The Loan Confirmation Letter is a critical document in Nigerian banking practice, issued following the successful approval of a loan application. This document serves as the official communication of loan approval and its terms, bridging the gap between initial loan application and final loan documentation. It's typically used after internal credit approval but before the execution of detailed loan agreements, providing borrowers with written confirmation of the bank's commitment and key loan terms. The letter must comply with Nigerian banking regulations, including BOFIA 2020 and CBN guidelines, and typically precedes the preparation of more detailed loan documentation. It's particularly important in both corporate and retail banking contexts, serving as a preliminary binding document that outlines the fundamental aspects of the approved facility.

1. Letter Header: Bank's letterhead, date, reference number, and recipient's address

2. Subject Line: Clear identification of the letter's purpose (Loan Confirmation)

3. Salutation: Formal greeting to the borrower

4. Loan Approval Confirmation: Clear statement confirming the loan approval and referencing any prior applications or discussions

5. Loan Amount and Purpose: Specification of the approved loan amount and its intended purpose

6. Key Terms and Conditions: Essential loan terms including interest rate, tenure, repayment schedule, and security/collateral requirements

7. Disbursement Details: Information about how and when the loan will be disbursed

8. Repayment Terms: Detailed breakdown of repayment schedule, installment amounts, and payment methods

9. Fee Structure: Clear outline of all applicable fees, charges, and commissions

10. Next Steps: Instructions on what the borrower needs to do to proceed

11. Closing: Formal closing, bank signatory details, and contact information for queries