Broadly there are two different types of financing: Term loans and Cash credits. Both are banking instruments that lends money to borrowers, but they have different definitions and goals.

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CA for project report of Term loan

Term loan is given only for the purpose acquisition of some asset. (It is important to note that from a term loan you can’t acquire any stock, land or pay your stock creditors)

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Documents required by a CA for project report term loan

1. Quotation/ Estimate:

These are the documents that contains the quote from the probable purchases from whom the borrower intends to take supplies of fixed assets once the loan is sanctioned. Estimate of Civil can also be given by the engineer.

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2. Project Report: (explained more in detailed at bottom)

A project report is a document that summarises the facts of a proposed project, including the project's aims, financial predictions (that includes detailed estimated projected schedule with CMA), steps how it will proceed with the marketing of the produced/ acquired goods, detailing on its target costumers and all other points related to the projects supply chain.

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3. KYC and other documents:

KYC is the basic documents, that banks need for processing the loan amount like

• Certificate of Incorporation

•  Partnership/ Trust/ Society deed

•  Address proof (like rent agreement, consent, Aadhar, Trade License, other industry specific license and approvals etc)

•  PAN Card

•  Udyam Registration (If Available)

•  If the project is enhancement of previous project or the entity has any other previous background then

•  Last FY Bank statements

•  Last 3 filed ITR Copy

•  Last 3 signed audited financials

•  Last 12 GST return copy

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4. Documents required by CA for preparation Projection (Estimated projected), explained more in detailed at bottom):

This is a schedule that shows the entire estimated and projected income, expenditure, asset, liability and cash flows until the year by which the loan is repaid.

This shows the detail calculation of project cost (bifurcating the owners contribution and bank loan component), payback period, repayment schedule (showing detailed break of principal and interest repayment), break even analysis, key financial ratios like GP %, NP %, DSCR, Debt to equity ratio etc. (Note: these ratios are calculated for all the estimated and projected year till the time loan is finally repaid).

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5. Collateral documents:

Here, the term loan taken to acquire the asset is to be compulsorily mortgaged/ hypothecated to the bank. Along with this the bank requires additional collateral for its comfort like Land, Building, FDs, securities, LIPs, Jewelleries etc.

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The above is an inclusive list of documents required to avail the term loan. After all, above is collated and submitted and if bank finds the project to be strong enough and have been satisfied with the borrower’s profile check (CIBIL etc), the bank will disburse the loan.

Note: Additionally, here the borrower will have to buy stamp papers for hypothecation of the purchased assets and creating deed of the security given as collateral.

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Apart from this, bank will require additional yearly compliance from the borrower side, i.e yearly submission of signed audited financials and few certified figures.

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Also, borrower may, if qualified, avail subsidy or interest subvention from the government under different schemes. (Like KVIC, PMEGP, Mudra, CLCSS, CGTMSE, Startup India, Stand-up India, NABARD Schemes, ATISIS, AIF, PM Aawas etc)

 

To check for amount eligible for term loan, you can visit:

https://www.caumang.com/post/what-are-the-documents-required-for-availing-term-loan-and-cash-credit-cc-loan

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What is Project Report key component?

Executive Summary
Brief overview of the business, its objectives, and the purpose of seeking the loan.

Business Model and Plan
Outlines the business concept, offerings, and strategic plan for growth or expansion.

Market Analysis
Evaluates the target market, customer segments, competition, and demand-supply dynamics.

 

SWOT Analysis
Summarises key internal strengths and weaknesses, and external opportunities and threats.

Organizational and Management Structure

Presents the management team, their roles, and the organizational hierarchy.

Financial Projections
Provides 5–7 year forecasts of income, cash flow, and financial position.

Break-Even Analysis
Identifies the point at which the business becomes profitable.

Funding Requirement and Usage
States the loan amount and specific allocation of funds.

Repayment Plan
Details the repayment schedule, sources of revenue, and cash flow availability.

Risk Analysis and Mitigation Strategies
Highlights potential risks and the corresponding mitigation measures.

Supporting Documents
Includes legal, tax, registration, and compliance-related documentation.​​​

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Estimated projected by CA for project report include:

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1. Land and Building Acquisition Cost
Cost incurred for purchasing or leasing land and constructing buildings.

2. Plant and Machinery Investment
Capital spent on procurement and installation of plant and machinery.

3. Expenditure on Ancillary Fixed Assets
Investment in additional non-current assets like furniture, tools, etc.

4. Total Fixed Capital Outlay
Cumulative cost of all fixed assets deployed in the business.

5. Raw Material Procurement Cost
Recurring cost of acquiring essential inputs for production.

6. Employee Compensation and Payroll Expenses
Total salary, wages, and statutory benefits payable to staff and workers.

7. Total Working Capital Requirement
Aggregate funds needed to meet day-to-day operational expenditures.

8. Total Project Cost
Overall financial requirement for setting up and commissioning the project.

9. Total Capital Infusion
Sum total of fixed and working capital deployed for the project.

10. Production Cost Estimate
Total cost involved in manufacturing goods or delivering services.

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11. Projected Annual Revenue
Estimated gross sales or income generated in a financial year.

12. Cost-Benefit Analysis
Evaluation of economic feasibility by comparing benefits with incurred costs.

13. Five-Year Financial Projections and Profitability Assessment
Forecast of revenue, expenses, and profit for the next five financial years.

14. Break-Even Point Analysis
Evaluation of the point at which revenues equal the initial investment made.

15. Sources of Financial Assets
Overview of funding mix such as equity, debt, subsidies, and grants.

16. Projected Statement of Profit and Loss
Summary of expected income and expenditure to assess net profit/loss.

17. Detailed Financial Assumptions and Justifications
Comprehensive notes supporting financial forecasts and assumptions made.