Whether you want to start a new business or a project or you want to expand your existing business, finance is the blood of any business. When you have a great idea, but no money to execute it, you can look for loans from banks and financial institutions.
There are many requirements to get a loan from a bank and these requirements vary from bank to bank and according to the amount and type of loan you are looking for. In this article, we are going to discuss how the project report can be prepared for the purpose of loan.
Mudra loans, like any other commercial loan, require submission of project report for lending under Tarun or Kishore category. Loans under the Shishu scheme are the most readily available loans for small businesses and borrowers are generally not required to present project reports with applications.
A project report is a document that provides a description of the business. It provides a detailed cost benefit analysis of the proposed expenditure for which a business loan is sought. It provides the audience of the report with a detailed idea of the project cost, scale of activities (proposed and existing), existing debt (if any), revenue estimates, and more.
The project report should be complete and with valid data so that it can be easily accepted and approved for approval of loans under PMMY.
How to create a Mudra Loan Project Report?
A project report for a bank loan is a document that gives details about a business or project for which finance is being sought. It contains details about the economic, financial, managerial, technical aspects or business of the project.
a. Business / Project Summary: It talks about what the business or project is, about the need for finance, etc.
b. Business Prospects and Prospects: Explain the scope of the project, the current situation and future prospects. It is about the financial and technical feasibility of the project.
c. Details about promoters and other important officers: Profile, educational qualification, details of promoters and key personnel experience.
d. Required Resources: Machinery, Infra, knowhow etc.: Explain the cost and capacity as well as the infrastructure and technical requirements of the project.
e. Details about targets and prospective customers: Explain the project’s consumer profile about the possibilities of scaling and targeting customers.
f. Investment Requirement: Specify details about required investment along with specifications. This is essentially the cost of the project.
g. Sources of Finance: How essential funds are being sourced. Details about ownership and external funds.
h. Project financial statement: It includes financial statements such as balance sheet, profit and loss account.
i. Financial Estimates: Quantitative projection on income, sources of funds, expenditure, and application of funds.
j. Ratio analysis: Financial statements need to be calculated and analyzed through key ratios and their implications.
k. Fund Flow Statement: Details about funds from where it is sourced and the application of funds.
l. Brief analysis: analysis of the broken point of the project, this is feasibility in terms of cost and benefit
m. Conclusion: Findings about the project, its weaknesses, strengths, opportunities and threats.
The above is not an exhaustive list of project reports required by the lenders. Many lenders may have specific requirements related to the project report and may also be sought with the help of a professional in preparing the project report.
The main requirement in this regard is that the project report should be complete and factual otherwise it may lead to rejection of the loan application. This in turn will harm the credit score of the applicant. Therefore, project reports should be made with the utmost care and in accordance with the necessary lender guidelines.
Lenders will examine the project report with a fine comb and therefore all the details provided by the applicants can be verified by experts.
Why do you need a project report for a Mudra loan? And the role of project report in loan approval?
Thus, a project report for bank lending is required to avail funds and loans from financial institutions and banks.
Every businessman is always ready to expand his business for which he needs money. The funding will come from banks or NBFCs or private equity funding. Now, in order to obtain funds from banks as well as other financial institutions, every entrepreneur needs to prepare a detailed business plan which is also known as bank loan or project report for feasibility report or feasibility report.
When an entrepreneur imagines a business idea, he thinks a lot about its feasibility. However, if he does not write the same and makes a detailed calculation of the costs and benefits involved, he cannot guess whether it is feasible and the idea is eventually dropped. Therefore, it is always appropriate to prepare a detailed business plan or project report to understand whether it is practical or not.
Failure to present a clear cut project report can result in rejection by the bank and then you will have to reapply or reconsider the information entitled in the report. So, if you have any doubt or any question regarding the preparation of the project report of the bank loan, then contact us through the Whats app or email.
What are the benefits of the project report for Mudra loan?
Mudra loan is mainly for the people setting up small businesses and hence the government has ensured that there is not much delay in disbursement of Mudra loan. Once the project report is submitted for the Mudra Bank loan, there is hardly a small phase for approval and disbursement of the loan.
What is the project report for Mudra loan?
The major part of a Mudra Loan or other business loan is the “Project Report”. A project report will help you understand the nature of your business, procurement, process, job opportunities, profitability and ROI. This will clarify how ready or honest you are for your startup.
The project report should be clear, meaningful and understandable as it will represent you in your absence. Its report should be in detail with facts and figures along with development. Incomplete project reports or mysterious data may cause rejection and rejection will lower your CIBIL score.
A project report for Mudra loan includes many things like your personal, educational and professional details. The bank can ask about the experience of that field and many other questions related to the field, experience to check eligibility.
Is project report mandatory for Mudra loan?
No, there is no requirement of project report for Shishu loan but Tarun and Kishore project report is mandatory to understand the business process.
What if your project report gets rejected?
If in any way the project report submitted for a bank loan is rejected by the bank, the business firm applying for the loan can prepare the report of any other project and apply the project report to any other bank or financial institution. It is important to note that this may not be the only reason for the rejection of a loan.
Is there a specific format for making a project plan report for Mudra loan?
No, there is no fixed or bank approved format for project planning for Mudra Bank loan. However, some information, such as market size and technical aspects, can be added to the Mudra loan project plan.
Who prepares the project report?
Project reports can be prepared by business entrepreneurs or they can hire the services of our website www.projectreportbank.com for the same.
Does the bank verify the information given by you?
Of course! Before issuing a loan to a business, the bank verifies the financial statements and other information presented in the project report. Therefore, it is advised that banks prepare a clean project report for the loan with all the necessary details regarding the financial projects of the business. However, the data provided in the financial projections are based only on a base decision basis and cannot be verified, however, bankers need to examine the feasibility of the assumptions made.
Need to sign Mudra Project Report for Bank loan / seal by CA?
No, CA is not required to be signed or stamped for submission of Mudra Loan Project Report in the bank, it is a plan or future data submitted by an entrepreneur to the bank or institution where the loan is applied for.
Can the project report prepared by https://projectreportbank.com/ be used for MUDRA loan?
Yes, there are various types of project reports available at http://projectreportbank.com/, which can be used for Mudra loan and other Government sponsored schemes.
Why is a professionally created project report required?
A project report is a foundation document for analyzing the future performance of an entity and is a very important document to form an opinion about the future of the company or business entity.
- To avail working capital loans, term loans and other loans from banks or financial institutions.
- For make a presentation to get the equity participation of the investor.
- To structure / restructure the firm’s bank lending / financial and business strategies.
- For buy, to start or to start a new business.
- To properly dispose of an existing business.
- Also, for assess the value of the project or business.
Which business projects are covered under Mudra loan?
Mudra loans are extended for various purposes resulting in employment generation and income generation. Loans are mainly extended to:
- Business loans for traders, sellers, shopkeepers and other service sector activities
- Working capital loan through MUDRA card
- Equipment Finance for Micro Units
- Transport Vehicle Loans – For Business Use Only
- Loans for agricultural-related non-agricultural income generating activities, e.g. Beekeeping, Fisheries. Poultry, etc.
- Tractors, tillers as well as two wheelers are used for commercial purposes only.
Following is a list of activities that can be covered under MUDRA loan:
1) Transport Vehicle
Purchase of transport vehicles for transportation of goods and passengers such as auto rickshaws, small freight transport vehicles, e-rickshaws, 3 wheelers, taxis, etc. Tractor trolleys, tractors, and power tillers that are only necessary for industrial purposes are also liable for PMMY assistance. Two-wheelers that are running for industrial purposes are not cover in PMMY.
2) Community, social and personal service activities
3) Food Products Sector
Activities such as pickling, papad making, jam / jelly making, agricultural produce protection at the village level, sweets shops, small serving food stalls and daily catering / canteen services, cold storage, cold chain vehicles, ice making units, biscuits, ice cream units, bread and bun making, etc.
4) Textile Product Area / Activity
Handloom, khadi activity, powerloom, brocade and zardozi work, traditional embroidery and hand work, traditional dyeing and printing, weaving, garment design, computerized embroidery, cotton weaving, sewing and other textile non-garment products such as vehicles Accessories, bags, furnishing of goods, etc.
5) Business loans for merchants and shopkeepers
Financial assistance for lending to individuals for their shops / business and business activities / service enterprises and non-farm income generating activities, which are activities with a size of beneficiary loan up to 10 lakhs per enterprise / borrower.
6) Equipment Finance Scheme for Micro Units
With a beneficiary loan size of up to 10 lakhs, micro enterprises can be start by purchasing machinery and equipments.
7) Activities allied to agriculture
‘Activities allied to agriculture’, e.g. Beekeeping, Poultry, Fisheries, Livestock farming, Sorting, Grading, Aggregation Agro industries, Agri-clinics, Fisheries, and Agribusiness centers, Food and agro-processing, etc. (excluding land improvement, crop loans, such as canals, wells, and irrigation) and supporting services that foster livelihoods or generate income would be covered under the PMMY.
Also, Read our article on :-
- Udyogini Loan scheme Do you know about this ?
- Prime Minister’s Employment Generation Programme PMEGP
- PMEGP 2 Loan Expansion of existing units
- Credit Linked Capital Subsidy Scheme
- Stand-up India Scheme 2020
- Pradhan Mantri Rojgar Yojana 2020
- Mudra Loan Scheme Purpose, Features, and Offerings
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