Commercial Vehicle loan project report

Project at a Glance

A one-page summary of all critical information, usually placed at the beginning of the report. It should give the loan officer a quick overview without reading the full document. Include:

1. Name of Applicant / Business
2. Address of business
3. Contact Details
4. Nature of Business
5. Total Project Cost (vehicle cost, registration, insurance, other charges)
6. Loan Amount Required and Margin Money
7. Repayment Tenure
8. Estimated Annual Sales and Profit from Vehicle
9. Paypack period
10. Estimated Annual Loan repayment
11. Debt Service Coverage ratio

Detailed Project Report

1. Introduction

The Introduction section of the Detailed Project Report presents a brief overview of the applicant’s business background, the nature of operations, and the purpose of preparing the report. It sets the stage by explaining the role of commercial vehicles in the business, the need for the proposed acquisition and how it aligns with market demand and growth prospects. It may also highlight the applicant’s current operations, existing fleet (if any) and the reason for seeking financial assistance.

2. Objective of the Project

The Objective of the Project clearly states the purpose behind the proposed investment. This part contains the specific goals, such as purchasing a new or used commercial vehicle to expand capacity, replace outdated assets, fulfill secured contracts, reduce outsourcing costs, improve service delivery, or capture new business opportunities. It reflects the expected operational and financial benefits, including efficiency gains and revenue growth.

3. Project Description

The Project Description is the core of the DPR, detailing the technical, operational, and financial aspects of the proposed plan. It typically includes the type, make, model, and capacity of the vehicle; acquisition cost and breakup; intended routes and operational schedules; revenue model; expected income per trip or per month; estimated running expenses such as fuel, maintenance, driver salaries, permits, and insurance; and the projected profitability. This section may also cover market demand, competition analysis, and the unique advantages of the project, along with a summary of how the loan will be structured and repaid.

4. About the Promoter

The About the Promoter section contains the background information of the individual or business entity implementing the project. It outlines the promoter’s personal details, educational and professional qualifications, years of relevant industry experience, previous business performance, financial standing and credit history. It also highlights the promoter’s strengths, such as knowledge of operations, existing customer relationships, proven ability to manage vehicles efficiently, and capacity to generate consistent revenue. This part helps lenders assess the credibility, capability, and reliability of the borrower.

Cost of Project and Means of Finance

The Cost of Project and Means of Finance section provides a clear breakdown of the total investment required for the proposed commercial vehicle purchase and the sources from which this funding will be arranged. The cost of the project typically includes the ex-showroom price of the vehicle, registration charges, road tax, permit fees, insurance premium, and any additional expenses such as body fabrication, accessories, or initial working capital requirements for fuel and operational setup. Each cost component is presented with its estimated value, preferably supported by dealer quotations or official price lists.

The Means of Finance outlines how the applicant intends to fund the project, generally comprising a combination of the loan amount sought from the bank or financial institution and the promoter’s own contribution (margin money). This section specifies the proportion of loan financing and margin funding, ensuring it aligns with the lender’s policy norms on borrower contribution. By clearly stating the total project cost, the required loan amount, and the applicant’s equity in the project, this section demonstrates the financial commitment of the promoter and provides the lender with confidence in the project’s viability and repayment capacity.

Projected Profit & Loss Account

This should show the financial performance for the next 3 to 7 years depending on the loan repayment period. 
Income

1. Freight or passenger revenue per trip × trips per month × months

2. Any additional service income

Expenses

1. Fuel cost

2. Driver salary and allowances

3. Vehicle maintenance and repairs

4. Insurance premium

5. Road tax and permits

6. Loan interest 

7. Administrative expenses

Net Profit = Total Income – Total Expenses

Projected Balance Sheet

A financial position statement for future years contains:
Assets

1. Fixed Assets: Commercial vehicle (cost less depreciation)

2. Current Assets: Cash in hand, bank balance, debtors

Liabilities

1. Loan outstanding

2. Creditors

3. Owner’s capital

Projected Cash Flow Statement (CFS)

It shows Sources and Use of cash :

1. Source of cash or Cash Inflows: Promotor’s capital, term loan, profit& loss, etc

2. Use of cash or Cash Outflows: Vehicle purchase, EMI payments, promoter withdrawals, etc

DSCR Ratio (Debt Service Coverage Ratio)

1. Formula:
   DSCR = (Net Profit + Depreciation + Interest on Loan) / (Principal Repayment + Interest on Loan)

2. Interpretation:
   A DSCR above 1.25 is generally considered safe for loan repayment.

3. Purpose: To show that the project generates enough cash to service the debt comfortably.

Basis of Estimation of incomes and expenses

1. Revenue/Sales projection based on current freight/passenger rates in the area

2. Fuel cost, Maintenance cost, etc as per prevailing market rate, with annual escalation assumption

3. Loan repayment and interest on loan table 

4. Fixed asset table showing Depreciation of 15 % on vehicle