What Banks Actually Look for in a Feasibility Report — Lessons from 100+ Project Files

A project feasibility report is the document that determines whether a bank or financial institution will finance your project. Having prepared reports for GSFC, GIIC, IDBI Bank, Bank of Baroda, and several cooperative banks over the past decade, we have observed consistently what makes a report credible — and what immediately signals to a lender that the projections are unreliable.

The Core Problem With Most Self-Prepared Reports

Entrepreneurs and promoters often prepare project reports themselves or through low-cost services that use templated numbers. Banks are experienced at identifying this within minutes: the DSCR is suspiciously comfortable (exactly 1.75 for five years), the capacity utilisation ramps up neatly, and the sensitivity analysis is absent.

Lenders evaluate projects daily. A report that does not reflect ground-level reality will be rejected or returned for revision — adding months to your approval timeline.

What a Strong Project Report Must Address

1. Market and Demand Analysis — With Primary Data

Generic secondary data from industry reports is not sufficient for loan sizes above ₹1 crore. Banks want to see:

• Competitor mapping specific to your geography and product
• Customer letters of intent or confirmed orders where available
• Capacity utilisation at comparable units in the same industrial cluster
• A realistic demand absorption analysis, not just industry growth rates

2. Technical Feasibility

For manufacturing projects:

• Plant layout approved by a licensed architect or industrial consultant
• Equipment quotations (minimum two competing quotes)
• Utility requirements and cost assumptions (power, water, fuel)
• Land title documentation or lease agreement

For service businesses:

• Location analysis (footfall, competition, infrastructure)
• Technology stack and scalability assessment

3. Financial Projections — The Detail That Matters

Projections must cover a minimum of 7 years (or the loan tenure, whichever is longer). They must include:

• Profit & Loss projections with assumption documentation
• Balance Sheet projections (many reports skip this — don't)
• Cash Flow projections with monthly detail for Years 1–2
• Working capital cycle analysis with debtors/creditors/inventory days
• Break-even analysis at unit and revenue level

4. DSCR and Debt Coverage

The Debt Service Coverage Ratio must be above 1.25 for most lenders. However, equally important is the pattern of DSCR across years:

• A DSCR that starts below 1.25 and builds gradually looks more credible than one that is exactly 1.75 every year
• Year 1 and Year 2 DSCRs below threshold should be explained — and the promoter's equity cushion should be demonstrated

5. Sensitivity Analysis — Non-Negotiable

All project reports submitted to banks must include a sensitivity analysis showing project viability under:

• 10% reduction in revenues
• 10% increase in key cost inputs
• Combined stress scenario

Many projects that look viable at base case become non-viable under even modest stress. If your project cannot withstand a 10% revenue fall, the bank will not finance it — and you should probably reconsider the project yourself.

The Promoter's Contribution

Banks require 25–40% promoter contribution for most term loans. Where this money comes from matters:

• Own funds: Best — document with bank statements
• Family contributions: Acceptable — get gift deeds or notarised acknowledgements
• Unsecured loans: May attract scrutiny — justify with adequate documentation

Do not show promoter contribution as "to be arranged." This is an immediate flag.

GSFC and GIIC Specific Requirements

Both Gujarat State Financial Corporation and Gujarat Industrial Investment Corporation have specific DPR formats. GSFC in particular requires a techno-economic viability certificate from an empanelled agency for projects above certain thresholds.

We prepare DPRs in the format prescribed by these institutions and have worked on projects across textile, chemicals, food processing, and engineering sectors in Gujarat's GIDC clusters.

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For a project feasibility report or DPR, contact us well before your submission deadline — a well-prepared report typically takes 2–3 weeks. Reach us at support@patelandpithadiya.co.in.