a few points, but the impact is usually minimal and temporary. Your credit score should recover within a few months.

Is it good to get preapproved for a home loan?

Getting preapproved for a home loan is a smart move. It helps you understand how much you can afford, shows sellers that you’re serious about buying and can make your offer more attractive in a competitive market. Preapproval also speeds up the overall mortgage process once you’ve chosen a home to buy.

*Data accurate at time of publication

If you have feedback or questions about this article, please email the MarketWatch Guides team at editors@marketwatchguides. com .

MarketWatch Guides may receive compensation from companies that appear on this page.
The compensation may impact how, where and in what order products appear, but it does not influence the recommendations the editorial team provides. Not all companies, products, or offers were reviewed.

• Your favorite state, in photos
• Sign up to follow compelling stories of Californians in pictures.

• Environment
• California Voices

Which of these 2024 California bills will Gavin Newsom sign into law?

For California laws, the buck does really stop at Gov. Gavin Newsom’s desk.

While the Legislature approved hundreds of bills before ending its regular session on Aug. 31, Newsom decides whether they become law. 

Already he’s signed a contentious package of bills to address retail theft and he agreed to a deal — not written into legislation — to help fund local newsrooms and AI research .

Now the governor has until Sept. 30 to decide on bills passed in the final days; he sometimes waits until right before the deadline to weigh in on contentious ones. And because he controls the fate of legislators’ bills, that could give him leverage during the special session he called on gas prices.

The governor gives a few typical reasons for vetoing bills: He deems them redundant, or calculates that their potential cost threatens to worsen the state’s budget situation. But he also blocks bills because they’re controversial, or opposed by powerful special interests. 

Last year, Newsom vetoed 156 bills and signed 890 , or about 15%, a similar ratio as in 2022, when he blocked some very significant ones . In 2021, he vetoed less than 8% . While the Legislature can override vetoes, it takes a two-thirds vote in both the Assembly and Senate and that rarely happens . Governors can also allow bills to become law without their signature, but that doesn’t occur very often, either .

Here are some noteworthy bills being tracked by CalMatters reporters. Bookmark this page for updates.

Advance reparations proposals

• Share by Email
• Share on Twitter
• Share on Facebook

By Wendy Fry

WHAT THE BILLS WOULD DO

Lawmakers shelved two critical pieces of reparations legislation in the final hours of the session, but sent 10 other reparations bills to the governor’s desk. The California Legislative Black Caucus announced 14 priority reparations bills in January based on recommendations made last year by a first-in-the-nation reparations task force. The most significant bill, AB 3089 , authored by Assemblymember Reggie Jones-Sawyer , a Democrat from Los Angeles and task force member, would require a formal apology from the state for “perpetuating the harms African Americans faced” from racial prejudice and unequal distribution of state and federal funding. 

Also approved: SB 1050 , by Sen. Steven Bradford , a Democrat from Gardena, aimed at returning property or the financial equivalent to people who had their land taken by racially-motivated eminent domain; AB 1986 , to increase oversight on book bans in prisons; and SB 1089 to require grocery stores and pharmacies to notify employees before closing. 

Another bill, AB 1815 by Assemblymember Akilah Weber , a Democrat from San Diego, would expand a 2019 law, barring hair discrimination in competitive sports. 

WHO SUPPORTS THEM

The California Legislative Black Caucus and other members of the California Reparations Task Force who do not serve in the Legislature support most of the bills. Also backing the legislation are a slew of social and racial justice advocates and organizations such as the Black Equity Collective, the California Black Power Network, the ACLU and others. 

WHO IS OPPOSED

Organizations generally did not register official opposition. Some Republicans abstained from voting. Many argue that because California was not a “slave state,” it is not responsible for making amends.

WHY IT MATTERS

California is the first state in the nation to grapple with the complexities of reparations — an effort that has sparked controversy among advocates and opponents alike. The most significant ongoing debate is whether reparations should be for all Black residents or just those who can prove they are the descendants of African Americans enslaved in the United States. Most of the bills before Newsom are more broadly tailored for overall racial equity, not aimed at a specific remedy for a specific harm. So far, California lawmakers have not pushed for cash payments.  

Black lawmakers say this session is only a first step in building a foundation for future reparations measures. The Legislature also placed a measure on the November ballot asking voters to amend the California constitution to delete language that allows involuntary servitude as a form of punishment for crimes.

What California does could ripple into the presidential elections, with Republicans claiming Democrats made false promises to Black Californians about supporting reparations. Vice President Kamala Harris has only publicly supported studying the issue, but she’s close friends and political allies with Amos Brown , a task force member who was one of the strongest advocates for lineage-based reparations and direct compensation.

GOVERNOR’S CALLS

Protect voters from AI

By Khari Johnson  

Lawmakers passed three bills intended to protect voters from deepfakes — deceptive forms of audio, images and video generated by artificial intelligence.

AB 2839 by Assemblymember Gail Pellerin , a Democrat from Santa Cruz, goes after individuals who create or publish deceptive content made with AI. The bill allows a judge to order an injunction requiring them to either take down the content or pay damages. AB 2655 by Assemblymember Marc Berman , a Democrat from Palo Alto, requires large online platforms such as Facebook to remove or label deepfakes within 72 hours of a user reporting it. And AB 2355 by Assemblymember Wendy Carrillo , a Democrat from Los Angeles, requires political campaigns to disclose use of AI in advertising.

To comply with the First Amendment, the deepfake bills only affect content that is intended to deceive. Ones that are considered comedy or parody aren’t covered.

AB 2839 and AB 2655 were sponsored by California Initiative for Technology and Democracy, a branch of the nonpartisan nonprofit Common Cause. Attorney General Rob Bonta also supports AB 2839, which would go into effect immediately if signed into law and would apply 120 days before and 60 days after the Nov. 5 election.

Groups including the Electronic Frontier Foundation, the American Civil Liberties Union, and a range of book publishers groups opposed AB 2839 due to concerns the bill may violate free speech rights. Business and internet organizations are also against AB 2655. Only the foundation is listed as an opponent to AB 2355.

Deepfakes became a flashpoint earlier this summer when X CEO Elon Musk circulated a fake campaign ad that mimicked the voice of Democratic presidential nominee Kamala Harris. Gov. Gavin Newsom said the ad made by Musk should be illegal; Musk retorted that it was parody and thus protected speech. Republican presidential candidate Donald Trump posted a generated image of his political opponents in prison jumpsuits , although the platform he posted it to, Truth Social, is too small to be regulated by AB 2655.

The AI disclosure bills come amid concern about the accuracy of AI-generated content. According to a study released in February, more than half of answers from AI models such as Google’s Gemini, Mixtral, and Meta’s Llama-2 were labeled inaccurate. Still, the bills would not stop AI-generated disinformation, but just make users be more aware. 

Allow tribes to sue cardrooms

By Ryan Sabalow

WHAT THE BILL WOULD DO

SB 549 would allow tribal governments to sue their business competitors — private card rooms — over the tribes’ longstanding contention that these private gambling halls are illegally offering table games including blackjack and pai gow poker. Tribes say California voters gave them the exclusive rights to host the disputed table games. But because they’re sovereign governments, the tribes lack legal standing to sue.

WHO SUPPORTS IT

Tribes including those operating the state’s 70 tribal casinos support the measure. The bill has several bipartisan coauthors, many of whom have large casinos in their districts. The tribes contend the card rooms’ games have stolen hundreds of millions of dollars of revenue from historically disenfranchised tribal communities across California. They’ve spent millions of dollars on lobbying and political donations for this bill, as well as a failed sport-betting ballot initiative two years ago that included a similar provision.

Opposing the bill are the state’s 80 or so privately-owned gambling halls, as well as several California cities and the municipalities’ employee unions. Card rooms, which embarked on a massive lobbying blitz this year , say their games are not illegal and that the attorney general’s office has approved each of them. They argue that if the tribes are allowed to sue, the card clubs wouldn’t be allowed to sue tribes back, and they could go out of business from the ensuing legal fees. Card rooms’ annual earnings are barely 10% of what tribal governments make, and the tribes have outspent the card rooms in this fight three to one.

Cities, including San Jose, argue that if the card rooms stop offering the disputed table games, it could force the municipalities to cut police, fire and other city services because their budgets are propped up by the taxes and fees that the card rooms pay local governments. Tribes say passing the bill would go a long way toward California making amends for the atrocities the state committed on native peoples.

GOVERNOR’S CALL 

Restrict private equity in healthcare

By Kristen Hwang

AB 3129 by Assemblymember Jim Wood , a Democrat from Ukiah, would authorize the attorney general to approve or reject private equity takeovers of most medical businesses, such as doctors offices, outpatient clinics and surgery centers. The attorney general already regulates nonprofit hospital mergers and is able to stipulate conditions intended to protect patient access and cost, such as preventing facilities from eliminating certain services. This would grant similar review powers over transactions in private industry. It exempts for-profit and government-run hospitals.

The measure has been hotly contested in the Legislature. Supporters include consumer health advocates, the state doctors’ lobby, and Attorney General Rob Bonta, who sponsored the legislation. They warn that private equity buyouts in health care drive increased consolidation and higher prices while diminishing patient access.

The state hospital lobby and a coalition of investor groups and dental practices oppose the bill. The coalition, Californians to Protect Community Health Care , spent more than $500,000 lobbying against the measure in the most recent quarter, according to state financial reporting records. They argue that the measure will stifle much-needed investment in health care, leading to service cuts and hospital closures.

Private equity investment in health care has drawn scrutiny nationwide. The investment firms tend to finance the purchase of hospitals, doctors offices and the like with borrowed money, saddling them with debt before exiting and selling the properties.

In California, between 2005 and 2021, private equity deals in health care grew from $1 billion to $20 billion annually, according to a recent policy paper from the California Health Care Foundation .

GOVERNOR’S CALL

Make key changes in campaign laws

By Sameea Kamal

AB 1784 by Democratic Assemblymembers Gail Pellerin and Wendy Carrillo would stop candidates from seeking multiple offices, by clarifying state law to prevent candidates from filing papers for more than one office in a primary election. It also allows people to withdraw their candidacy until the filing deadline, which they currently can’t do. The bill does not apply to candidates for statewide office, and clarifies that withdrawal is final. 

AB 2041 by Assemblymember Mia Bonta would make it easier for candidates to use campaign cash for their own security . Under current law, threats have to be verified by law enforcement.  This bill would lift that requirement and allow spending on home or office security systems and other expenses (but not firearms) due to threats tied to official duties. The bill would allow politicians to protect their families and staff, and spend as much as $10,000 on security expenses over their careers.  

AB 1784 is supported by Secretary of State Shirley Weber, the California Association of Clerks and Election Officials and California’s League of Women Voters, which said that having someone on the ballot twice can confuse voters and undermine confidence in elections. It could also lead to costly special elections if a candidate wins both contests, the group said.

Supporters of AB 2041 include the state’s Fair Political Practices Commission, which enforces campaign finance laws, as well as the League of California Cities. The bill’s supporters in the Legislature tell of increasing threats and harassment over controversial bills. They also point out that female candidates and officials are often the targets of threats. “Stalking and harassment have become all too common in today’s politics, especially for candidates who are female, LGBTQ+, and candidates of color,” Bonta said in a statement after her bill passed on the final night of session. 

There is no registered opposition on file to either bill.

AB 1784 seeks to address the very specific debacle that resulted from Assemblymember Vince Fong putting his hat in the ring after Rep. Kevin McCarthy stepped down from Congress. Fong was already on the primary ballot to run for re-election in his Assembly district, so the Secretary of State tried to stop him from running for a second office. Fong sued, and won . Authors of the bill want to clarify for future elections that dual candidacies are prohibited.

Gov. Newsom vetoed a similar bill to AB 2041 last year, saying it lacked clear definitions of security expenses and could lead to unintended uses of political donations. But supporters say the bill language has been tightened up to only allow spending for reasonable costs. If Newsom signs this bill, it would take effect immediately, so candidates could take advantage during the fall campaign.

GOVERNOR’S CALLS 

Allow more outdoor alcohol and cannabis sales

By Jenna Peterson

SB 969 would let local governments create “entertainment zones,” where bars and restaurants can sell alcoholic beverages that people can drink on public streets and sidewalks. Starting Jan. 1, cities could tailor these zones to fit their needs. 

AB 1775 would legalize cannabis cafes in California. Cannabis lounges already exist in some places, but they’re limited to selling prepackaged food and drinks. 

State Sen. Scott Wiener , a San Francisco Democrat and author of SB 969, says the bill would help boost local businesses and “make our cities more fun!” Currently, cities can designate open-container zones for events such as festivals and parades, but they’re only applicable to outside vendors. The city of San Jose, the California Nightlife Association, and the city and county of San Francisco are sponsors of the bill. 

AB 1775’s author, Assemblymember Matt Haney, also a San Francisco Democrat, says the bill is necessary to support small cannabis businesses. He’s compared California’s cannabis culture to Amsterdam’s, which has well-known cannabis cafes that have been legal for decades. Many cannabis organizations are supporters of the bill. 

Recorded opponents — which include the California Alcohol Policy Alliance, Alcohol Justice, California Council on Alcohol Problems and Citizens for a Better Los Angeles — say the bill could harm mixed-use neighborhoods and contribute to rising alcohol mortality rates and drunk driving accidents . 

The American Heart and Lung Associations and other health-focused organizations oppose AB 1775 because cannabis contains particulate matter, which can cause cardiovascular disease and lung infections. They also say that secondhand cannabis smoke can be harmful to workers at cannabis cafes. 

Many California cities have yet to see foot traffic recover from the COVID-19 pandemic. Last year, a University of Toronto study tracked cell phone activity to determine how many downtown visitors cities have recovered. While San Jose was at 96% as of October, Los Angeles was at 83%, San Francisco at 67% and Sacramento at 66%. Wiener pushed through a similar bill last year, but it was limited to San Francisco . Cannabis cafes could also contribute to post-pandemic recovery of foot traffic.

GOVERNOR’S CALLS  

Protect maternity wards from closures

Two bills on the governor’s desk aim to improve transparency when a hospital plans to shut down its maternity ward and help state agencies understand the ripple effects of growing labor and delivery “deserts.”

If a hospital plans to close labor and delivery or inpatient psychiatric services, SB 1300 by Sen. Dave Cortese , a Democrat from Campbell, would require public notification four months in advance. The hospital would also need to hold a public hearing with its county board of supervisors and report why it is eliminating services and how its patients may be affected.

AB 1895 by Assemblymember Akilah Weber , a Democrat from La Mesa, would require hospitals to notify state regulators, including the Department of Public Health, of challenges keeping maternity services open. Regulators would be required to assess how service cuts would affect the community and identify the next closest hospitals with operating labor and delivery wards.

Cortese’s proposal is co-sponsored by the National Alliance on Mental Illness and supported by a number of behavioral health associations and consumer advocates. Supporters of Weber’s measure include the American College of Obstetricians and Gynecologists District IX, the California Nurse-Midwives Association, and Reproductive Freedom for All California, which all co-sponsored the legislation. 

The California Hospital Association opposes Cortese’s measure, arguing that it does not address the underlying financial and staffing challenges many hospitals are struggling with, and may make it more difficult to keep services running.

Weber’s bill is unopposed.

Maternity wards are closing in California at an unprecedented rate. More than 50 hospitals have closed or reduced labor and delivery services in the past decade with at least eight more closures planned this year, according to an ongoing CalMatters investigation. In addition, birth centers , which can handle low-risk pregnancies, are also shutting down rapidly.

CalMatters reporting has revealed that these losses disproportionately impact low-income and Latino communities .

Ban more plastic bags

SB 1053 would ban all plastic grocery bags in California, so customers would have to use paper or reusable bags, effective Jan. 1, 2026. Voters approved a similar ban in 2016, but a loophole allowed for plastic bags that are thick enough to reuse. 

The bill was authored by state Sens. Ben Allen and Catherine Blakespear , Democrats from El Segundo and Encinitas, respectively. They wrote the bill to raise awareness of the current law’s contribution to plastic pollution. More than 70 environmental organizations — including the Center for Environmental Health, Climate Action California and California Environmental Voters — support the bills because they would prevent plastic waste, which releases toxic chemicals into the air, water and soil. 

Opposition includes the American Recyclable Plastic Bag Alliance, which says that according to a survey they conducted, 60% of Californians are reusing plastic bags from the grocery store. They also say that many reusable bags have a more negative impact on the environment than the currently legal plastic bags. 

Plastic waste contributes to 3.4% of all greenhouse gas emissions, according to The Organisation for Economic Co-operation and Development . According to a CalRecycle report , plastic grocery bags made up more than 231,000 tons of California waste in 2021. When plastic enters a landfill, it breaks down into microplastics, which can seep into soil and contaminate groundwater. 

GOVERNOR’S CALL  

Make undocumented immigrants eligible for homebuyer and jobless aid

By Wendy Fry and Jeanne Kuang

AB 1840 and SB 227 , written by Assemblymembers Joaquin Arambula and María Elena Durazo , respectively, aim to ensure Californians are not excluded from assistance programs due to their immigration status. 

AB 1840, written by Arambula, a Democrat from Fresno, makes clear that undocumented first-time homebuyers can apply for a program that offers 20% downpayment assistance of as much as $150,000. The bill has drawn national media attention, with Republicans claiming it follows “a long litany of taxpayer dollar giveaways…that encourage and reward illegal immigration.” A spokesperson for Arambula said the bill only clarifies that undocumented Californians can participate in “Dream for All” and other home purchase assistance programs if they meet all other eligibility and financial criteria. The program ran out of $300 million in funding 11 days after launching in 2023. Because of the state budget shortfall, no new funds were appropriated this year. 

SB 227 requires the Employment Development Department, by next March, to come up with a plan on how to give undocumented workers who lose their jobs access to unemployment benefits. Employers pay into the unemployment fund; an expansion would likely need to be funded by the state. Gov. Gavin Newsom in 2022 vetoed a similar bill directly requiring the new program because lawmakers hadn’t identified a funding source. This version would make the administration figure out how to create the program, including how much it would cost, and then send the plan back to lawmakers and the Department of Finance for review.

A large coalition of immigrant rights advocates, including the ACLU, CHIRLA, the Coalition for Humane Immigrant Rights, and the Mexican American Opportunity Foundation. 

California Republicans argue that programs providing aid to undocumented residents act as a magnet for illegal immigration, even as many Californians can’t afford to buy houses. Elon Musk posted on his social media site X that “half of earth should move to California given all the incentives to do so.” 

There are no registered opponents for the unemployment bill. Newsom’s finance department last year opposed the bill because the state hadn’t budgeted funds for it, and called its timelines “infeasible,” but the bill has since been amended to require a plan rather than the program itself. 

Decades of work went into building a social safety net for California’s roughly 2.3 million undocumented immigrants, who still have the highest poverty rates in the state . Some argue that because undocumented immigrants pay taxes, they should also have access to taxpayer-funded programs, like unemployment insurance. According to USC’s California Immigrant Data Portal , undocumented immigrants paid an estimated $3.7 billion in state and local taxes in 2019. 

In recent years, natural disasters such as winter storms and extreme heat have shed light on how farmworkers, over half of whom are undocumented, can lose work with little notice. But with a tight state budget, Newsom has cited costs in halting or slowing down the state’s expansions of social services. 

Require state prisons to provide menstrual products

By Wendy Fry  

AB 1810 by Assemblymember Isaac Bryan , a Democrat from Culver City, would require state prisons to provide incarcerated people with free and ready access to menstrual products without inmates having to request them. Currently, state prisons, local jails and juvenile facilities are required to provide sanitary pads and tampons products only “upon request.” A 2023 report by the attorney general’s office found half of the facilities surveyed were not complying, including 25 county jails that were not providing free period products. 

A coalition of human and prisoner rights advocates, including the ACLU California Action, the San Francisco Public Defender, the Western Center on Law & Poverty and the Legal Services for Prisoners With Children organizations. Bryan said there were documented cases of California Department of Corrections and Rehabilitation officers withholding sanitary products as retaliation or punishment. Alissa Moore, the re-entry coordinator for Legal Services for Prisoners with Children , testified at a hearing on the bill that she was sexually assaulted several times during her 25 years in prison: “I often felt humiliated, and ashamed and embarrassed when I would have to, on occasion, ask the same staff that had victimized me for sanitary supplies.” The bill passed the Senate and Assembly without any “no” votes.

The California Family Council voiced opposition to the bill , arguing that the legislation does not clearly identify a person who menstruates as a woman. Some correctional officers have said male inmates sometimes ask for pads to make cushions for seats or for their sandals. State mandates that cost money for local jurisdictions, like county jails and juvenile detention facilities, are usually reimbursed by the state. According to the Senate Appropriations Committee, the bill does not have significant costs.

There are more than 3,700 women in state prisons , plus more than 9,800 in county jails . Formerly incarcerated people have described being humiliated by having to ask for personal hygiene products. Advocates say it can lead to unsafe and unsanitary conditions and lead to an imbalance of power between correctional officers and inmates. 

California is reckoning with how it treats its prisoners. Proposition 6 is asking voters whether to change the state constitution to expressly ban involuntary servitude so that inmates in California jails and prisons can no longer be compelled to work and punished with solitary confinement or the loss of privileges for declining jobs, most of which pay less than $1 an hour. 

Test AI for critical harm to society

By Khari Johnson

SB 1047 by Senator Scott Wiener , a Democrat from San Francisco, requires the makers of advanced artificial intelligence models to test their likelihood to cause critical harm to society. The bill also protects the rights of whistleblowers to raise concerns to the attorney general. The bill attempts to codify, oversee, and enforce safety testing similar to what major companies voluntarily agreed to in deals with the White House and governments in the United Kingdom and South Korea. The bill also takes steps toward establishing a public cloud computing cluster known as CalCompute to advance AI development.

In the weeks leading up to passage, X CEO Elon Musk and prominent researchers Yoshua Bengio and Geoffrey Hinton voiced support for the bill. Other supporters include AI company Anthropic, youth AI nonprofit organization Encode Justice, the Economic Security Project California, and experts including Lt. Gen. Jack Shanahan, the first director of the Joint AI Center at the Pentagon; Dan Hendrycks, director of the Center for AI Safety; and Daniel Kokotajlo and William Saunders, former OpenAI employees and whistleblowers. 

Major AI developers including Google, Meta, and OpenAI strongly oppose the bill , arguing that it will stifle innovation and the availability of open source software. Eight members of Congress who represent California districts, all Democrats, took the unusual step of urging Gov. Newsom to veto the bill. Former House Speaker Nancy Pelosi of San Francisco also opposes the bill, saying in a letter that it does more harm than good.

California is home to the majority of the top AI companies in the world, so tough regulation of them could set a standard for the entire industry and for Congress. Supporters of the bill say now is the time to act because they don’t trust the makers of AI to self regulate particularly as profit pressures mount. Kokotajlo told CalMatters that if SB 1047 were in effect when he worked at OpenAI, it would have prevented or at least helped expose a violation of internal safety protocols he witnessed there.

Stop legacy admissions at private colleges

By Mikhail Zinshteyn

AB 1780 by Assemblymember Philip Ting, a Democrat from San Francisco, would bar private nonprofit colleges from making admissions decisions based on whether a student has ties to a donor or an alumni. About a half dozen colleges currently factor legacy or donor ties in their admissions decisions — including Stanford and University of California . The bill would take effect next September. Schools that report that they violated the law would appear on a list published by the Department of Justice. They’ll also be required to publish aggregate data about their newly admitted class, including who were and were not admitted with legacy or donor ties, but not in a way that identifies individual students. Students with legacy or donor ties could still be admitted, just without preferential treatment.

A coalition of social justice and education groups and wide support from Democrats. Bill backers say the bill could influence other states to ban legacy and donor ties in admissions decisions, something four states so far have already done. They cite concerns that the very wealthy are much more likely to be admitted to highly selective colleges. Also, they underscore the chilling effect that last year’s U.S. Supreme Court decision to outlaw race-based affirmative action in the U.S. may have on students of color. If a student’s racial identity cannot be a factor in applying for college, why should proximity to wealth and power, their logic goes. The bill can both be a signal to students that college is for them and free up enrollment slots. WHO IS OPPOSED

In the Legislature, most Republicans opposed or didn’t vote for the bill. The major opponent, though, is the Association of Independent California Colleges and Universities, the group that represents the state’s 80-plus private nonprofit colleges and universities. The group has “ strong reservations ” about legislators scrutinizing the admissions and academic practices of private colleges. That’s the kind of oversight that’s typical for public colleges and universities, which receive billions of dollars in direct state support to fund their education missions. Private colleges generally just receive state financial aid dollars for their low-income students. A previous version of the bill would have required colleges that violate the law to repay the amount equal to what they received in student financial aid from the state. That was cut in amendments. 

California’s public universities do not consider legacy or donor ties in admissions.

WHY IT MATTERS So far four states have approved such bans on either public or private institutions. But because California is the most populous state and enrolls more college students than any other, the bill takes on an outsized role in the national conversation about wealth, race and access to college. Bill backers say it will be a necessary corrective to last year’s U.S. Supreme Court ban on race-based affirmative action. If that decision may have caused a chill on student desire to apply for college, this bill would send a welcoming signal in response, backers say. The bill would again cement California as a trendsetter in state policy that takes on national resonance. The state was the first to ban affirmative action at public institutions through a voter-approved proposition in 1996 , setting off a wave of similar efforts across multiple states. 

Let undocumented students work on campus

AB 2586 by Assemblymember David Alvarez , a Democrat from Chula Vista, would make California the first state in the nation to allow public colleges and university students who are undocumented to work at their campuses. The bill is based on a novel legal theory , first proposed by UCLA law professors, that argues that the 1986 federal law that bars undocumented residents from working doesn’t apply to state employers. About 60,000 students at California’s community colleges, California State University and the University of California could benefit starting Jan. 6 if Gov. Gavin Newsom signs it. WHO SUPPORTS IT

A coalition of undocumented students, the student governments of the three public higher education systems, UCLA legal scholars, some individual community colleges and a phalanx of social justice nonprofits. While undocumented students are eligible for state grants and tuition waivers, they’re blocked from receiving federal aid and loans, which denies them full access to funds to afford tuition, rent, school supplies and other basic needs. Many undocumented students already work, but risk being exploited or put in dangerous situations. Working on campus ensures more safety and jobs that are better fits with what students study.

Aside from the few Republicans who voted against the bill, no one officially, though the public university and community college system central offices expressed an assortment of concerns. The University of California worries that its hiring staff would be at risk of prosecution for flouting federal law and that its billions of dollars in federal contracts would be in jeopardy. The Cal State system had similar worries about the federal student financial aid all its students receive. The UCLA law scholars have argued those scenarios are highly unlikely and that in a worst-case scenario, a judge would tell the state and campuses that they can no longer hire undocumented students. The Senate’s judiciary committee staff analysis also pushed back on UC’s concerns. 

The community college system, meanwhile, said it’ll struggle to meet the early January deadline to implement the law.

WHY IT MATTERS Students and UCLA legal scholars first proposed the idea to the UC Board of Regents, who pledged in 2023 to consider the proposal. Ultimately, the regents voted to delay any implementation, citing the analysis of the system’s lawyers and outside counsel about the risks to the UC in the event the federal government retaliates. Heartbroken, the students and their allies synced up with Alvarez to propose this bill. The bill would mean more economic opportunity for undocumented college students. It may also prompt other state legislation to allow more state agencies to hire undocumented residents. How the bill is received by the federal government will be top of mind for state and national immigration and education watchers. The stakes may be even higher if Donald Trump again wins office: He and his aides want to deport millions of undocumented Americans and establish deportation camps near the southern border .

Ban book bans in public libraries

By Alexei Koseff  

AB 1825 , by Assemblymember Al Muratsuchi , a Torrance Democrat, would require public libraries in California to establish a clear policy for choosing books, including a way for community members to voice their objections, but would prohibit banning material because it deals with race or sexuality. It also clarifies that library material can include sexual content that’s not obscene and leaves to the discretion of librarians where to display those books, though they could not prevent minors from checking them out.

Over the past year, politicians in Huntington Beach and Fresno County created review committees for children’s library books to move material with “sexual references” and “gender-identity content” into restricted sections, where it could only be accessed with a parent’s permission. This has raised fears in the LGBTQ community that they are being targeted and their stories suppressed. The California Library Association, civil liberties advocates at ACLU California Action and LGBTQ rights organization Equality California argue that the state must protect diverse perspectives at public libraries amid growing threats of censorship. 

Opponents of AB 1825, including the California Family Council, which lobbies for a conservative Christian perspective in policymaking, complain that the measure would undermine their efforts to keep inappropriate reading material out of children’s hands. They contend that book review panels allow communities to set their own standards for age-appropriate material and parents to introduce their kids to controversial topics on their own terms.

Public libraries are the latest front in a burgeoning battle between California’s liberal government and more conservative communities across the state. With Democrats so dominant in Sacramento that they can dismiss the cultural grievances animating political discourse in red states, such as election fraud and abortion restrictions, Republicans are turning to local governance to push back against California’s progressive values. The state has moved quickly to shut down these flashes of rebellion through bills such as AB 1825.

Speed up ‘tiny homes’ for homeless people

By Marisa Kendall

SB 1395 by Sen. Josh Becker , a Democrat from Menlo Park, would make it easier for cities and counties to quickly set up tiny homes for their homeless residents. 

How? Traditional homeless shelters already are exempt from some of the red tape that often slows down housing construction, including the California Environmental Quality Act. Becker’s bill would expand that to include shelters that are “non-congregate and relocatable.” In other words: tiny homes. The bill also would extend cities’ ability to streamline the construction of homeless shelters, which now is set to expire in 2027. 

The bill’s co-sponsors include San Jose Mayor Matt Mahan (whose city has embraced tiny homes as solution to homelessness), DignityMoves (a nonprofit that helps build tiny homes villages), the Bay Area Council, and SPUR (a nonprofit public policy organization focused on housing and transportation).

SB 1395 has no registered opposition. But that wasn’t the case last session, when a similar version introduced by Becker died following opposition from prominent groups that included the National Alliance to End Homelessness, the Western Center on Law & Poverty and the Corporation for Supportive Housing. They complained the bill characterized tiny homes as permanent housing. In reality, they said, tiny homes’ substandard construction (many lack kitchens and bathrooms) means they should be used as temporary shelters only. The new version of the bill specifies that tiny homes are temporary shelters. 

As homeless encampments continue to grow, the state and many cities are doubling down on tiny homes as a quick way to get people off the streets. San Jose has more than 500, and there are 2,000 statewide, according to DignityMoves . Newsom last year promised 1,200 tiny homes to four communities in California, though that project ran into some snags .

Give tenants more time to respond before eviction

By Ben Christopher

AB 2347 by Assemblymember Ash Kalra , a San Jose Democrat, would give tenants 10 business days to respond to an eviction notice, doubling the current deadline of five business days. If a tenant doesn’t respond within that time frame, they automatically lose their eviction case.  

Legal aid organizations that represent low-income tenants are the main backers of the bill. They’re joined by affordable housing advocates, the California Democratic Party and the city of San Jose. Supporters argue that tenants being threatened with eviction may also be struggling financially, not have access to legal representation, not speak English as a first language, or fail to understand the significance of the landlord’s eviction notice. Five court calendar days, they say, is simply not enough time to respond. 

Researchers have found that tenants lose 40% or more of their eviction cases in California by default — either because they failed to respond on time or filed the application incorrectly. 

Landlords. It often takes months between when an eviction notice is filed and when an owner can reclaim their property from a tenant. Extending that process even further means higher costs for those in the rental industry and, landlord lobbying groups warn, higher rents.

California has one of the highest rates of homelessness in the county. California already has laws on the books that restrict how and when landlords can boot tenants from their rental properties, but this bill would give tenants more legal leverage to make use of those protections. Supporters hope that will keep more Californians from becoming homeless in the first place. 

End single-family zoning, redux

SB 450 by San Diego Democratic Sen. Toni Atkins is aimed at “fixing” one of the most controversial state housing laws in recent memory. 

In 2021, Gov. Newsom signed another Atkins bill that allows California homeowners to divide their properties into as many as four separate units. That law was both lauded and condemned at the time as the “ end of single family zoning ” as we know it. In practice, it did no such thing. Few homeowners made use of the law . This bill is aimed at making that law more user friendly, by requiring local governments to approve applications quickly and preventing them from saddling duplex-ification proposals with extra requirements. 

The bill also includes language promoting it as a statewide solution to California’s “severe shortage of housing.” That’s meant to address a court ruling from earlier this year that exempted charter cities from the 2021 law .

Builders, landlords and “Yes in my Backyard” activists. For years, pro-density and development advocates have argued that zoning restrictions that keep apartment complexes, townhouses and multiplexes out of certain neighborhoods makes it harder for the state to build its way out of the current housing shortage and exacerbates economic and racial exclusion.

Santa Clarita in Los Angeles County and local governments in San Mateo opposed the bill, arguing that it chips away local authority over land use and puts an added burden on city planners. Though this year’s effort generated less attention, the original bill in 2021 saw enormous opposition from local governments, suburban neighborhood associations, anti-density advocates and some progressive political advocacy groups.

“Ending single family zoning” has long been the holy grail of YIMBY advocates and pro-equity groups. The 2021 law was a symbolically important crack at statewide zoning reform, but its impact was limited. This year’s bill is another effort to make that vision of a denser California a reality — and to see whether achieving the goal will also make the state more affordable. 

Give doxxing victims the right to sue

AB 1979 would allow victims of doxxing — when someone shares identifying information online about someone else with the intent to harm them — to sue their attackers in civil court for damages of as much as $30,000. 

Assemblymember Chris Ward , a San Diego Democrat, and Assemblymember Cecilia Aguiar-Curry , a Davis Democrat, co-authored the bill. AB 1979 has support from many LGBTQ+ rights organizations, as members of the LGBTQ+ community are disproportionately targets of doxxing. A number of Jewish rights organizations announced their support for the bill earlier this month, and the Anti-Defamation League is a co-sponsor. 

There is no recorded opposition to AB 1979. Newport Beach Republican Diane Dixon was the sole “no” vote in the Assembly, and told CalMatters she generally opposes bills that create a private right to action because they clog up the court system. The bill also received five “no” votes in the Senate. 

It’s difficult to obtain evidence for doxxing, so the crime isn’t prosecuted often. For example, only one doxxing case was filed in Sacramento County in the last five years. According to a 2024 Anti-Defamation League Report , 45% of transgender respondents said they had experienced severe online harassment in the last year, and LGBTQ+ advocates say harassment is worsening as anti-trans legislation rises across the country. 

Doxxing has also played a role in recent Gaza war demonstrations, with many protesters wearing face coverings in fear of being identified and facing online harassment. 

Allow civilian officers to testify

SB 804 would allow community service officers — uniformed police department civilian employees who don’t have arrest powers — to testify at preliminary hearings where authorities present evidence to a judge who decides whether to move ahead with a full felony trial. Witnesses or victims are still required to testify in a trial. As it stands, only sworn officers are allowed to testify at “prelims,” despite community service officers often taking witness statements at crime scenes and during investigations. 

The Redding Police Department brought the issue to the attention of the region’s senator, Republican Brian Dahle , arguing that as police budgets shrink, community services officers should be allowed to testify to free up sworn officers for other duties. The California State Sheriffs Association, the California Police Chiefs Association, San Francisco Mayor London Breed and the state’s police union support the legislation. Proponents say that it would keep officers from having to re-interview witnesses. Plus, they argue that having fewer armed officers interacting with witnesses helps address concerns about over-policing in communities of color.

ACLU California Action, criminal defense attorneys, including the California Public Defenders Association, and social justice groups opposed the legislation. They argue that the changes could lead to shoddy testimony being admitted into legal proceedings where a suspect’s freedom is on the line. They argue that preliminary hearings are already tilted in the favor of police and prosecutors. “The bottom line is that preliminary hearings are so problematic right now,” Ignacio Hernández of California Attorneys for Criminal Justice, told the Assembly Public Safety Committee this summer . 

Since 1990, the state’s population has grown by nearly 10 million people, yet the numbers of California’s sworn patrol officers have dropped to below where they were in 1991, according to a recent report from the Public Policy Institute of California. Sworn officer staffing shortages are particularly prevalent in rural areas such as those in Dahle’s sprawling Senate district in northeastern California.

At the same time, in the wake of high-profile cases of unjustified police violence, social justice advocates have been urging California lawmakers and local governments to scale back the numbers of armed police patrolling communities of color. Some communities are deploying unarmed social or mental-health workers trained to defuse confrontations in situations where armed officers used to be the sole respondents.

Shine a light on teen treatment

The bipartisan SB 1043 seeks to bring greater transparency to the treatment of children and young adults living in state-licensed facilities — specifically short-term residential therapeutic programs. The bill would expand reporting requirements over the facilities’ use of restraints and seclusion rooms.

Following an incident that involves restraining a child (or youth up to 21 years old) or putting a youth in a seclusion room, the facility would be required to provide a report to both the youth and to their parent, guardian or other representative. The report would include a description of the incident and various other information, and a copy would be provided to the California Department of Social Services. The department would be required to review reported incidents for any health, safety and licensing violations and investigate the incident if needed. The department must also make data about these incidents publicly available on its website by Jan. 1, 2026.

Led by Sen. Shannon Grove , a Bakersfield Republican, the measure has several Democratic and Republican co-authors. But the bill’s most recognizable and famous supporter is Paris Hilton , the hotel heiress, socialite and media personality. As a teenager, Hilton experienced physical and emotional abuse at youth treatment centers in California, Utah and Montana. This has led to her personal crusade against institutional abuse in the “troubled teen industry.” Hilton’s nonprofit, 11:11 Media Impact, is a co-sponsor of the bill. Disability Rights California and Children’s Law Center of California also support the proposal. 

WHO IS OPPOSED  

There is no formal opposition registered and no lawmakers have voted against the bill, though some legislators did not vote.

In 2021, after reports of rampant abuse , California passed a law prohibiting the practice of sending troubled youth, including foster children, to out-of-state, for-profit treatment centers. As an alternative, youths can be sent to short-term therapeutic facilities licensed by the state’s social services department. Two years ago, Gov. Gavin Newsom signed into law to fund crisis residential treatment facilities for children on Medi-Cal. The bill seeks to bring more transparency and accountability to the 355 facilities operating in California . It would also provide parents or guardians, who may have to make the difficult decision of sending their children to one of these facilities, information about any potential misuse of restraints and seclusion rooms. 

Limit empty beds in state prisons

By Nigel Duara

AB 2178 by Assemblymember Phil Ting , a Democrat from San Francisco, would cap the number of empty beds at all California prisons at 11,300 by the summer of 2026. It would require further cuts each year until reaching the state’s minimum capacity requirement of 2,500 empty beds. That likely means closing prisons.

The measure is meant to reduce spending on prisons, which house about 65,000 fewer inmates today than they held in 2011. Despite the falling inmate population, California is expected to spend $18 billion on state prisons over the next year, an annual budget of $3 billion more than at the start of the Newsom administration in 2019.

A wide variety of public defense and civil rights organizations support Ting’s bill. They include the ACLU of Northern California, the California Public Defenders Association and a prison advocacy group called Californians United for a Responsible Budget. The California Nurses Association also backs the proposal. 

The bill is opposed by the California Correctional Peace Officers Association , the union for prison guards, which said that tightening capacity limits will mean tighter quarters that pose more danger to guards. It’s also opposed by the California Association of Psychiatric Technicians , a smaller union that represents mental health workers in state prisons and state hospitals.

California prisons have an empty bed problem. The prison system, which was once so crowded that inmates slept in hallways and day rooms, has cut down on its population over the last decade under federal court orders. The result is that the prison system now has too many empty beds, at least 13,000 in January. By 2028, the prison system is anticipated to have 19,000 empty beds, about one-fifth of the system’s total capacity.

Gov. Gavin Newsom has moved to close four prisons , a reduction that his administration says will save about $3.4 billion by 2027. A recent report from the Legislative Analyst’s Office says the system can afford to close five more, which would save an additional $1 billion a year. 

Make it easier for farmworkers to file heat illness claims

By Jeanne Kuang

Authored by Sen. Dave Cortese, a Campbell Democrat, SB 1299 would make it easier for farmworkers to make a workers’ compensation claim for heat illness. Under the current system a worker can get covered for any workplace injury — whether it’s their employer’s fault or not — if they can prove the injury was connected to the job. Benefits include payments for medical care, lost wages or death benefits for the family. For certain injuries in certain industries, workers claiming benefits get a “presumption” (legalese for a fast-track to approval) that their injury was work-related — firefighters who develop cancer, for example, because of how often they are exposed to carcinogens in burning buildings. The bill gives a similar, though narrower, presumption to farmworkers claiming heat illness by allowing them to more easily link the injury to their job, specifically in cases in which the employer was not following state safety rules for those who work outside in the heat. 

The bill is sponsored by the United Farm Workers and has support from labor groups and attorneys who represent injured workers in workers’ compensation claims. The United Farm Workers say the bill can put financial pressure on employers to comply with the heat rules, in the absence of more robust state enforcement.

Farming groups oppose the bill, as well as workers’ compensation insurance carriers and broader business groups such as the California Chamber of Commerce. Business groups say the bill unfairly mixes workplace safety regulations with workers’ compensation insurance rules, and worry it could put employers on the hook for heat cases that are not work-related. 

Heat waves in California are growing longer and more intense , but workers’ advocates say many employers still do not follow the state’s nearly two-decade-old outdoor work heat rules  that require growers, farm labor contractors, construction site supervisors and others to provide shade, breaks and water and to monitor their workers for heat illness. The challenge is compounded by an understaffed state workplace safety agency; CalMatters reported in August that the agency’s enforcement of heat rules has declined significantly since 2019 despite the increasing risks of extreme heat. 

Add folic acid to tortillas

By Ana B. Ibarra

AB 1830 by Assemblymember Joaquin Arambula sets out to help make pregnancies healthier by requiring that manufacturers of corn masa add folic acid to their products starting in 2026. Corn masa is used to make tortillas, corn chips and other foods. The federal government already requires folic acid in enriched grain products, including cereals, breads, pasta and rice because of its known effectiveness in helping prevent birth defects. 

Specifically, the bill requires 0.7 milligrams of folic acid in every pound of masa flour. That addition must be reflected in the nutrition label. Through the legislative process, the bill was amended to make exemptions for small businesses and restaurants, which often make their own corn masa and tortillas. 

The bill is supported by the American College of Obstetricians and Gynecologists, March of Dimes and a number of organizations that advocate for kids’ health. 

There is no registered opposition on file. 

Arambula said this bill will help address disparities in who gets the necessary amount of folic acid. State public health data show that Latinas are less likely to take folic acid in the early weeks of pregnancy or before becoming pregnant when compared to other racial or ethnic groups. This puts them at higher risk of having children born with birth defects of the brain and spinal cord, most commonly spina bifida and anencephaly . Research shows that folic acid can help prevent birth defects by as much as 70%. 

Expedite gender-affirming care licenses

AB 2442 , authored by Los Angeles Democrat Rick Chavez Zbur , would speed up the licensure process for gender-affirming healthcare providers. The bill does not change the requirements to get a license; rather it prioritizes applicants who intend to practice gender-affirming healthcare or gender-affirming mental health care. As part of a package of new laws on abortion access , the legislature passed a similar law in 2022 to expedite licenses for abortion service providers after the U.S. Supreme Court overturned Roe vs. Wade. AB 2442 has a sunset clause, so the legislature would reevaluate the need for the bill in four years. 

Planned Parenthood Affiliates of California and Equality California are sponsors of the bill, which also has support from organizations that support LGBTQ+ rights, reproductive justice and healthcare access. 

The California Family Council, Our Duty Democrat, Protect Kids Initiative and Protection of the Educational Rights of Kids Advocacy are recorded opponents of AB 2442. The latter group says that other providers should also get expedited licensing, and that the bill could hurt other areas of medicine. Instead, they want to add more staff to the Department of Consumer Affairs so that all medical providers can get licensed more efficiently. The other organizations have concerns about the safety of children undergoing gender reassignment surgery or hormone therapy before their brains fully develop, saying it could harm mental health and lead to infertility. 

Twenty-six states have passed laws that ban gender-affirming care. In a 2022 survey by the National Center for Transgender Equality, 47% of transgender respondents said they had considered moving to another state because of these laws. In California, patients seeking gender-affirming care at Stanford Medical Center often have to wait six to eight months to get an appointment. Supporters say AB 2442 would allow California to keep up with the demand from out-of-state patients while continuing to support in-state patients. In 2022, California passed a law protecting those receiving or providing such treatment from prosecution by other states. 

Exclude medical debt from credit reports

SB 1061 by Sen. Monique Limón would remove medical debt from credit reports and prohibit debt collectors from reporting patients’ medical debt information to credit agencies. This pertains specifically to debt owed to a medical provider, such as a hospital or a doctor’s office, and not medical debt charged to credit cards.

The bill is backed by Attorney General Rob Bonta, the California Nurses Association and a number of consumer advocacy organizations. 

The bill was originally opposed by a coalition of bankers and creditors that pushed back on the bill’s definition of “medical debt” because it included medical credit cards, which are often offered at doctors’ and dentists’ offices as a way to pay for a procedure, but also can be used to pay for elective services, fitness programs and even veterinary services. That kind of debt, these groups argued, should not be hidden from lenders. The coalition removed its opposition once the bill redefined medical debt to that owed directly to providers. 

About 4 in 10 Californians report carrying some type of medical debt, according to the California Health Care Foundation. Medical debt can significantly weigh down credit scores and hurt consumers’ chances at securing a rental, a mortgage or car loan. 

Regulate middlemen in pharma industry

Pharmacy benefit managers work as middlemen between insurance companies and drug manufacturers. They process claims, negotiate drug prices and help determine the list of drugs that health insurance plans cover. 

SB 966 by Sen. Scott Wiener , a Democrat from San Francisco, would prohibit pharmacy benefit managers from restricting where patients can fill prescriptions and mandate that 100% of discounts negotiated with drug manufacturers be passed onto health insurance plans. It would also require the state insurance department to license pharmacy benefit managers and improve price transparency.

The measure is co-sponsored by the California Pharmacists Association, California Chronic Care Coalition, Los Angeles LGBT Center and San Francisco AIDS Foundation. Supporters say exclusionary practices have forced the closure of 300 pharmacies across the state and limited drug access. It is also supported by Pharmaceutical Research and Manufacturers of America, which represents drug companies.

Health plans and trade organizations representing pharmacy benefit managers are the primary opponents to the measure. They say preferred pharmacy networks, formularies and discounts are all strategies that allow pharmacy benefit managers to keep prices reasonable. They blame drug companies for driving up prices and say this legislation would increase premiums by $1.7 billion in the first year.

Spending on prescription drugs in California ballooned 39% in just five years, according to the most recent state data . State and federal regulators are increasingly concerned about tactics used by pharmacy benefit managers to generate profits. A report from the Federal Trade Commission , which is investigating the middlemen, suggests that the largest organizations may be engaging in practices specifically to evade regulation, such as moving portions of their operations out of the country. Research also suggests consolidation drives prescription drug prices higher with the three biggest companies — CVS Caremark, Express Scripts and OptumRx — controlling 80% of the market. 

Stop local voter ID requirements

SB 1174 by Sen. Dave Min , a Democrat from Irvine, would ban local governments from requiring voters to present identification to vote. The bill attempts to push back against a charter provision passed by voters in Huntington Beach that supporters said would prevent voter fraud. Min said “an overwhelming body of evidence proves our elections are safe, secure, and above board.” 

Groups that advocate for voter access such as the League of Women Voters of California, as well as California Environmental Voters and Disability Rights California. Common Cause California said that voter identification is already required when someone registers to vote, and that there are numerous protections in place to prevent voter fraud. The group — and other supporters — say the city’s law would disproportionately impact Latino, Black, young and low-income voters, and would create confusion since it would only apply to the local elections, which might be held at the same time as state and federal elections.

Min’s bill is in response to the city of Huntington Beach’s move to place a measure on the ballot allowing the city to verify voter eligibility through IDs, which 53% of voters passed in March — one of several local initiatives aimed at pushing back against California’s progressive politics . 

An attorney for Huntington Beach said the city’s law, which takes effect in 2026, is intended to increase participation in elections, and that the ballot measure represented “ the will of the people .” In addition to the city, the bill is also opposed by the conservative-aligned group Election Integrity Project California, and the Greater Bakersfield Republican Assembly. Republicans from other parts of the state, including Riverside-area Assemblymember Bill Essayli , have also opposed the bill

This bill is the latest front in an ongoing battle over allegations of voter fraud , which have been rampant since the 2016 election. In April, Attorney General Rob Bonta and Secretary of State Shirley Weber filed a lawsuit against the city of Huntington Beach , alleging that the voter ID requirement is in conflict with state law. The lawsuit is pending.

Declare three more state symbols

AB 2504 would designate the shell of the black abalone — an endangered marine snail — as California’s official state seashell. AB 1797 would name the Dungeness crab the state crustacean. And AB 1850 would recognize the banana slug as the state slug. These would be the latest additions to the state’s 44 official symbols. 

The shell bill was authored by Assemblymember Diane Dixon , a Republican from Newport Beach who notes that the black abalone has an important history to Native American tribes in Southern California, who have used the shell for trading and ceremony regalia and eaten the snail for thousands of years. The crab measure was authored by Assemblymember Jim Wood , a Ukiah Democrat. And the slug bill came from Assemblymember Gail Pellerin , a Santa Cruz Democrat. All three bills won overwhelming support in the Legislature.

There is no recorded opposition from advocacy groups to any of the three bills. Assemblymember Tom Lackey , a Republican from Palmdale, was the lone vote against the slug bill, but “in good fun .” 

The National Marine Fisheries Service designated the black abalone as an endangered species in 2009, as it faces environmental threats such as overfishing, disease and natural disasters. Lawmakers hope the designation will help Californians be more aware of those dangers. The Dungeness crab was chosen because of its positive impact on the commercial fishing industry and coastal economies. Pellerin chose the banana slug not only because it’s the mascot of University of California, Santa Cruz, but it also symbolizes California’s biological diversity.