What Is A Bank Loan Project Report
- 1 What Is A Bank Loan Project Report
- 2 Project Report Format For Bank Loan for new business It’s Mandatory
- 3 Who Can Make Project Report Format For Bank Loan
- 4 Why Clear Cut Project Report Required
- 5 Do Bank Verify The Information You Have Provided
- 6 What If Your Project Report Get Disapproved
- 7 Standard Format For Preparing Project Report For Bank Loan
- 8 Project Report Format For Bank Loan Types
- 9 Secure
- 10 Features Of Bank Loans
- 11 Advantages and disadvantages Bank Loans
- 12 Sources Of Bank Loans
- 13 Conclusion
In this post I will share with you Project Report Format For Bank Loan pdf if you want to download Project Report Format For Bank Loan pdf then you can Read this article carefully and download Project Report easily by given below link.
A written document related to investment, containing information or details proving the worthiness or potential of a project is known as the Project Report. It helps the entrepreneur to get an exact idea about the initial inputs required for the business, providing records of which helps him to avail certain loans and funding from various banks and institutions too.
The project report necessarily contain details about the financial, economical, managerial, production and technical aspects of the business.
This also involves in-depth information about production, machinery, manufacturing process, manufacturing capacity, requirement of raw materials, manpower, power and water, and other business related entites.
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Project Report Format For Bank Loan for new business It’s Mandatory
Yes. It is mandatory for a business to present the Project Report for Bank Loan including business plan, projected financials, viability study, technical analysis etc, for availing loan or funds from bank and other financial institutions in order to meet the financial requirements of the business.
Who Can Make Project Report Format For Bank Loan
The task and process of making a appropriate project report is a crucial one. Therefore, the Project Reports for Bank loan are generally prepared by number of experts like the Bankers and CAs, having years of experience.
Why Clear Cut Project Report Required
- For availing working capital loan, term loan and other loan from banks or financial institution.
- For making presentation to get equity participation of the investor.
- For structuring / re-structuring bank loan / financial and business strategies of the firm.
- For buying, taking over or starting a new business.
- For making proper disposal of an existing business.
- For assessing the value of the project or the business.
Do Bank Verify The Information You Have Provided
Of course! The bank verifies the financial details and other information presented in the project report before issuing the loan to the business. Therefore, it is advised to prepare a neat project report for bank loan with all necessary details regarding the financial projects of business.
What If Your Project Report Get Disapproved
If the submitted project report for the bank loan anyhow gets disapproved by the bank, then the business firm applying for the loan may prepare an another project report and reapply or may apply the project report to any other bank or financial institutions.
Standard Format For Preparing Project Report For Bank Loan
- Introductory Page
- Summary of the project
- Details about the Promoters, their educational qualifications, work experience, etc.
- Current Status of the Bank, its products and services, target market, and activities.
- Employees, details about the top management, their educational qualifications, work experience, etc.
- Infrastructure facilities, tools deployed, operational premises, machinery, etc.
- Customers, details about them as well as prospective customers
- Regional Operations
- Fiscal acquisitions and tie-ups
- Means of Financing
- Balance Sheet
- Profit and Loss Statements
- Fund Flow Statement
- Chief Ratios
- Break Even Point Evaluations
In finance, a loan is the lending of money from one individual, organization or entity to another individual, organization or entity. A loan is a debt provided by an entity (organization or individual) to another entity at an interest rate, and evidenced by a promissory note which specifies, among other things, the principal amount of money borrowed, the interest rate the lender is charging, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower.
In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time.
The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan.
In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent.
Acting as a provider of loans is one of the principal tasks for financial institutions such as banks and credit card companies. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.
Project Report Format For Bank Loan Types
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral. A mortgage loan is a very common type of loan, used by many individuals to purchase things. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security – a lien on the title to the house – until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.
In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter – often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect.
A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.
Unsecured Unsecured loans are monetary loans that are not secured against the borrower’s assets. These may be available from financial institutions under many different guises or marketing packages:
- credit card debt
- personal loans
- bank overdrafts
- credit facilities or lines of credit
- corporate bonds (may be secured or unsecured)
- peer-to-peer lending
The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.
Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured lender’s options for recourse against the borrower in the event of default are severely limited.
An unsecured lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrower’s unencumbered assets (that is, the ones not already pledged to secured lenders).
In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower’s assets.
Thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible.
Features Of Bank Loans
- It is a short-term source of finance.
- A bank loan may be either secured or unsecured depending upon the circumstances.
- The interest charged by the bank on such a loan may be either fixed orvariable.
- If mortgage loan is to be obtained, the borrower has to pay a number of fees such as title searching fees, application fees, inspection fees, etc.
Advantages and disadvantages Bank Loans
Advantages Of Bank Loans
- They can be easily procured.
- They can be used for short-term as well as medium-term financing.
- Interest paid on a bank loan is a tax deductible expenditure
Disadvantages Of Bank Loans
- Some bank loans carry prepayment penalty.
- Borrowing too much as a bank loan can lead to decreased cash flow.
- In most cases, the bank does not disburse the whole amount of loan applied for, it pays cash lower than the loan demanded.
Sources Of Bank Loans
A bank loan is an amount of money borrowed for a set period within an agreed repayment schedule. The repayment amount will depend on the size and duration of the loan and the rate of interest.
Many businesses use bank loans as a suitable part of their financial structure. In fact, bank loans tend to be more available for well established and growing businesses rather than start-up businesses.
The reason for this is risk – banks prefer to loan to businesses with an established track record of profitability, which makes them more likely to be able to repay the loan and interest.
If a bank loan can be obtained, then there are several advantages for a growing business:
- The business is guaranteed the money for a certain period – generally three to ten years (unless it breaches the loan conditions)
- Loans can be matched to the lifetime of the equipment or other assets the loan is for
- While interest must be paid on the loan, there is no need to provide the bank with a share in the business
- Interest rates may be fixed for the term, making it easier to forecast interest payments
- The main disadvantage of a bank loan is the security that usually has to be given to the bank over the assets of the business.
The bank becomes a secured creditor with collateral over the business assets. If the business fails, then the bank has first call on what is left (before the shareholders).
Thus, a Project Report for Bank Loan is necessary for availing funds and loan from financial institutions and banks for the needs business fundings.
It is mandatory for the said purpose and must be prepared on the basis of the format as we explained above.
Failure in presenting a clear cut project report may result in disapproval by the bank and then you have to reapply or reconsider the information entitled in the reports.
Now you can download Project Report Format For Bank Loan pdf by clicking above link.
So, as now if you have any doubts or any questions in regard with the preparation of the project report of bank loan, then contact us through the comments anytime.