How entrepreneurs should build a good Bank Proposal

The term ‘bank proposal’ can create a pit in the stomach for many a new and accomplished entrepreneur. Funding and loans are the most challenging and fear-inducing tasks as you decide to embark on your entrepreneurial journey.

However, with the help and guidance of experts, these tasks become pretty simple and doable; which is why deAsra Foundation is here.

We got our experts talking and worked with them to offer you entrepreneurs, some tips on how to build a great bank proposal that stands a good chance of succeeding and getting you the loan you want.

Read on to get your answers.

Q 1 What is the process of submitting a business proposal to a bank, in brief?

Applicant/candidate prepares a project report may be with the help of consultants, which covers detailed information about promoters, project cost, means of finance, details of the activity (product/service) on which the business is based, financial projections, market study, cash flow, repayment ability, security- primary and collateral.

In a nut shell, it is a techno/economic feasibility/viability report of the project.

Q 2 Who at the bank sees and approves the proposal?

Each bank has its own specified assessment-appraisal system. Typically, the initial study/appraisal is done by the Credit Processing Officer and is approved by a Senior Official. The powers for sanctioning the loan are given to authority or position holders (e.g.: Branch Manager, General Manager, CEO , Credit Committees etc.) High-value loans are sanctioned by the Board itself. Banks have a Financial Power Structure, approved by the bank’s Board, which is how loans are approved and sanctioned.

Q 3 What should the proposal have that the banks like or favour?

Banks need to see reliable promoters having credibility, experience, sound technical knowledge, a service or product which has a good market and potential, and the fact that this business is a feasible and viable activity. Banks also need to know the availability of primary and collateral security which has a direct impact on the loan decision.

Q 4 What should the proposal not have – things that the banks disapprove of?

Non-viable business, promoter with a weak financial background, unfavourable credit reports, very high-risk ventures/activities such as gambling etc.

Q 5 What are the typical things that budding entrepreneurs miss out on, in the proposal?

In their rush to get the bank proposal submitted, budding entrepreneurs typically miss out on some important things and these are: not doing the home work and groundwork properly while choosing the activity/product/service on which the business will be based; market study not done at all or is not adequate in its information, forecast and projections not supported by data, highly ambitious/over ambitious project.

Q 6 How much time does it take for a proposal to be approved-from applying to approval and loan disbursement?

This duration depends on the size of the loan, financial power/decision making structure in the bank, quality of proposal prepared and submitted and also on which bank we are going ahead with. Different banks follow different structures and procedures for proposal approvals and loan disbursements. It will pay rich dividends if the entrepreneur understands these and plans his way ahead, accordingly.

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To set up and run a business, or to grow a business, entrepreneurs need to have a working knowledge of how the banks work and how proposals need to be done. It helps to read on this, talk about this among the entrepreneurial community as well as have heart-to-heart and transparent discussions with your consultant. Leaving everything to the consultant is not advisable because your stakes in this are high. You should work with consultants closely and choose them right.

deAsra Foundation has Udyog Mitras and senior experienced members aboard who can take you through this entire process with ease. To know more, call us on 020 65365300/11 or write to us on team@deasra.co.in

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