Comprehensive Loan Proposal Analysis

1
CONTENTS
Chapter No. Table of Contents Page No.
1
 Executive Summary
 Objectives
 Scope
 Limitation
 Assumptions
2
 Profile of the firm

3
 Research Methodology
 Method of Data Collection
 Primary Data
 Secondary Data
 Loan Proposal
 Marketing Analysis
4
 Investment Cost of Project
 Capital Structure
 Working Capital
 Total Annual Expenditure
 Revenue for The Projected Period
 Repayment of loan
 Schedule For Depreciation
 Income statement
 Cash Flow Statement
 Balance Sheet
 Ratio Analysis
5  Conclusion & Bibliography

2
CHAPTER 1
EXECUTIVE SUMMARY
OBJECTIVE
SCOPE
VISION
LIMITATION
ASSUMTIONS

4
OBJECTIVES:
 To get information of loans taken from banks and other financial companies.
 The experience of both numerical and practical use of financial statements.
 For future financial need forecasting and planning, so from the following
project we will know all the usage from financial, statements banks loans and
terms related to finance.
 We will know all the financial polices. Loans taken rules and regulations and
usages ratios.
 To get knowledge about the rules and regulation of government with related
project study.
 To get knowledge about the specialized subject.
 Interpretation of a corporate loan proposalwith reference to a casestudy.

5
SCOPE:
 To learn financial terms, installment procedures of banks loans repayments,
income statement, profit and loss account, balance sheet and cash flow statement.
 The study of the project includes information which is useful in financial
management and human resources management.
 The study can also helpful with focused on data collection of both primary and
secondarydata in procedure.
 As our project is related to finance field, the study will mostly useful to support
our financial working.
 The study also flows also on the project preparation techniques and also data
collection techniques.
 So, finally we can say that study of project related to financial management
which provides financial statement for the projected period of 5 years.

6
LIMITATION:
 The original profit and other expenses , gains and losses are higher or lower
than that of projected projection.
 Errors can be done while preparing projected balance sheet and other
financial statements and also when calculations are made.
 It is not possible to get exactly desired result by the business firms while
projecting future objectives and goals thus perfection is not possible.
 Everything is based on estimations hence the results are approximate.

7
ASSUMPTIONS:
 This project has been made on the basis of data that has been received
directly from sources & indirectly from books and internet.
 The accuracy of this data cannot be measured and so the main assumption
here is that the data provided is 100% true.
 The Rate of Interest at the time of starting the research was found to be
14.5%, but this value could have changed with the new financial policies
and economic growth.
 The points have been rounded off whenever and wherever necessary to
make calculations easier.

8
CHAPTER II
BANK PROFILE AND INTRODUCTION

9
BANK PROFILE
Name of Organization : State bank of hyderabad
Contact Info :
Website : www.sbhyd.com
Year of Establisment : 8 Aug 1941
Address : Lane-C, Main Road, Ambedkar Chowk
Sillod - 431112, Dist. Aurangabad Maharashtra.

11
CHAPTER III
 Research Methodology
 Primary Data
 Secondary Data
 Loan Proposal

12
RESEARCH METHODLOGY:
Research can be defined as logical and systematized application of the
fundamentals of science to the general and overall questions of a study and
scientific techniques which provide precise tools ,specific procedures and technical
rather than philosophical means for getting and ordering the data prior to their
logical and manipulation. In other words, research refers to any original and
systematic investigation undertaken in order to increase knowledge and to establish
facts and principles .It is an organized and systematic activity and may lead to new
and improved insights, development of new products and processes.
Research is the process which includes defining and refining problems,
formulating hypothesis or suggested solutions; collecting, organizing and
evaluating data; making deductions and reaching conclusions, and at last, carefully
testing the conclusion to determine whether they fit the formulating hypothesis.

13
Method of Data collection:
The information for this project has been collected through primary and
secondary sources:-
Primary Data:
Firstly we collected data by visiting STATE BANKOF HYDERABAD and meeting
delegates and interviewing about the entire process of obtaining loan.
We also had a detailed interview with the manager abouttheir loan procedureas
well as different schemes.
Secondary Method:
The secondary data werecollected from the brochureof the bank, the
boards with the information displayed in the bank premises and, fromthe bank
website.
In short we can say that we got the secondary data from the following sources :
 Internet.
 Books.
 Bank profile.
LOAN PROPOSAL:
Detailed report(based on the potential borrowers, loan application and credit
worthiness), presented usually by a banks officer (with his or her comments) to a
senior loan officer or the banks’ loan committee.

14
HOW TO MAKE A LOAN PROPOSAL
STEP-1
Submit a cover letter with your proposal. This should be a brief introduction to
your company, the size of the loan requested and the purposeof the loan.
STEP-2
Begin your proposalwith general information, including the company name and
address, names and social security number of the principals, the purposeof the
loan, the exact amount of money needed and detailed plants for what will be done
with money.
STEP-3
Describe your business in detail. Include information on prior and projected
performance, unique aspects of your business and the legal and ownership
structures.
STEP-4
Provide complete market information. Identify your competition and explain how
your business stacks up. Submit details on your current customer base.
STEP-5
Prepare management profiles for all owners and key employees. Highlight their
education, past accomplishments and qualifications.

15
STEP-6
Submit complete information concerning your last 5 years of operation. If you’re
just starting out, provide projected balance sheets and income statements. Also
include personal financial statements from all the owners and information on any
collateral that will be placed as security for the loan.
STEP-7
Proofread the document; double checking spelling, rammer and the facts contained
in the proposal.
STEP-8
Submit your proposalwith each copyof the loan package you’re required to return.
Remember to keep a copyfor yourself.

16
DOCUMENTS REQUIRED FOR LOAN PROPOSAL
 Submit shop act license.
 Submit three years estimated balance sheet.
 Submit three years income tax challan.
 Submit KYC (Know Your Customer) documents- ration card, election ID,
PAN card, photos, light bill.
 Person mustbe a shareholder.
 Submit property guarantee(housevaluation, tax receipt).

17
CHAPTER :4
FINANCIAL STATEMENTS

18
INVESTMENT COST OF THE PROJECT:
Serial Particulars Amount Amount
A Equipment Cost:
Leg Press 65000
Leg Extension 70000
Standing Calf 60000
Leg Curl 70000
Low Cable Row 65000
Lat Pull Down 71000
Cable Cross over 75000
Back Extension 25000
Decline Bench 28000
Adjustable Bench 22000
Dumble 58000
Plates Weight 30000
Trade Mills 25000
Elliptical Trainer 110000
Cycles 62000
Steam Bath 72000
Cabins 12000
Peek Deck Fly 65000
Power cage 58000
Mirror 87500
1130500
B FURNITURE
Sofa Sets 10000
Computer Table 80000
1148500
C License 6000 1154500
D Computers & Printers 26000 1180500
E Working Capital 115000
F Total Cost of project 1295500

19
CAPITAL STRUCTURE:
Serial Particular Amount
A LOAN FROMBANK 906850
B OWN CONTRIBUTION 388650
TOTAL COST 1295500

20
NOTES:
The costof the equipment has been takenfrom an absolute fitness gym.
The costof furniture and fixture has been takenon the basis of researchand
discussionwith experts.
The currency unit of the projecthas been takenin INR.

21
WORKING CAPITAL:
Particulars amount
Receptionist 6000
4*6000 24000
Electricity bills 12000
fuel charges 2000
Rent 34000
repairs and maintances 5000
marketing and advertisement p.a 9000
lightening fitting 23000
Totalworking capital 115000

22
TOTAL ANNUAL EXPENDITURE DURING
PROJECTED YEAR:
Particulars year 1 year 2 year 3 year 4 year 5
Receptionist 72000 72000 72000 72000 84000
Trainers 288000 360000 432000 504000 576000
Electricity 12000 13000 14500 14500 15000
fuel charges 24000 20000 22000 5311 7000
Rent 408000 420000 432000 432000 432000
repairs and maintenance 60000 24000 30000 35000 20000
marketing
&advertisement
9000 8000 7500 5000 6000
lighting fitting 23000 0 15000 0 15000
Total 896000 917000 1025000 1067811 1155000

23
Notes:
 Trainers and salaries of trainers will increase in second by add one additional
trainers and salary increaseby 10%.
 Electricity bills increasing 1500 every year.
 Marketing and Advertising increase by Rs.500 and respectively.
 Lighting and Fitting will increaseas in third year and fifth year we have2 new
air conditions and fans to give a good temperature to gymarea.
 Fuel charges decrease and increase with related situation.
 Rent increaseby Rs. 1000 every year as per agreement.
 Repair and maintenance increasing due related condition.
Revenue for projectedperiod:
We have three plans for our customers to join the club
 One year plan = Rs.10000
 Six month plan = Rs.5000
 Three months plan =Rs. 2500

24
Revenue for the first year:
 Starting of business: Oneyear plan - 40 customers
10000*40=40000
 Starting of business: Six months plan - 60 customers
5000*60*2=600000
 Starting of business: Three month plan - 70 customers
2500*70*4=700000
 For other customers wehave one month plan for one year = 30000
Total revenue for the first year = 1730000
Due to the growing business thecustomers will also increase and will effect on
revenue according to the years.

25
Revenue for second year:
 Starting of business: oneyear plan - 45 customers
10300*45=463500
 Starting of business: one year plan - 65 customers
5300*65*2=689000
 three months plan is starting of business wehave75 customers
2700*75*4=8100000
Total revenue for Second year = 2022500

26
Revenue for third year:
 Starting of business: oneyear plan - 50 customers
10300*50=515000
 Starting of business: sixmonths plan - 70 customers
5300*70*2=742000
 Starting of business: three month plan - 80 customers
2700*80*4=864000
Total revenue for the third year=2181000

27
Revenue for fourth year:
 Starting of business : one year plan - 55 customers
10300*55=566500
 Starting of business : six months plan - 75 customers
5300*75*2=795000
 Starting of business : three months plan - 88 customers
2700*88*4=950400
Total revenue for fourth year= 2371900

28
Revenue for fifth year:
 One year plan is starting of business wehave 60 customers
10300*60=618000
 Six month plan is starting of business wehave75 customers
5300*75*2=795000
 Three months plan is starting of business wehave 95 customers
2700*95*4=1026000
Total revenue for fifth year= 2499000

29
Revenue schedule for five years:
Year Year 1 Year 2 Year 3 Year 4 Year 5
Amount 1730000 2022500 2181000 2499000 10804400

30
What is EMI ?
Equated Monthly Installment – EMI for short – is the amount payable every
month to the bank or any other financial institution until the loan amount is fully
paid off. It consists of the interest on loan as well as part of the principal amount to
be repaid. The sum of principal amount and interest is divided by the tenure, i.e.,
number of months, in which the loan has to be repaid. This amount has to be repaid
monthly. The interest component of the EMI would be larger in the initial months
and gradually reduce when compared to the principal amount. The exact
percentage allocated towards payment of the principal depends on the interest rate.
Even though your monthly EMI payment won’t change, the proportion of principal
and interest components will change with time. With each successivepayment,
you’ll pay more towards the principal and less in interest.
Here’s the formula to calculate EMI:
Where,
E is EMI
P is Principal Loan Amount
r is rate of interest calculated on monthly basis. (i.e., r = Rate of Annual
interest/12/100. If rate of interest is 10.5% per annum, then r =
10.5/12/100=0.00875)
n is loan term / tenure / duration in number of months

31
Calculation of interest and installment of bank loan for first
year:
Month Monthly
Installment
Interest Principal Balance
0 906850
1 21336.62 10957.77 10378.85 896471.1
2 21336.62 10832.36 10504.26 885966.9
3 21336.62 10705.43 10631.19 875335.7
4 21336.62 10576.97 10759.65 864576.1
5 21336.62 10446.96 10889.66 853686.4
6 21336.62 10315.38 11021.24 842665.1
7 21336.62 10182.2 11154.42 831510.7
8 21336.62 10047.42 11289.2 820221.5
9 21336.62 9911.01 11425.61 808795.9
10 21336.62 9772.951 11563.67 797232.2
11 21336.62 9633.223 11703.4 785528.8
12 21336.62 9491.807 11844.81 773684
Total 256039.5 122873.5 133166

32
Calculation of interest and installment of bank loan for
second year:
Month Monthly
Installment
13 21336.62 9348.682 11987.94 761696.1
14 21336.62 9203.828 12132.79 749563.3
15 21336.62 9057.223 12279.4 737283.9
16 21336.62 8908.847 12427.77 724856.1
17 21336.62 8758.678 12577.94 712278.2
18 21336.62 8606.695 12729.93 699548.3
19 21336.62 8452.875 12883.75 686664.5
20 21336.62 8297.196 13039.43 673625.1
21 21336.62 8139.636 13196.99 660428.1
22 21336.62 7980.173 13356.45 647071.6
23 21336.62 7818.782 13517.84 633553.8
24 21336.62 7655.442 13681.18 619872.6
Total 256039.5 102228.1 153811.4

33
Calculation of interest and installment of bank loan for third
year:
Month Monthly
Installment
25 21336.62 7490.128 13846.49 606026.1
26 21336.62 7322.816 14013.81 592012.3
27 21336.62 7153.482 14183.14 577829.2
28 21336.62 6982.103 14354.52 563474.7
29 21336.62 6808.652 14527.97 548946.7
30 21336.62 6633.106 14703.52 534243.2
31 21336.62 6455.438 14881.18 519362
32 21336.62 6275.624 15061 504301
33 21336.62 6093.637 15242.98 489058
34 21336.62 5909.451 15427.17 473630.8
35 21336.62 5723.039 15613.58 458017.3
36 21336.62 5534.375 15802.25 442215
Total 256039.5 78381.85 177657.6

34
Calculation of interest and installment of bank loan for
fourth year:
Month Monthly
Installment
37 21336.62 5343.431 15993.19 426221.8
38 21336.62 5150.18 16186.44 410035.4
39 21336.62 4954.594 16382.03 393653.4
40 21336.62 4756.645 16579.98 377073.4
41 21336.62 4556.303 16780.32 360293.1
42 21336.62 4353.541 16983.08 343310
43 21336.62 4148.329 17188.29 326121.7
44 21336.62 3940.637 17395.98 308725.7
45 21336.62 3730.436 17606.19 291119.5
46 21336.62 3517.694 17818.93 273300.6
47 21336.62 3302.382 18034.24 255266.4
48 21336.62 3084.468 18252.15 237014.2
Total 256039.5 50838.64 205200.8

35
Calculation of interest and installment of bank loan for fifth
year:
Month Monthly
Installment
49 21336.62 2863.922 18472.7 218541.5
50 21336.62 2640.71 18695.91 199845.6
51 21336.62 2414.801 18921.82 180923.8
52 21336.62 2186.162 19150.46 161773.3
53 21336.62 1954.761 19381.86 142391.4
54 21336.62 1720.563 19616.06 122775.4
55 21336.62 1483.536 19853.09 102922.3
56 21336.62 1243.644 20092.98 82829.33
57 21336.62 1000.854 20335.77 62493.56
58 21336.62 755.1305 20581.49 41912.07
59 21336.62 506.4375 20830.18 21081.88
60 21336.62 254.7394 21081.88 0
Total 256039.5 19025.26 237014.2

36
SCHEDULE FOR DEPRICIATION:
Depreciationschedule on equipment’s:
Year Opening
balance
Rate
%
Depreciation Closing
balance
1 1130500 10% 113050 101745
2 101745 10% 10174 91570
3 91570 10% 9157 82413
4 82413 10% 8241 74171
5 74171 10% 7417 66753
Depreciationschedule on furniture:
Year Opening
balance
Rate
%
balance
1 18000 10% 1800 16200
2 16200 10% 1620 14580
3 14580 10% 1458 13122
4 13122 10% 1312 11809
5 11809 10% 1180 10628
Depreciationon computers and printers:
Year Opening
balance
Rate
%
balance
1 26000 50% 13000 13000
2 13000 50% 6500 6500
3 6500 50% 3250 3250
4 3250 50% 1625 1625
5 1625 50% 812 812

37
Income statement, Profit & Loss A/c:
Particulars year 1 2 3 4 5
Revenue From the
Project 1730000 2022500 2181000 2371900 2499000
Less Expenses 896000 917000 1025000 1067811 1155000
PBDIT 834000 1105500 1156000 1304089 1344000
less Depreciation 127850 18294 13865 11178 9409
Less Interest 1,22,873 1,02,228 78,382 50,839 19,025
Less Preliminary
Expenses 3879 3879 4000 4000 4000
PBT 5,79,398 9,81,099 10,59,753 12,38,072 13,11,566
Less TAX @ 30% 1,73,819 2,94,330 3,17,926 3,71,422 3,93,470
Net Profit 4,05,578 6,86,769 7,41,827 8,66,651 9,18,096

38
Cash flow statement:
Op balance 0 5,13,141 10,68,272 16,50,306 22,75,245
Revenue 17,30,000 20,22,500 21,81,000 23,71,900 24,99,000
Own Capital 3,88,650
bank Loan 9,06,850
Total 3025500 2535641.181 3249271.927 4022206.404 4774245.115
Less: Cash Outflow
Fixed
Assets 11,80,500
Instalments 2,56,040 2,56,040 2,56,040 2,56,040 2,56,040
Tax paid 1,73,819 2,94,330 3,17,926 3,71,422 3,93,470
op Exp 8,96,000 9,17,000 10,25,000 11,19,500 11,55,000
Reg Charge 6,000
Total 25,12,359 14,67,369 15,98,966 17,46,961 18,04,509
Closing
Balance 5,13,141 10,68,272 16,50,306 22,75,245 29,69,736

39
Balance Sheet:
Own Capital 3,88,650 5,97,067 10,83,374 18,31,608 27,00,604
Bank Loan 9,06,850 7,61,696 6,06,026 4,26,221 2,18,541
Net Profit 4,05,578 6,86,769 7,41,827 8,66,651 9,18,096
Total 17,01,078 20,45,532 24,31,227 31,24,480 38,37,241
Assets
Fixed Assets 1180500 824545 810680 799502 790093
Current Assets 0 0 0 0 0
Cash In hand 5,14,578 12,20,987 16,20,547 23,24,978 30,47,148
Registration
Charges 6000 0 0 0 0
Total 17,01,078 20,45,532 24,31,227 31,24,480 38,37,241
Difference 0 0 0 0 0

40
Ratio analysis:
Net profit ratio:
Net profit ratio = net profit/net sales*100
Sales 17,30,000 20,22,500 7,48,234 8,68,856 9,19,802
Net profit 4,05,578 6,86,769 21,81,000 23,71,000 24,99,000
Ratio 0.23 0.34 2.91 2.73 2.72

41
Debt equity ratio:
Debt equity ratio = long term debt/ proprietor’s fund
Debt 9,06,850 7,61,696 6,06,026 4,26,221 2,18,541
Own Fund 3,88,650 5,97,067 10,83,374 18,31,608 27,00,604
Ratio 2.33 1.28 0.56 0.23 0.08

42
DSCR ratio = net profit after tax+depreciation+interest/interest+installment
PAT 4,05,578 6,86,769 7,41,827 8,66,651 9,18,096
Depreciation 1,27,850 18,294 13,865 11,178 9,409
Interest 1,22,873 1,02,228 78,382 50,839 19,025
Total 6,56,302 8,07,291 8,34,074 9,28,667 9,46,530
Interest 1,22,873 1,02,228 78,382 50,839 19,025
Installment 2,56,040 2,56,040 2,56,040 2,56,040 2,56,040
Total 3,78,913 3,58,268 3,34,421 3,06,878 2,75,065
Ratio 1.73 2.25 2.49 3.03 3.44

43
Debt service coverage ratio:
Debt service coverageratio=PBID/annualrepayment
PBID 8,34,000 11,05,500 11,56,000 13,04,089 13,44,000
Repayment
Of loan 2,56,040 2,56,040 2,56,040 2,56,040 2,56,040
Ratio 3.26 4.32 4.51 5.09 5.25

44
CHAPTER : 5
CONCLUSION AND BIBLIOGRAPHY

46
BIBLIOGRAPHY:
1. Financialstatements are basedon assumption given earlier:
I. Initial sources and application of fund
II. Profitability statement
III. Cashflow statement
IV. Balance sheet
V. Depreciation
VI. Repayment of loan
2. Websites:
www.google.com
www.fitness-world.com
www.sbhyd.com
www.onlinesbh.com

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