A correct and crisp project report is a key differentiator between acceptance and rejection of your Project finance. It holds true either you are looking for finance to start a new business or looking loans from bank to expand it, Or you are looking for a Loan from a Public sector bank, NBFC or from Private Equity.

Now we are going to explain what are the Key criteria in a project report which define whether you will get the Project loan or not. In other words what are the key area which a Bank or Private equity fund looks at before nodding its head.

Here are some points to check in Project report: -

1) Debt Service Coverage Ratio: - DSCR as it is called is the single most important criteria for Project report appraisal. This ratio basically indicates how much cushion you have to pay your Project Loan installment regularly. The larger is better with minimum it should be 1.35 or more. It is calculated by your total net EMI payable divided by net cash flow each month. An expert project report consultant can provide an near accurate projection with reliable assumption to build trust in your project or Project loan proposal.
2) Executive Summary: - It is also called Project Summary and it contains brief details about project, its viability, market research if any and details about promoter. It works as a link between financial projection and non-financial aspects. A properly drafted Executive summary by promoters with guidance of a project finance professional, can create an assurance in mind of Project appraisal team of banks and Financial institute about its viability, market acceptance and qualification of promoters.
3) Assumption Sheet :- Any projections for future need to be made on the basis of certain assumption, such as growth rate of company, increase in Turnover, Projections of Expenses, Requirement of capital etc. An Assumption sheet enlists all such Assumption at on place with cross-reference at the financial projections. It enables financer to check if the assumptions are practical. A phony projection without understanding of business environment will not draw trust from banks and they may back off from considering it. Hence always advisable to take help of a third party Professional Project Consulting firm to cross check your assumption before placing it in Banks.
4) Presentation of Project Report: - Last but not least, how you present your project report also have a counting on its approval, The Projection should be in a standard format which is accepted by industry norms like for bank Loans like Term loan and CC/OD loan a CMA data format is preferred by bank. While if you considering getting project funding from NBFC or from Private equity there are separate way to present the data.

In nut-shell while you know your project much better however a professional guidance should be taken before you approach a Bank/NBFC/ Private Financer for a Project loan. We as an AKT Associates are Leader in professional Project report firm, have a specialized team of professional for each category of Project finance, Starting from large projects to Cash Credit and Overdraft facility. With more then 10 years of Experience we can certainly bring more value and weightage to your Project report. You can reach-out our Project Report team @ tax@aktassociates.com or connect with us at 8080809061

About Author

CA Arun Tiwari is a practicing Charted Accountant and Consultant to AKT Associates, Providing guidance and expert advisory on matters related to Project Finance, and International Taxation, he can be reached at tax@aktassociates.com
more information visit us https://aktassociates.com/business-finance/documentation/project-report/

Author's Bio: 

AKT Associates is worlds first online tax compliance firm to provide world-class taxation, legal,management compliance & consulting services using Whatsapp platform