A project report a bank will read
Put together the project report a loan application asks for, section by section, with numbers you can defend.
7 min read
Ask a bank for a loan for a new business, or a larger one for a business you run, and you will be asked for a project report. It sounds like a consultant's job. It is really your one-page plan written out with numbers, in an order a loan officer knows how to read.
What the bank is reading it for
The officer is not grading your writing. They are checking three things:
- That the money will be spent on what you say, at prices that are real.
- That the business will earn enough to make the repayments, with room to spare.
- That you have thought about what could go wrong.
Every section below answers one of those.
The sections
1. About you and the business. Who you are, your experience in this line of work, the business's name, structure, address and registrations. Experience matters: a bank lends more readily to a cook opening a kitchen than to a cook opening a hardware shop.
2. What the business does. The product or service, who buys it, and why they will buy from you. Two or three paragraphs, from your one-page plan.
3. The market. Who your competitors are, what they charge, and how much demand there is where you will trade. Evidence beats adjectives: "four tiffin services within 2 km, all with waiting lists" is worth more than "huge demand".
4. What the money is for. An itemised list — machinery, fittings, first stock, working capital — each with its cost. Attach quotations from suppliers for anything you will buy. A quotation turns a guess into a fact the bank can check.
5. How it is paid for. The total cost, how much you bring yourself, and how much you are asking to borrow. Name the scheme if you are applying under one.
6. Projected sales and costs. Month by month for the first year, then year by year for the next few. Sales, the cost of those sales, running costs, and what is left.
7. Repayment. The loan's instalments set against what the business earns. The bank wants to see that the instalment is comfortably covered, not just barely.
8. Risks. What could go wrong and what you would do: a slow start, a key supplier failing, a price rise. Naming them shows you have thought about them.
Write sections 6 and 7 last, and from the bottom up: start from what one sale leaves you, how many sales a month you can honestly expect, and your running costs. A projection that starts from the loan amount and works backwards to justify it is easy for a bank to spot.
Make the numbers defensible
Every figure in the report should have an answer to "where did that come from?"
| Figure | A defensible source |
|---|---|
| Equipment costs | Supplier quotations |
| Rent | The rent agreement, or a written offer |
| Selling price | What you charged in your test, or competitors' prices |
| Sales per month | Your test results, or a slow, stated assumption |
| Wages | What you will actually pay, by person |
Do not inflate the sales to make the repayments look easy. If the business later earns what you honestly expected rather than what you wrote, you are the one who cannot pay the instalment. A cautious report that still works is far stronger than an optimistic one.
Do you need to pay someone to write it?
Many people pay an agent or a CA to prepare the report. A CA is worth it for a larger loan or a company. But you should be able to explain every number in it yourself — the officer will ask, and "the consultant wrote that" is not an answer.
The funding report below researches the loans and schemes that fit your business and city, and gives you much of the market and funding material a project report needs.