Union loan to ALP above board: Senator

Labor senator and former NSW party boss Sam Dastyari insists a $500,000 loan his party received from a union was above board.

Senator Dastyari said he asked the Electrical Trades Union for the money in December 2010 as NSW Labor was struggling for cash.

The trade union royal commission is investigating the unsecured loan, which was allegedly approved without proper discussion at the union's executive level.

Senator Dastyari said he asked ETU NSW secretary Bernie Riordan for a loan at a 2010 meeting.

"I do not recall the date of the meeting or the precise matters discussed," Senator Dastyari's statement said.

"To the best of my recollection, it was during this meeting that I proposed to Mr Riordan the terms of the ETU NSW Loan, including payment of a commercial rate of interest."

Senator Dastyari said he drafted and sent a letter confirming the loan agreement in September 2011, in response to an internal ETU review.

"I drafted the letter in response to a request to confirm the circumstances in which the ETU NSW loan was entered into," he said.

Senator Dastyari said the ETU loan, and similar loans from the Transport Workers Union NSW and Unions NSW, had been repaid.

"The ALP NSW received funds to assist with its cash-flow in the lead-up to the 2011 NSW state election, and the ETU NSW, the TWU and Unions NSW were paid interest at a competitive rate," he said.