Preparing loan appraisal

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Querist : Anonymous

Querist : Anonymous (Querist)

26 March 2012 i have a client who has asked me to assist him to get his loan application of INR 2.5 crores sanctioned from a scheduled bank. How should i proceed. Please help.

CA Prashant Gupta

CA Prashant Gupta (Expert)
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26 March 2012 Prepare a project report. compile his IT Returns and income sources, assess the repayment capicity of borrower and then approach to a bank.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2012 Sir can you please mail me a sample project report. It would be very kind of you. My mail id is sam_sun10@yahoo.com

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 August 2024 Assisting a client in getting a loan sanctioned from a scheduled bank involves several steps. Below is a structured approach you can follow:

### 1. **Understand the Client’s Needs**

- **Loan Purpose:** Determine the exact purpose of the loan (e.g., working capital, capital expenditure, project funding).
- **Loan Amount:** Confirm the required loan amount (INR 2.5 crores).
- **Repayment Terms:** Discuss the preferred loan tenure and repayment schedule.

### 2. **Gather Required Documents**

Banks typically require a range of documents for processing a loan application. Ensure you gather the following:

- **Business Plan/Project Report:** A detailed plan outlining the project or business, including financial projections.
- **Financial Statements:** Balance sheets, profit and loss statements, and cash flow statements for the past 2-3 years.
- **Tax Returns:** Income tax returns for the past 2-3 years.
- **Proof of Identity and Address:** For both the business and the individual(s) involved.
- **Collateral Documents:** If the loan is secured, documents related to the assets being offered as collateral.
- **Business Registration:** Certificates of incorporation, partnership deeds, or other business registration documents.
- **Credit Report:** A good credit history and credit report of the business and/or individuals.

### 3. **Prepare a Comprehensive Project Report**

A well-prepared project report is crucial for loan approval. Here’s how to structure it:

- **Executive Summary:** Overview of the project, its objectives, and its financial needs.
- **Business Description:** Detailed description of the business, including its history, vision, and operations.
- **Market Analysis:** Research and analysis of the market, industry trends, and target audience.
- **Product/Service Description:** Detailed information about the products or services offered.
- **Operational Plan:** Description of how the business or project will operate, including production processes, supply chain, and logistics.
- **Management Team:** Information about the management team and their qualifications.
- **Financial Projections:** Forecasted income statements, balance sheets, and cash flow statements for the next 3-5 years.
- **Funding Requirements:** Detailed explanation of the funding required, including how it will be used and the repayment plan.
- **Risk Analysis:** Identification of potential risks and the strategies to mitigate them.

### 4. **Submit the Loan Application**

- **Prepare the Application Form:** Complete the bank’s loan application form with accurate details.
- **Attach Documents:** Attach all the required documents and the project report to the application form.
- **Submit:** Submit the completed application and documents to the bank.

### 5. **Follow Up**

- **Track Application:** Regularly follow up with the bank to check the status of the application.
- **Respond to Queries:** Be prepared to provide additional information or clarification if requested by the bank.

### 6. **Prepare for the Bank’s Due Diligence**

- **Site Visits:** Be ready for any site visits or inspections by the bank.
- **Interviews:** Prepare for interviews or meetings with the bank’s credit team.

### Sample Project Report Outline

To assist with your client’s loan application, here is a brief outline of a project report that you can adapt based on the specifics of the project or business:

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**Title Page**

- **Project Title**
- **Client’s Name**
- **Business/Company Name**
- **Date**

---

**1. Executive Summary**

- **Project Overview**
- **Funding Requirement**
- **Expected Outcomes**

---

**2. Business Description**

- **Company Background**
- **Mission and Vision**
- **Business Model**

---

**3. Market Analysis**

- **Industry Overview**
- **Market Needs**
- **Target Market**
- **Competitive Analysis**

---

**4. Product/Service Description**

- **Products/Services Offered**
- **Unique Selling Points**

---

**5. Operational Plan**

- **Operational Structure**
- **Production Process**
- **Supply Chain Management**

---

**6. Management Team**

- **Key Personnel**
- **Roles and Responsibilities**
- **Qualifications**

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**7. Financial Projections**

- **Revenue Forecast**
- **Expense Budget**
- **Profit and Loss Statement**
- **Cash Flow Statement**
- **Balance Sheet**

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**8. Funding Requirements**

- **Amount Needed**
- **Utilization Plan**
- **Repayment Schedule**

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**9. Risk Analysis**

- **Risk Factors**
- **Mitigation Strategies**

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**10. Appendices**

- **Supporting Documents**
- **Detailed Financial Statements**

---

Feel free to adjust this outline based on your client's specific requirements and the details of the project. If you need further assistance or have specific questions about any section, just let me know!