This is generally the banks position about giving loan proceeds out in cash.

"Allowing the issuance of loan proceeds in the form of cash (that is, in the form of paper currency and current coins) is considered to be a weakness in internal control in a bank."

From the last line of the cut and paste from Wiki in this post. Not my words, what someone from the banking community likely wrote.

Of course theoretically a person could take the proceeds from a loan, go to the teller window, write a check and take out cash. This probably would work for a few thousand dollar loan. But likely the bank is going to want some collateral for the loan. So unless it is collateral you already own, the bank is either going to want you to cut a check to pay for the item you took the loan out for or they will create the draft themselves for you to take to buy the collateral.

I'm not a banker. Please. Any bankers that actually know how their own system works, correct me if I am wrong. All of this information is available freely. Much of it on the Fed's own web site.

John