How to Create a Business Loan Project Report?

Business financing is the most effective way to inject capital and capitalise on new opportunities. This loan is available in a customised form tailored to a specific company's requirements. You can use them to buy new machinery, open a new office, start a new project, or use it in a number of ways to expand your business. However, every time you send a loan application to a business lender, you must have noticed that the business lender requests various documents, one of which is a project report. The project report includes detailed information about your company. This article will teach you how to write a project report for a business loan.
 

How to make a project report for business?

 
Preparing a project report format for a loan requires careful planning. Here is a list of the information you must include in the report. 
 

1. Introductory page

   This one should be your project report's first page. Include information about the business you want to invest in, annual sales forecasts, and revenue projections on this page. Mention the new company's goal and the type of audience you want to reach.
    
   It is critical to creating a precise but impactful introduction page; otherwise, the lender's executive will not proceed to the next page and will reject the application.
    

2. Project outline

   A project outline is a synopsis of your plan of action. It also includes the business status and an estimated budget for the project's successful completion or the establishment of the new venture. If you are raising funds for your manufacturing company because you have received a large order, make sure to include the deliverable.
    
   Timelines will inform your business loan lender about when you will receive payment from the client.
    

3. Promoters details

   Promoters are individuals, groups of individuals, companies, or firms responsible for carrying out various formalities necessary for the business establishment. The lender might approve the loan if the promoter is a seasoned entrepreneur or an established company.
    
   When mentioning a promoter, highlight their educational qualifications, experience, companies with which they are affiliated, and so on. Aside from that, include the names, experience, and academic credentials of the board of directors, Chief Executive Officer (CTO), and other key people in management.
    

4. Employees' information

   The number of employees in your company may be lower if you run a small business. We recommend you include information about your department heads, their experience, and their current roles and responsibilities in the business loan project report. 
    

5. Infrastructure details

   The business infrastructure consists of various components that are typically assets of your company. If you own a factory, include information about the property's size and value, as well as a list of the plant and machinery installed in the facility and other valuable tools.
    
   Include the age of various pieces of equipment as well, as this will give your lender an idea of depreciation and operational efficiency.
    

Also Read: Mistakes That First-Time Small Business Loan Recipients Make

 

1. Details of prospects/target customers

   If you work in the service industry or as a supplier to large corporations, include your clients' information in the project report for a business loan. Provide information on your monetary transactions with each client.
    
   Working with well-known names in various industries gives the impression to the business lender that you have a steady income and can pay your EMIs on time. Similarly, if you are in the retail industry, include information about your target customers. The lender uses this information to assess your earning potential.
    

2. Financing Details

   Companies borrow money from various sources for different reasons. When a company is in its early stages, it raises funds through equity financing, angel investors, and venture capitalists. In such financing options, the company must give a portion of its business stake to the investors in exchange for funds and critical contacts. However, the owner prefers to borrow from financial institutions as the company grows.
    
   Include information about various financing options when preparing a business loan project report. It will notify lenders if your company is in debt.
    

3. Regional operations

   Restaurants, beauty salons, and hospitals open branches in various locations to reach regional customers. You will also notice that many companies have offices in other countries. If you are an entrepreneur with multiple outlets/offices, do include this information in your project report. Also, provide information on the number of staff and assets in each branch. 
    

4. Business financials

   It is the most crucial information of all. This data informs lenders about your revenue trend, how your company has made sales over time, your business's liquidity position, and whether you have enough reserves to deal with a financial crisis.
    
   The balance sheet, financial ratio analysis, profit and loss account, and cash flow statement are all vital financial reports to include in the report. You must also provide projection details for various expenses, revenue sources, and so on.
    

5. Business Acquisition

   The start-up ecosystem is thriving in India. If you have invested in any new venture or have acquired any potential start-up, you must include this information on the project report. Similarly, if you have partnered with another organisation to provide specific services, this information must be included as well.
    

Is a business loan project report necessary for acquiring funds?

 
Not always. Financial institutions require this report if the loan amount is significantly higher. However, if you are applying for a term loan for a maximum sum of Rs 25 lakhs and a repayment term of 36 months, the presentation of the project report is not mandatory. The lender approves a term loan based on your business experience, creditworthiness, profitability, and debt coverage ratio.
 
Also Read: Top 10 Factors to Consider Before Signing Your Business Loan Application
 

To conclude

 
Drafting a project report format for a loan and entering relevant information is complex. For report preparation, you should seek assistance from a qualified CA, financial expert, or ex-banker. The comprehensive and precise project report will assist you in obtaining immediate funding, and the applicable business loan interest rate on your profile will also be lower.