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WHAT IS PROJECT REPORTS & THEIR ROLE IN THE BANK LOAN APPROVAL?

WHAT IS A PROJECT REPORT?

A written report, which contains information or details proving the eligibility or feasibility of a project/business idea or business component, is known as a project report. This helps the entrepreneur to get an accurate idea of ​​the initial inputs required for the business. It also provides records that help him get some loans and funds from various banks, government schemes like NBFCs, private equities, venture capital funds, Mundra loans and financial institutions. The project report is required even if the business is new and recently started.

The project report must contain details of the financial, financial, managerial, production and technical aspects of the business. It also includes in-depth information and analysis on resource requirements such as production, machinery, production process, production capacity, raw material requirements, manpower, electricity and water and other business-related costs.

IS IT MANDATORY?

Yes. It is mandatory for the business to submit project reports for bank loans, including business plans, estimated finances, feasibility studies, technical analysis, etc., to obtain loans or funds from banks and other financial institutions to meet the financial needs of the business. Even for business startups, project reports are the first important document they need to be prepared for when requesting any kind of funding from VC, private equity. Project reports must be submitted in an approved format such as CMA data format for bank loans. However, the format of the project report for a bank loan also depends on the type of loan. A project report is required for a small loan scheme like a currency loan, how, ever this is the only basic type of project report where a financial forecast for only three years is required.

WHO CAN MAKE IT?

The task and process of preparing a proper project report is an important issue. Therefore, project reports for bank loans are usually prepared by expert CAs, financial professionals, former bankers, Tax Consultants.

WHY DOES A EXPERT CREATE A PROJECT REPORT?

The project report is the basic document for analyzing the future performance of a component and is a very important document for forming an opinion about the future of a company or business component.

1. To obtain capital loans, term loans and other loans from a bank or financial institution.

2. To make a presentation to get investors’ equity participation.

3. To structure / restructure the firm's bank loan / financial and business policies.

4. To buy, own or start a new business.

5. for proper disposal of existing business.

6. To evaluate the value of a project or business

DOES THE BANK VERIFY THE INFORMATION YOU HAVE PROVIDED?

Of course! Before lending to a business, the bank verifies the financial details and other information presented in the project report. Therefore, it is advisable to prepare a systematic project report for the bank loan with all the necessary details regarding the financial projects of the business. However, the data provided in the financial estimates are based on basic judgment and cannot be verified, however, it is necessary to examine the feasibility of the assumptions made by the bankers.

WHAT IF YOUR PROJECT REPORT GETS DISAPPROVED?

If the project report submitted for the bank loan is rejected by the bank, the business entity applying for the loan may prepare another project report and re-apply or apply the project report to any other bank or financial institution. It is important to note that this may not be the only reason to refuse a loan, there may be several reasons for rejecting your loan application.

FORMAT OF PROJECT REPORT FOR A BANK LOAN:

1. Introduction page

2. Summary of the project

3. Details about promoters, work experience, their educational qualifications etc.

4. Current status of the bank, target market, its products and services and activities

5. Details of top management and employees, their educational qualifications, work experience etc.

6. Infrastructure and services, working premises, deployed equipment, machinery and equipment etc.

7. Details of customers, as well as potential customers

8. Territorial operations

9. Tie-up and financial acquisition

10. Financing tool

11. Balance

12. Profit and Loss Statement

13. Fund flow details

14. The main ratio

15. Break-even point assessment

16. Conclusion

As above, the format of the project report for the bank loan. And all project reports (for bank loans) should be prepared based on the specimens mentioned above.

CONCLUSION: The role of project report in the loan approval

Thus, a bank loan project report is required for obtaining funds and loans from financial institutions and banks for business funding. It is mandatory for this purpose and must be based on the format we mentioned above. Failure to submit a clear project report may result in dislike from the bank and you may have to re-apply or reconsider the information provided in the report. So, now if you have any queries or questions regarding the preparation of the bank loan project report, please contact us anytime with comments.

Regards

Santosh Patil

9769201316

Founder & Director

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