Every startups or existing business which looks for funding from banks and financial institutions have to first prepare a detailed project report. Such project reports are required in case of funding by new company or existing company looking for expansion or diversification. Further, at time of renewal of existing funding also, project reports are required.

Project Report

Besides funding from banks, project reports may also be required for following purposes:

  • Making an application for various grants or subsidies or incentives from government
  • In order to procure various government licenses or approvals or quotas etc
  • In order to enter into technology tie ups and collaboration agreements
  • For making planning for expansion or diversification
  • Any other similar purpose

People often get confused between CMA data and Project report. CMA data refers to Credit Monitoring Arrangement data. Both CMA data as well as project report are useful for getting funds from banks and financial institutions. However, generally, CMA data are required for existing loan facility which wants to renew the limit or enhance the limit capacity whereas project report is quite comprehensive and is used for funding by new as well as existing businesses.

CMA Data is prepared to analyze how the borrower is managing His/hers working capital in order to to ensure the use of funds effectively.

Depending upon size of funding, project report may be brief or very detailed one.

Contents of Project report for Bank Funding

Normally a project report for bank funding contains following information:

  • Brief profile of firm and its promoters or owners
  • Business model and nature of business of existing or proposed company
  • Cost of project and means of financing. Typically, banks fund only 75% of cost of project. Balance 25% has to be self-funded. In such case, source of self-financing the project.
  • Nature of loan required i.e. Term loan or working capital requirement
  • Details of movable and immovable properties required with costing
  • How much man power is required and its availability
  • In case of manufacturing, process of manufacturing
  • How will marketing of product will be done
  • Expected revenue and expenses and when can there be break even
  • Loan amortization schedule during tenure of loan
  • Calculation of various ratios
  • Provisional and projected financials for next 5 years
  • CMA Data
  • Depreciation chart
  • IRR calculation
  • Project viability analysis
  • Any other information

 

Contents of CMA Data

Normally a CMA Data contains following information:

  • Analysis of various ratios like fixed assets coverage ratio, DSCR, Profitability ratios, liquidity ratios, solvency ratios, working capital ratios etc.
  • Analysis of Provisional and Projected Balance sheets, Cash flow statements
  • Break even Analysis

Calculation of MPBF as per methods prescribed in Tandon Committee Norms

No votes yet.
Please wait...
Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.
No votes yet.
Please wait...