projections for bank loans purposes

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....rojections for bank loans purposes<br> Query (Issue) Started By: - Sundaraiah kollipara Dated:- 11-3-2026 Last Reply Date:- 11-3-2026 Banking - Finance<br>Got 1 Reply<br>Companies Law<br>sir, A Small business person rs:10 lacs bank cc loan required but bank manager two years balance sheet and profit and loss projections asked for loan purposes. Question: two years how much sale turnover and ....

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....capital showing for bank loan purposes and loan calculted procedure. Reply By YAGAY andSUN: The Reply: For a Rs. 10 lakh Cash Credit (CC) loan, banks mainly evaluate the last 2 years&#39; Balance Sheet and Profit & Loss (P&L) to check the business&#39;s turnover, profit, and capital. There is no fixed rule, but banks usually apply common working-capital norms. 1. Turnover Requirement Ma....

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....ny banks use the Turnover Method, where the CC limit is about 20% of annual sales turnover. Formula: Eligible CC Limit = 20% x Annual Turnover Example: • Desired CC Limit: Rs. 10,00,000 • Required Turnover Rs. 50,00,000 per year So, showing Rs. 45-60 lakh annual sales generally supports a Rs. 10 lakh CC request. 2. Profit Level (P&L) Banks check th....

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....at the business earns reasonable profit. A typical small-business margin is 8-15% net profit. Example: • Annual Sales: Rs. 50,00,000 • Expenses: Rs. 44,00,000 • Net Profit: Rs. 6,00,000 (around 12%) Consistent profit for two years strengthens the loan application. 3. Owner&#39;s Capital (Net Worth) Banks expect the owner to invest their o....

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....wn funds. Usually 25-30% of the working capital should come from the owner. Example Balance Sheet (simplified): • Owner Capital: Rs. 8,00,000 • Bank CC Loan: Rs. 10,00,000 • Total Funds: Rs. 18,00,000 Assets side may include: • Stock: Rs. 9,00,000 • Debtors: Rs. 6,00,000 • Cash/Other Assets: Rs. 3....

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....,00,000 4. Stock Method / Drawing Power For CC accounts, banks often calculate limits based on stock and receivables. Example: • Stock: Rs. 10,00,000 • Debtors: Rs. 5,00,000 • Total Current Assets: Rs. 15,00,000 • Bank Margin: 25% Eligible limit = Rs. 15,00,000 x 75% = Rs. 11,25,000 So the bank may sanction about Rs. 10....

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.... lakh CC. 5. Example of Two-Year Financials for Rs. 10 Lakh CC Year 1: • Sales: Rs. 48,00,000 • Net Profit: Rs. 4,80,000 Year 2: • Sales: Rs. 55,00,000 • Net Profit: Rs. 6,00,000 Owner Capital: around Rs. 7-9 lakh. Common documents required: • 2 years Balance Sheet & P&L • Income Tax Retu....

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....rns (ITR) • GST returns or sales proof • 6-12 months bank statement • Stock statement • KYC documents In practice, showing Rs. 50-60 lakh turnover, about 10% profit, and Rs. 7-8 lakh capital generally supports a Rs. 10 lakh CC loan proposal.<br> Discussion Forum - Knowledge Sharing ....