Project Report Preparation is very important because it provide very useful information for better business decision. It works like a written plan for forward work. It includes the aim of business project. It also includes the total written budget of project. We have to prepare it systematic way.
The process of establishing a new business is preceded by the resolution to select entrepreneurship as an occupation. This calls for recognising lucrative business ideas upon a meticulous evaluation of the entrepreneurial prospects. Creation of business ideas is not sufficient, they must be tested on techno-fiscal, economic and authorized viewpoints. A project report for new business conducts a profound road map for effectual business venture. It discusses whether the business requires finance or not, the challenging risks, several problems en route, etc. Hence it becomes vital for every new business to prepare a project report, to acquaint them on forewarning issues.
Before you begin writing your proposal, there are four things that you need to be able to clearly address:
1. How much money you need.
2. How your business will use the money.
3. How you will repay the loan.
4. What you will do if your business is unable to repay the loan.
There are many different formats you can use for a loan proposal. You may want to contact the lender to determine which format is preferred by the lender. Generally, a loan proposal should include these elements:
• Executive Summary. Begin your proposal with a simple and direct cover letter or executive summary. Clearly and briefly describe who you are, your business background, the nature of your business or start-up, and how the loan will be used to help the company succeed.
• Business Profile. Describe the history of your business and summarize current activity and results. Describe your market, your customers, and your industry.
• Management Experience. Describe the experience, qualifications, and skills of each owner and key member of your management team.
• Loan Request. State the amount of money you need and how you determined this amount. Include quotes for equipment or supplies, for building costs, etc. In short, be able to answer the question, “Why do you need that amount of money?” Also explain specifically what the loan will be used for and why it is needed.
• Loan Repayment. Describe the terms you hope to receive (interest rate, term, etc.). Show how you can meet that repayment schedule based on sales and cash flow projections. Keep in mind that loan terms will need to be negotiated with your lender based on their risk assessment of your business.
• Collateral. Describe collateral you would be willing to pledge as security for the loan. Every loan program requires at least some collateral that can be sold in case the cash generated by the small business isn’t sufficient to repay the loan. All loans should have at least two identifiable sources of repayment. The first source is ordinarily cash flow generated from profitable operations of the business. The second source is usually collateral pledged to secure the loan.
• Personal Financial Statements. Include financial statements for all owners with 20 percent or more interest in the business. These statements should not be more than 90 days old. Some lenders may also require tax returns for the previous one to three years.
• Business Financial Statements. Include complete financial statements (balance sheet, income statement, and reconciliation of net worth) for the last three years plus a current interim financial statement (not more than 90 days old). If you are just starting out, provide a projected balance sheet and income statement.
• Equity Investment. An owner must put some of his/her own money into the business to get a loan; the amount depends on the type of loan, purpose and terms. Equity can be built up through retained earnings or by the injection of cash from the owner. Most lenders want to see that the total liabilities or debt of a business is not more than four times the amount of equity.
• Projections. Provide projected income and cash flow statements for at least one year or until positive cash flow can be shown. Be prepared to answer questions about how you will change operations if you don’t reach your projections.
• Other Items (if applicable)
o Lease (or copies of proposal)
o Franchise agreement
o Purchase agreement
o Articles of Incorporation
o Partnership agreements
o Copies of business licenses and registrations required for you to conduct business
o Copies of contracts you have with any third parties.