Swansea manager Paul Clement worked with Sanches during his time as Bayern's assistant manager last season before leaving to take over the PL side.
Sanches, 20, has four years left on his Bayern contract and though a season-long loan move would include a fee, it is believed Bayern might pay some of his wages, according to the BBC.
Bayern sporting director Hasan Salihamidzic said Sanches asked to be left out of the squad versus Werder Bremen in Bundesliga play last weekend as he and the club worked out loan details from potential suitors.
Sanches, who joined Bayern from Benfica for €35M in May 2016, made 25 appearances and scored zero goals in 903 minutes for Bayern last season. Sanches was also an important part of Portugal's surprise title-winning turn at EURO 2016. Sanches was also named Europe’s Golden Boy, the continent’s best player under the age of 21, joining the likes of Lionel Messi and Wayne Rooney, but could not earn consistent first-team appearances for Bayern under Carlo Ancelotti.
Update: loan confirmed
It has been confirmed that Sanches will join Swansea on a 1-year loan. According to kicker, Swansea will pay a transfer fee of €8.5M. The loan does not include an option to buy.