What is a Project Loan?

A Project Loan is a long-term loan taken to set up a new unit, expand capacity, or start a new project. It covers expenses like land, building, plant & machinery, and initial working capital.

Who Should Take a Project Loan?

• Manufacturing units
• Infrastructure projects
• Large MSME expansions
• New industrial setups
• Chemical, textile, pharma, engineering businesses

What Expenses Are Covered?

• Land & building construction
• Plant & machinery
• Electrical installations
• Preliminary & pre-operative expenses
• Margin money for working capital
  
  

Key Eligibility Criteria

• Clear project report (DPR)
• Promoter background & experience
• Minimum margin contribution (20–35%)
• Viable cash flow projections
• CIBIL & financial discipline

Documents Required

• Detailed Project Report (DPR)
• Last 3 years financials (if existing)
• KYC of promoters
• Bank statements
• Statutory registrations

Common Mistakes Businesses Make

• Inflated projections
• Ignoring interest during construction
• No proper cost break-up

CA’s Advisory Tip

A technically strong project fails without financial structuring. Proper DPR + loan structuring improves approval chances significantly.