Importance of Project Report in Bank Loan Approval

Project Report Format for Bank Loan

What is a project report and Project Report Format?

Project Report is a document which provides details of the overall picture of the proposed business in a project report format. The project report is a kind of draft of all operations carried out to achieve the desired results and contains all the information regarding the suggested Project.

Project Report is a plan of action and clearly defines its goals and objectives. Business Plan helps in converting the business idea into an effective move without any confusion. It also helps in taking loans and funds from various finance company like Banks Venture Capital funds, NBFC, Govt schemes like MUDRA, PMEGP loan etc.

Therefore, for better understanding, we have included information like technical, financial, economic, production, and managerial together in this report.

Project Profile describes all inputs such as production, manufacturing process, manufacturing capacity, the requirement of raw materials, human resources, power and water, and other business-related expenses.

However, project reports are like a necessary tool available with management for proper presentation of operations and help them to get a loan from the bank. It helps to estimate all costs of services and possible profits of the proposed Project.

Need and Objective of the Business Plan

Need and Objective of the Business Profile

Selecting the best investment Proposal: It helps to choose the best proposal, possible profits and risk connected with Project.

Project Approval: It is required to get approval from the authorities like Bank, Government Departments etc.

Visibility: It helps to give a clear description of the activities of the Project to avoid any confusion.

Risk Identification: It helps in finding risk and its effects on propose business.

Cost Management: Project reports help to set the project cost in advance to manage expenses and help to find out any deviation through tracking projects.

Financial Assistance: Project report help financial institutions and Government Department to judge the assistance of given Project and help in approving the loan.

Is it compulsory?
compulsory

Yes, Project report compulsory for every business which is going to the bank for the loan.  This report is the business plan, projects or technical analysis etc. for any credits to taking from banks.

The project report must be present in a particular kind of format called CMA Data- Credit Monitoring Arrangement data format for bank loans which prescribe by RBI- Reserve Bank of India. Also, this format depends on the type of loan.

Who can perform this job?

Experts like Chartered Accountants, Financial Professionals, and Ex-Bankers perform this type of job as it is not a simple task.

Why is a Professionally made report crucial?

Why is a Professionally made business plan crucial

In other words, To understand future performance and to make an opinion about the future of a business, it is very much required. Secondly, this is the best way to present the status of the Project and also helps in identifying risks and other challenges about the forecast of a company.

To get the working capital loan, term loan and other loans from banks or financial institution.

Presentation Business plan before the investor to take equity participation.

For buying, taking over or starting new business ideas

Disposal of an existing business required.

For estimation the value of the Project.

Verification of the information you provided

Yes, necessarily the banks or any financial institutions verify every detail you provided in the project report before loan approval.

Therefore, it advisable to prepare the proper step by step clean report with all the necessary information and taking the help of some experienced person or hire someone.

However, the data provided is just judgment and cannot be confirmed. Bankers need to check the feasibility of the assumption made.

What to do if the report gets disapproved?

What to do if the report gets disapproved

If somehow the project report is no approved, then make another project report and apply in other bank or funding institutes. Make sure that rejection of loan there could be many different reasons than this.

The Project Report Format for Bank Loan should be like:

Project Report Format for Bank Loan
  • Introduction About the Project/Business
  • Project Summary Project at Glance
  • Information of available employees is present along with their experience and qualifications
  • Current Status of the Bank, target market, its products and services, and activities
  • The information on the higher management is present along with their experience and educational qualifications.
  • Infrastructure facilities and services, operational premises, tools deployed, machinery and—equipment, etc.
  • Details of the Customers, as well as prospective customers
  • Regional Operation
  • Tie-ups and fiscal acquisitions 
  • Financing Means and Application of Fund
  • Balance Sheets
  • Profit and Loss Statements
  • Fund Flow Statement
  • Ratios Analysis
  • Break-Even Point Evaluations
  • Conclusions and Recommendation
  • SWOT Analysis

Above all is the format of the project report for the bank loan. Therefore, all reports for Bank Loans should be prepared based on the form discussed above.

Role of Project Report in Loan Approval 

Thus, to get the loan or funds from the banks or funding firms, it is necessary to have a Neat and Clean Project Report. It must be in the same format as mentioned above and must be for the told cause/reason.

In conclusion, The result of an inadequate and unclear project report will be the rejection or dissatisfaction, which may result in worse. So prepare the best project report of your business plan and have a quick loan.

If you have still any doubts or questions, contact us anytime and also read below mention articles.

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