How to Prepare a Project Report for a Business Loan in India

A project report is the document that makes the case for a term loan: what you'll build or buy, what it will cost, how it will be funded, and how the loan will be repaid. It's also required for many government-backed schemes. This guide sets out what it should contain.

1. Introduction and Promoters

The business, its history, and the promoters' background and experience. Lenders lend to people as much as to projects.

2. The Project

What the project is — a new unit, an expansion, new machinery — with its location, capacity, technology, and timeline.

3. Cost of Project

• Land and building.
• Plant and machinery, supported by quotations.
• Other fixed assets.
• Preliminary and pre-operative expenses.
• Margin money for working capital.
• Contingencies.

4. Means of Finance

How the cost will be funded: promoters' contribution, term loan, subsidies, and any other sources. Lenders expect a meaningful promoter contribution.

5. Market and Viability

Demand for the product or service, competition, customers and orders, and why the project will succeed.

6. Financial Projections

• Projected capacity utilisation and sales.
• Costs of production and operating expenses.
• Projected profit and loss, balance sheets and cash flows for the loan tenure.
• Depreciation and tax.

7. Repayment and Ratios

• Loan repayment schedule, including any moratorium.
• Debt service coverage ratio, year by year.
• Break-even analysis.

Making It Convincing

1. Use real quotations and orders, not estimates.
2. Keep assumptions consistent with your track record and industry.
3. Show a realistic ramp-up, not full capacity from day one.
4. Include a sensitivity analysis.

Getting Help

Think Filing prepares project reports for term loans and government schemes, with projections lenders can rely on.