Project Report Format for a Bank Loan (PMEGP, MUDRA, Term Loan): The Sections Banks Expect, With Page Order
- A bank project report is read in a fixed order — cost of project, means of finance, DSCR, break-even — and a report that puts those four on one page gets sanctioned faster than one that buries them.
- Project cost must be itemised with quotations and must include working-capital margin and preliminary expenses; means of finance must add up to exactly that cost, with promoter contribution shown and sourced.
- DSCR of 1.5 average and break-even below 60% of capacity are the two thresholds that most sanction notes quote.
Whether the scheme is PMEGP, MUDRA Tarun, Stand-Up India or an ordinary term loan, the bank's credit officer wants the same document: a project report (often called a Detailed Project Report or DPR) that proves the project costs what you say, is funded in a way that adds up, and generates enough cash to repay. Templates downloaded from the internet fail because they are generic; reports that follow the structure below pass because they answer the officer's questions in the order they are asked. This is the page order and the content of each section.
Page order of a bank-ready project report
| # | Section | What it must contain | What the officer checks |
|---|---|---|---|
| 1 | Executive summary | Name, constitution, activity, location, project cost, loan sought, promoter contribution, DSCR, break-even — on one page | Whether the four key numbers hold before reading further |
| 2 | Promoter profile | Education, experience in the trade, existing business, net worth, CIBIL, Udyam and DPIIT details | Capacity to run the unit; who stands behind the loan |
| 3 | Project description | Product or service, process, capacity, raw materials, utilities, manpower, location and premises | Technical feasibility; licences needed |
| 4 | Market and marketing | Demand, target customers, competitors, pricing, orders or LOIs in hand | Whether projected sales are plausible |
| 5 | Cost of project | Land/building, plant and machinery (with quotations), electrification, furniture, preliminary and pre-operative expenses, contingency, working-capital margin | Itemisation; nothing inflated; margin for working capital included |
| 6 | Means of finance | Promoter contribution, term loan, subsidy (PMEGP), unsecured loans — totalling exactly the cost of project | Debt-equity; source of contribution |
| 7 | Working-capital assessment | Holding periods, current assets and liabilities, limit required by the turnover method or MPBF | Whether the cash-credit request is justified |
| 8 | Projected profitability | 5–7 years: capacity utilisation, sales, costs, depreciation, interest, tax, net profit | Margins consistent with the industry and with year-one reality |
| 9 | Projected cash flow and balance sheet | Sources and uses, closing cash, balance sheet each year | Current ratio, TOL/TNW, no negative cash |
| 10 | Repayment schedule and DSCR | Moratorium, instalments, interest, DSCR each year and average | Average ≥ 1.5, minimum ≥ 1.2 |
| 11 | Break-even and sensitivity | Break-even capacity and sales; DSCR with sales −10% and cost +10% | Cushion against shortfall |
| 12 | Assumptions | Every rate, price, growth, holding period, interest rate, tax rate, depreciation method | Defensibility to the sanctioning committee |
| 13 | Annexures | Quotations, lease, licences, KYC, ITRs, bank statements, Udyam, quotations, CA certificate where required | Documentary support |
Cost of project — getting it right
- Itemise machinery with supplier quotations; banks finance against quotations, not estimates.
- Include preliminary and pre-operative expenses (registration, deposits, trial-run costs) and a 5–10% contingency on civil and machinery costs.
- Add the working-capital margin — the borrower's 25% share of the first year's working-capital requirement — to the cost of project; banks expect it to be funded from long-term sources.
- Exclude land purchased earlier unless it is being brought in at a documented value; PMEGP excludes land cost altogether.
- Interest during construction belongs in project cost if the moratorium exceeds a few months.
Means of finance — the arithmetic banks check first
Promoter contribution + term loan + subsidy (if any) + other long-term funds must equal the cost of project to the rupee. Scheme norms: PMEGP requires 10% owner contribution (5% for special categories) with the balance as bank loan, of which the subsidy portion is back-ended; MUDRA and CGTMSE term loans typically expect 15–25% promoter margin; Stand-Up India allows margin to be met partly from other scheme convergence. Show the source of contribution — savings, gold loan, family funds with a gift deed — because the officer will ask.
Projections that survive scrutiny
- Capacity utilisation rising gradually: 50–60% in year one to 80–85% by year three or four. Full capacity from month one is the fastest way to lose credibility.
- Selling price and raw-material cost from actual quotations and market rates, with modest annual escalation applied to both.
- Manpower at applicable minimum wages plus statutory costs.
- Depreciation by the written-down-value method at Income-tax rates, consistently.
- Interest computed on the reducing balance of the term loan and on the average utilisation of the cash-credit limit.
- Tax at the rate for the constitution — slab rates for a proprietorship, 25% or the concessional 22% for a company under section 115BAA.
- DSCR = (net profit after tax + depreciation + interest on term loan) ÷ (interest on term loan + principal instalment); show every year and the average.
- Break-even = fixed costs ÷ contribution per unit (or contribution margin ratio); express it as a percentage of installed capacity.
Scheme-specific notes
- PMEGP: the report is uploaded on the KVIC portal with the application; the format should follow the portal's cost heads; land cost excluded; subsidy shown as back-ended in means of finance.
- MUDRA Tarun / Tarun Plus: a shorter report (10–15 pages) is acceptable, but the branch still wants cost, means, projections and DSCR.
- Stand-Up India: the portal asks for the same sections; include training or handholding support availed.
- Term loan above ₹1 crore: add CMA data in the bank's format for the working-capital component.
The Project Report tool produces the report in this exact section order from your inputs — quotations, capacity, prices, holding periods — and computes DSCR, break-even and the sensitivity table, so the officer's first four checks are answered on page one.
Common mistakes
- Means of finance that do not equal cost of project. The commonest arithmetic error, and fatal.
- Working-capital margin left out of project cost, so the unit is under-funded from day one.
- 100% capacity in year one and margins no one in the industry earns.
- No quotations for machinery; banks will not finance a figure without a vendor behind it.
- Repayment starting before the unit operates, collapsing year-one DSCR.
- No assumptions page, leaving the officer unable to defend the file to the committee.
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Open Project Report tool →Frequently asked questions
What should a project report for a bank loan contain?
In order: executive summary with the key numbers, promoter profile, project description, market, itemised cost of project with quotations, means of finance that total the cost exactly, working-capital assessment, five-to-seven-year projected profitability, cash flow and balance sheet, repayment schedule with DSCR, break-even and sensitivity, an assumptions page and annexures.
What DSCR do banks want in a project report?
An average debt-service coverage ratio of at least 1.5 over the loan tenure and not below 1.2 in any single year. DSCR is (profit after tax + depreciation + term-loan interest) divided by (term-loan interest + principal instalment) for each year.
Is a CA-certified project report compulsory?
Not for every scheme or bank, but many branches ask for a CA or consultant certification on projections above a threshold, and PMEGP district task forces prefer it. More important than the signature is that the figures tie to quotations, ITRs and GST returns and that the assumptions are stated.
How much promoter contribution is needed?
PMEGP requires 10% of project cost (5% for special categories). MUDRA and CGTMSE-covered term loans usually expect 15–25%. Stand-Up India allows up to 15% margin with convergence of other central or state schemes. The contribution must be visible in the bank account or documented from a stated source.
General information for FY 2026-27, not professional advice for your specific case. Rules change — verify against the latest notification or ask a KyaTax expert.
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