Project Reports, CMA Data & Loan Documentation

What are project reports and CMA data?

When a business applies for a term loan or working capital facility, the lender wants to see how the money will be used and how it will be repaid. A project report sets out the business case for a new project or expansion — cost, funding, projected revenues, profitability, and repayment. CMA data, named after the Credit Monitoring Arrangement format banks use, presents historical and projected financials in a standard format for assessing credit.

Both are built on realistic projections backed by the business's track record. Well-prepared documents make appraisal faster and improve the chance of approval on better terms.

The key terms

What lenders analyse:

Project report

A document setting out the project's background, cost, means of finance, technical and market viability, projected financials, and repayment schedule.

CMA data

Standard schedules of historical and projected operating statements, balance sheets, current assets and liabilities, and fund flows, used by banks to assess working capital.

Working capital gap

Current assets needed to run the business, less current liabilities other than bank borrowings.

Margin

The share of the requirement the business must fund itself, with the bank funding the rest.

DSCR

Debt service coverage ratio — cash available to repay loans compared with repayments due. Lenders typically want comfortable coverage.

Current ratio and gearing

Liquidity and leverage measures, like current assets to current liabilities, and total outside liabilities to net worth.

Drawing power

The amount that can be drawn on a working capital limit, based on stock and receivables after margins.

Why it matters

The quality of the documents shapes the lender's decision:

Approval chances

Clear, realistic projections make appraisal easier and approval more likely.

Loan terms

A strong case can support better rates, lower collateral, and longer tenures.

Speed

Complete documents in the bank's format reduce back-and-forth.

Right-sized facilities

Correctly computed working capital needs avoid being under-funded.

Scheme eligibility

Government-backed schemes and credit guarantees often require a project report.

Covenants

Projections become the basis for covenants the business must meet later.

Credibility

Projections that tie to history build trust with the lender.

Who is this for?

Projections must be realistic. Over-optimistic numbers lead to covenants that can't be met, and credibility problems later.

Project report vs. CMA data

Two documents for different purposes, often used together:

What we'll need from you

Financial statements

Audited accounts for the last three years, and current-year provisional figures.

Project details

Cost estimates, quotations for machinery or construction, and timelines.

Market information

Orders, customer commitments, and market assumptions.

Existing loans

Details of current facilities and repayments.

Promoter details

Background, net worth, and proposed contribution.

Stock and receivables

Current levels and ageing, for working capital.

Fees depend on the size and complexity of the proposal.

How we prepare your loan documents

Our approach:

1. 1

   Understand the proposal

   We discuss the purpose, amount, and structure of the finance needed.

2. 2

   Analyse history

   Past financials are analysed for trends and ratios.

3. 3

   Build projections

   Revenue, costs, working capital, and cash flows are projected on documented assumptions.

4. 4

   Compute requirements

   Working capital needs, margins, and repayment capacity are computed.

5. 5

   Prepare documents

   The project report and CMA data are prepared in the lender's format.

6. 6

   Support appraisal

   We answer the lender's queries during appraisal.

After the loan is sanctioned

Obligations continue:

Meet conditions

Complete pre-disbursement conditions like margin contribution and security.

Stock statements

Submit periodic stock and receivable statements for working capital.

Covenants

Monitor financial covenants in the sanction terms.

Annual renewal

Provide updated CMA data and audited accounts for renewal.

Use funds as intended

Lenders may ask for end-use certificates.

Register the charge

Make sure the lender's charge is registered with the ROC for companies.

Benefits and responsibilities