Project loan applications rarely fail on the merits at the first hurdle. They stall because the file is incomplete and goes back and forth for weeks while each missing item is produced one at a time.
The list below is the ordinary starting set. A particular lender will add to it, and a particular sector will add more again, but assembling this much before the first meeting changes the pace of everything that follows.
Constitution and identity
- Certificate of incorporation, memorandum and articles
- Board resolution authorising the borrowing and naming who may sign
- KYC for the company, and for directors and substantial shareholders
- PAN, GST registration, and any sector licence or registration
- Proof of the registered and business addresses
Financial history
- Audited financial statements for the last three years, with schedules
- Provisional or management accounts for the current year to date
- Income tax returns with computation for the same period
- Bank statements for all operating accounts, ordinarily twelve months
- Details of existing borrowings: sanction letters, outstanding balances, repayment record
A lender reads the bank statements at least as closely as the audited accounts. Regular returns, frequent overdrawing or unexplained large movements will be asked about, so it is better to explain them in the submission than to be asked.
The project itself
- A detailed project report. What is being built, why, what it costs, what it will earn, and on what assumptions.
- A cost of project statement, item by item, distinguishing what is already spent from what is proposed.
- Quotations or estimates for plant, machinery, civil work and equipment.
- CMA data. Projected financials in the format the lender expects, showing the funding requirement and the repayment capacity.
- Means of finance, showing promoter contribution alongside the borrowing.
Land, premises and approvals
- Title documents or the registered lease for the site
- Approved plans and, where the project needs them, environmental, pollution control and local authority consents
- Utility sanctions where the project depends on them
Security
- Documents for the property or assets offered as collateral
- Valuation reports where the lender requires them
- Details of any existing charge on those assets
- Personal guarantee documentation from promoters, where required
What actually holds applications up
Assumptions that are not stated. A projection whose drivers are invisible cannot be tested, and a lender who cannot test it will discount it.
A title chain with a gap. Almost always discoverable in advance, and almost always slower to fix under time pressure.
Existing borrowings disclosed late. The lender will find them. Finding them after the application has been made costs credibility that the numbers then have to earn back.
A promoter contribution that has not been arranged. Sanction is commonly conditional on it, and the condition is easier to satisfy if it was planned rather than discovered.
One habit worth adopting
Ask the lender for its checklist at the outset and work to that document rather than to a general list. Requirements differ between lenders and between products, and building the file against the wrong list is the most avoidable delay in the whole process.
This note is general information published under the Bar Council of India's rules and is not legal advice. It should not be relied upon without taking specific advice on your own facts.