Pending professional review. This guide is awaiting review by our Chartered Accountants.
When a business applies for a term loan or working capital limit, the bank assesses the proposal largely from two documents: a project report and CMA data.
The project report
A project report describes the business or project and shows whether it can service the loan. It typically covers:
- the promoters and their background;
- the project or expansion — what will be done, where and when;
- the cost of the project and how it will be financed (own funds, loans, other sources);
- market and operating assumptions;
- projected profitability, cash flows and debt-service capacity.
CMA data
CMA (Credit Monitoring Arrangement) data presents past, current and projected financials in the standard format banks use to assess credit, especially working capital. It typically includes operating statements, analysis of balance sheets, comparison of current assets and current liabilities, the computation of maximum permissible bank finance, fund-flow statements and key financial ratios.
What to gather before you apply
- Audited financial statements for recent years and the current year's provisional figures.
- Income-tax and GST returns.
- Details of existing loans and sanction letters.
- Quotations for assets to be purchased under the project.
- Realistic sales, cost and stock-holding assumptions for the projection period.
Common reasons proposals get delayed
- Projections that don't reconcile with past performance.
- Figures in the CMA that don't match the audited accounts or GST returns.
- Working-capital requirements that aren't supported by the operating cycle.
Our corporate finance team prepares lender-ready project reports and CMA data. Use the EMI calculator for a first look at repayments.