From the Knowledge Centre
Preparing a Project Report and CMA Data for a Bank Loan: What Lenders Look For
A loan application is only as strong as the numbers behind it. Lenders assess two things: whether the business will generate enough cash to repay, and what protects the bank if it does not. The project report and CMA data are where you answer the first question.
What goes into a project report
- Promoter profile – background, experience and net worth.
- Project description – product or service, capacity, location, technology and approvals.
- Market assessment – demand, competition, pricing and customer base.
- Cost of project – land, building, plant and machinery (with quotations), pre-operative expenses, contingency and margin money for working capital.
- Means of finance – promoters' contribution, term loan, subsidy and unsecured loans.
- Projected financial statements – profit and loss, balance sheet and cash flow for the loan tenure.
- Repayment schedule and key ratios.
- Risk analysis – sensitivity to lower sales or higher costs.
The ratios lenders focus on
| Ratio | What it shows | Typical expectation |
|---|---|---|
| DSCR (Debt Service Coverage Ratio) | Cash available to service the loan ÷ instalments plus interest | Average of 1.5 or more, and not below about 1.2 in any year |
| Current ratio | Current assets ÷ current liabilities | 1.33 or more for working capital loans |
| TOL/TNW | Total outside liabilities ÷ tangible net worth | Generally below 3 to 4 |
| Promoters' contribution | Share of project cost funded by promoters | Often 20–25% or as per scheme |
| Break-even point | Capacity utilisation at which there is no profit or loss | The lower the better |
Projections should be conservative and internally consistent. Lenders compare projected capacity utilisation, margins and working capital cycles with industry norms and with your past performance.
CMA data for working capital
CMA (Credit Monitoring Arrangement) data is a standard format of six or seven forms that banks use to assess working capital needs. It covers past, current-year estimated and projected figures for:
- operating statement and balance sheet analysis
- current assets and current liabilities
- computation of maximum permissible bank finance
- fund flow and ratio analysis
For MSMEs, banks commonly use the turnover method, under which the working capital requirement is 25% of projected turnover, with at least 5% contributed by the borrower. Larger borrowers are assessed on the holding period (cash budget) method.
Government schemes worth knowing
- PM MUDRA Yojana – loans to micro enterprises in Shishu, Kishore, Tarun and Tarun Plus categories, the last for up to ₹20 lakh for borrowers who have repaid earlier Tarun loans.
- CGTMSE – a credit guarantee for collateral-free loans to micro and small enterprises. The ceiling was raised to ₹10 crore per borrower from April 2025.
- PMEGP – a margin money subsidy for new micro enterprises in manufacturing and services, through KVIC and the District Industries Centre.
- Stand-Up India – loans between ₹10 lakh and ₹1 crore for greenfield enterprises promoted by SC/ST or women entrepreneurs.
- State schemes – Uttar Pradesh offers capital and interest subsidies under its industrial and MSME policies. Check eligibility before finalising the project location and cost.
Common reasons for rejection or delay
- projections disconnected from past results without explanation
- under-estimated working capital, leading to a cash crunch soon after the project starts
- quotations that are not current, or not from genuine suppliers
- promoters' contribution not documented
- tax returns and GST turnover that do not match the financial statements
A Chartered Accountant can prepare and certify the financial information. The lender's credit team makes the decision. Presenting realistic, well-supported numbers is the most effective thing a borrower can do.
The information in this article reflects the law as on the date of publication and is for general guidance only.