What banks look for
A credit officer reading a project report is asking three things: is the project viable, can the cash flows service the debt with a margin, and are the promoters' assumptions reasonable? A report that answers those clearly, with numbers that tie back to the audited accounts, gets through appraisal faster than a thick document full of generic industry text.
CMA data is the bank's own format for the same analysis. Its six forms take the business's financial statements and projections, and lay them out so the bank can assess the working capital gap and the limit it can sanction.
What a project report includes
- The business and promoters: background, experience and the purpose of the loan.
- Project cost and means of finance — promoters' contribution, term loan, and any subsidy.
- Revenue and cost assumptions, with the reasoning behind each.
- Projected profit and loss account, balance sheet and cash flow statement for the loan period.
- Repayment schedule, and the debt service coverage ratio for each year.
- Break-even analysis and sensitivity to lower sales or higher costs.
- For working capital: holding periods for stock and receivables, and the assessed limit.
Documents required
- Audited financial statements for the last two or three years.
- Provisional figures for the current year, if the year isn't closed.
- Details of the project: quotations for machinery, civil work estimates, land or lease documents.
- Existing loan sanction letters and repayment schedules.
- Details of promoters' contribution and its source.
- The bank's own CMA template, if it has one.
How we prepare it
Understand the proposal
The amount, the purpose, the bank, and the scheme if it's a government-backed loan.
Build the assumptions with you
Capacity, pricing, costs and credit terms — tested against what the business has actually achieved.
Prepare the projections
Profit and loss, balance sheet and cash flow, with the loan and repayment built in.
Fill the CMA forms
Actuals and projections laid out in the bank's CMA format, with ratios computed.
Review with the promoters
We walk you through the numbers so you can explain them in the credit meeting.
Practical notes from our engagements
- Projections disconnected from past results. A jump from 10% to 30% growth needs a reason the bank can see — a new contract, new capacity, a new market.
- Working capital understated. Businesses often plan the machinery and forget the stock and receivables it will generate. The bank won't.
- Actuals that don't match the audited accounts. The first thing a credit officer checks is whether last year's figures tie to the audit report.
How we handle project reports and CMA data
We build the projections with the promoters, not from a template, and make sure every actual figure ties to the accounts. Where a bank needs a certificate or an examination report on the projections, we issue it separately and say clearly what it covers.
Related services
Frequently asked questions
What is CMA data?
Credit Monitoring Arrangement data — the standard format banks use to assess working capital and term loan proposals, set out in six forms covering limits, operating results, balance sheets, current assets and liabilities, the working capital assessment and fund flow.
How many years of projections does a bank need?
For working capital, usually the current and next year. For a term loan, projections usually cover the repayment period.
Does a CA guarantee the projections?
No. Projections are based on management's assumptions. A CA prepares or examines them and reports on whether the assumptions are reasonable and the projections properly prepared, not on whether they will be achieved.
What DSCR do banks expect?
It varies by bank and loan, but banks look for cash flows comfortably above the debt service each year — a ratio well above 1.
Can you prepare a project report for a new business with no history?
Yes. The assumptions then rest on the project plan, quotations and industry norms, and the promoters' experience matters more.