Vincent Kompany has signed eight new players since Burnley got promoted back to the Premier League at the end of last season.
The Burnley boss is looking to make more additions to his squad and has been scouring the loan market for options.
He is keen to add more attacking depth to his squad and Burnley are closing in on signing one more player this summer.
According to German broadcaster Sky Deutschland, Larsen is set to undergo a medical at Burnley ahead of joining the club.
The Clarets have a deal in place to sign the winger from Hoffenheim on a season-long loan.
He has signed a one-year extension with the German club ahead of his proposed loan move to Burnley.
It is unclear whether Burnley have an option to buy in the loan agreement with Hoffenheim.
