What is Project Report & CMA Data for Bank Loans?
A project report is the document a lender assesses when deciding whether to finance a business, setting out the proposal, the cost, the means of financing and projected financial statements. CMA data is the standard format in which banks require past and projected figures for a working-capital or term loan assessment.
Who needs it
- Businesses applying for a term loan to buy machinery, build premises or fund an expansion.
- Businesses seeking working-capital limits, where CMA data is part of the application and of each renewal.
- Applicants under schemes for micro, small and medium enterprises, which require a project report in a prescribed shape.
- Startups and first-generation businesses that have no track record and must support the proposal with projections.
- Existing borrowers at the point of renewal or enhancement of their limits.
- Businesses whose earlier application was returned for want of a properly supported projection.
Benefits
- Projections built from the business's own drivers, so the assumptions can be explained at the appraisal meeting.
- The ratios lenders actually test computed and presented: debt service coverage, current ratio and leverage.
- CMA data in the standard format, with the past years and the projections on a consistent basis.
- Working-capital requirement assessed on the operating cycle rather than asked for as a round figure.
- The schedules and notes that support each projected line, so a query does not stall the file.
- A view on which facility and which scheme fit the requirement before the application is made.
Key facts
| Item | Position |
|---|---|
| What it is | The document a lender assesses: proposal, cost, financing and projected statements |
| CMA data | The standard bank format: audited past years, current-year estimate and projections |
| Core ratios | Debt service coverage, current ratio, leverage, break-even |
| Working capital | Assessed from the operating cycle, not requested as a round figure |
| Typical timeline | Two to three weeks from the point the information is available |
| Statutory due date | None; dates follow the lender's sanction and renewal calendar |
| After sanction | Stock statements, audited accounts and renewal CMA data as the sanction requires |
What goes into a project report?
A lender reads a report in a particular order, and the report is easier to appraise when it is assembled in that order.
- The proposal: what is being financed, why, and what it costs, supported by quotations or estimates
- Means of financing: promoter contribution, the borrowing sought, and any subsidy, with the contribution evidenced
- The business and the promoter: constitution, activity, experience, and existing borrowings
- Projected profit and loss, balance sheet and cash flow, for the term the lender requires
- The assumptions, line by line, with the basis for revenue, material cost, overheads and working capital
- Ratio analysis: debt service coverage year by year and on average, current ratio, leverage and break-even
- A sensitivity case showing the position if revenue falls short of the base case
- CMA statements in the standard format, and the schedules supporting each projected line
How is DSCR calculated?
The debt service coverage ratio is the number the appraisal turns on for a term loan, because it answers whether the business can pay the instalments from what it generates. The figures below are illustrative.
| Line | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Profit after tax | ₹22,00,000 | ₹31,00,000 | ₹38,00,000 |
| Add: depreciation | ₹18,00,000 | ₹16,00,000 | ₹14,00,000 |
| Add: interest on term loan | ₹12,00,000 | ₹10,00,000 | ₹7,50,000 |
| Cash available for debt service | ₹52,00,000 | ₹57,00,000 | ₹59,50,000 |
| Interest on term loan | ₹12,00,000 | ₹10,00,000 | ₹7,50,000 |
| Principal repayment due | ₹25,00,000 | ₹25,00,000 | ₹25,00,000 |
| Total debt service | ₹37,00,000 | ₹35,00,000 | ₹32,50,000 |
| DSCR | 1.41 | 1.63 | 1.83 |
Two points matter as much as the average. The lowest year governs, because that is when the business is most exposed, and here it is the first year, which is typical since repayment begins before the project reaches full capacity. And the ratio should survive the sensitivity case: a projection with a DSCR of 1.4 that falls below 1 on a 10% shortfall in revenue tells the lender the margin is thin, which is better addressed in the report than discovered at the appraisal.
How is the working-capital requirement worked out?
From the operating cycle: how long cash is locked up before it comes back. The figures below are illustrative, for a business projecting turnover of ₹6 crore.
| Element | Holding period | Illustrative amount |
|---|---|---|
| Raw material | 30 days of consumption | ₹30,00,000 |
| Work in progress | 15 days of cost of production | ₹18,00,000 |
| Finished goods | 20 days of cost of sales | ₹26,00,000 |
| Receivables | 45 days of turnover | ₹75,00,000 |
| Gross working capital | ₹1,49,00,000 | |
| Less: creditors | 30 days of purchases | (₹35,00,000) |
| Net working capital required | ₹1,14,00,000 | |
| Less: margin to be brought by the borrower at 25% | (₹28,50,000) | |
| Indicative bank finance | ₹85,50,000 |
The holding periods are the part an appraising officer will challenge, because they come from the business's own history and from what is normal in the trade. A projection that shortens the receivable period without explaining what will change is the most common weakness. The margin percentage is set by the lender's policy for the facility.
Why do applications get returned?
Rarely because the business is not viable. Usually because the file cannot be appraised as submitted.
- Projected turnover that does not reconcile with the GST returns and bank credits the lender can already see
- A revenue assumption with no stated basis, or one that implies a market share the business has never held
- Existing loan repayments left out of the projected cash flow, which inflates the coverage
- A working-capital request as a round figure, with no operating cycle behind it
- Promoter contribution shown but not evidenced
- No schedules, so every projected line generates a query and the file stops moving
- A DSCR that works only in the base case, with no sensitivity
- Quotations missing for the capital items being financed
Schemes for micro, small and medium enterprises
Several central schemes exist to improve access to credit, and the right one depends on the size of the enterprise, whether it is new or existing, and what is being financed. The credit guarantee scheme for micro and small enterprises enables lending without collateral by guaranteeing part of the lender's exposure up to a prescribed ceiling. Other schemes provide subsidy-linked finance for new enterprises, and small-ticket lending is channelled through designated routes with their own slabs.
Ceilings, eligibility and subsidy terms under these schemes are revised periodically, and some operate through particular categories of lender only. The practical approach is to settle the facility and the amount first from the project's own numbers, then check which current scheme the proposal fits, rather than designing the proposal around a scheme limit remembered from an earlier year.
Related reading
- Udyam (MSME) registration — the registration most credit schemes require
- Stock audit for banks — what the lender verifies after the facility is drawn
- Virtual CFO services — monitoring the projections once the loan is running
Official sources
- Ministry of Micro, Small and Medium Enterprises — schemes and eligibility
- Credit Guarantee Fund Trust for Micro and Small Enterprises — guarantee cover and ceilings
- Reserve Bank of India – master circulars — lending to micro, small and medium enterprises and priority sector norms
- Udyam registration portal — MSME classification and registration
Documents required
- 01Financial statements and tax returns for the last two or three years, where the business exists
- 02GST returns and bank statements for the recent period
- 03Details of the proposal: what is being bought or built, with quotations or estimates
- 04Means of financing: promoter contribution, proposed borrowing and any subsidy or grant
- 05Existing loan details with sanction letters, outstanding balances and repayment schedules
- 06Order book, contracts or a basis for the projected revenue
- 07Cost structure: material, labour, overheads and the basis of each
- 08Details of land, building and plant, with ownership or lease documents
- 09Promoter profile, net worth statements and the constitution documents of the business
- 10Collateral details, where the facility is to be secured
Due dates and penalties
| Item | Due date | If missed |
|---|---|---|
| CMA data for renewal of working-capital limits | Before the limit's renewal date, as the sanction requires | Limits can be held up or reduced pending renewal |
| Stock statements during the facility | At the frequency the sanction requires, commonly monthly | Drawing power is restricted under the sanction terms |
| Audited accounts to the lender | Within the period the sanction specifies after the year end | A breach of the sanction conditions |
| Scheme applications | Within the window the particular scheme prescribes, where one applies | The application falls outside the scheme for that period |
A project report has no statutory due date; the dates that matter are set by the lender's sanction and renewal calendar and by the scheme, if one applies. Scheme eligibility, limits and subsidy terms are revised from time to time, so the current guidelines should be checked before an application is prepared.
Mistakes to avoid
- Projecting a growth rate with nothing behind it, which is the first thing an appraising officer tests.
- Projections that do not reconcile with the GST returns and the bank statements the lender can already see.
- Asking for a working-capital limit as a round figure rather than deriving it from the operating cycle.
- Ignoring the repayment of existing loans in the projected cash flow, which overstates the coverage available.
- A debt service coverage ratio that only works in the base case, with no margin if sales fall short.
- Omitting the promoter's own contribution, or showing a contribution that cannot be evidenced.
- Projecting profit without the working capital that the extra turnover will absorb.
- Submitting a report with no schedules, so every line attracts a query and the file stalls.
Why PHMG
- Partner-led: a chartered accountant reviews your work, not only a junior team.
- Clear fee and scope in writing before we start.
- Deadlines tracked for you, with reminders well before the due date.
- Your documents and data are handled confidentially.
- Online service across India, with a single point of contact.
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