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What is Project Report for Bank Loans?
A business needs to avail of finance from banks and financial institutions in order to start, sustain, or expand the operations. So, businesses apply for loans to secure the financial resources required for the business. Loan is a term used by the banks and other financial institutions wherein they lend out money to small businesses, MSMEs, individuals, large corporations, etc. for a wide variety of reasons pertaining to the financial needs of the business. The loans offered can be secured or unsecured with different rates of interest depending on the bank offering the loan and the business entity concerned.
For availing the bank loans, it is necessary for the business to prove its credibility to the banks or financial institutions. Supporting documents and a project report needs to be submitted to the bank for validating the authenticity of the business concern. A project report contains all the necessary pointers that would represent the business. It is basically a written and detailed representation of the business. It facilitates the process of availing bank loans. At Provenience, we prepare a comprehensive and useful project report for bank loans that will enable you to secure the bank loan.
FEATURES
Facilitates Process of Availing Loan
With the help of a project report for bank loan, it is easier for the bank officials to understand the business needs. A project report simplifies the work for the bank to understand the business goals and facilitates the process of availing bank loan.
Optimising Business Strategy
With rapidly changing market conditions, businesses often have to optimise their business strategy. A project report gives the owner a 360-degree view of the performance of the business, enabling them to improve the strategy and move the business in the right direction.
Required For Equity Investment
The project report is not just required for bank loans, it is also crucial for getting equity investment. The investors akin to bank need to understand your business inside out before making any investment. A project report for bank loans helps in providing that information to the investors and creates an opportunity to get better investment in the business.
Assessment Of The Value Of Business
A project report is a compilation of all the financial statements and reports of the business. This helps in assessing the value of the business or a particular project. A project report for a bank loan is not restricted to just availing loans but also helps in value analysis of the business.
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Frequently Asked Questions (FAQs)
The project report for bank loan should contain the following important pages:
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Introductory page
- Summary of the business
- Details of promoters
- Details of employees
- The infrastructure of the business
- Customer details
- Regional operations (if any)
- Methods of financing
- Any tie-ups or fiscal acquisitions
- Balance Sheet
- Profit and loss account
- Fund flow statements
- Break-even point calculations
There are certain assumptions that are made for making the project report. They are:
- Price of raw material remains unchanged.
- The selling price of products remains unchanged.
- Working days per year.
- Shifts per day.
- No change in the government policy or rules.
- No abnormal changes in the life of the project or business.
- All the production is sold in the market.
- Manpower and other utilities are easily available.
Yes, even under the Government scheme of MUDRA loans, submission of the project report is necessary. The format of this project report for the MUDRA loan will be simple and straight forward. But, it is essential to submit the project report.
These two are quite different from each other as the project report is a projection of the general parameters of the business. It gives a thorough explanation of all the business aspects. On the other hand, CMA is a data projection that gives a detailed insight into the business performance based on multiple parameters.
The type of project report for bank loan varies depending on factors like the loan requirement, the purpose of the loan, availability of past data and the mortgage requirement. So, if the loan is for machinery finance or a start-up or MUDRA loan, then the project report format along with its calculations will change. A project report differs from one business to another, and it is customized on the basis of above-mentioned factors.