Author: info@finline.in

To get a bank loan, a working capital loan, or a CC limit, you need to prepare and present CMA data. The CMA report in Excel format is one way to present it more attractively and efficiently. As we said it is really essential to create CMA reports for bank loans. We, the Finline team, have prepared this article to provide answers to all of these queries. Any inquiries are welcome from your side.

CMA report also is known as the Credit Monitoring Arrangement report. It is a report showing the projected performance and the past performance of a business in financial terms for obtaining a bank loan. Also, It is compiled with all the required financial ratios and metrics to help bankers obtain the financial health of a business. Therefore, most of the Banking and Financial Institutions request the entrepreneur to submit the CMA report to understand the flow and application of funds in the business.

Most banks require loan applicants to prepare reports. These reports help the banks determine if the capital can be used for growth and eventual repayment. However, a better CMA report will improve the chance of getting a loan. Finline helps you create the report professionally and easily. A banker/analyst can easily interpret the data and ratios in the report and thus reach into a conclusion on the health of the business unit.

Preparing a CMA report is a tiresome job and needs extra professionalism and care, so a normal entrepreneur feels it very difficult to prepare. With Finline, it’s very easy. You don’t need to worry about difficult calculations, ratios, or adjustments because our intelligent software takes care of it all. Finline is the best tool for CMA data reports to obtain bank loans.

The CMA report includes the following statements:

Operating Statement

This indicates the borrower’s business plan showing the Current Sales, profit before & after tax, sales projections, direct & indirect expenses, and profit position for 3 to 5 years.

Analysis of Balancesheet

This statement contains an analysis of the current & projected financial years. Also, it helps in providing a comprehensive analysis of current & non-current assets, current & non-current liabilities and cash & bank position of the borrower. This statement also specifies the net worth position of the borrower for the future projected years.

Comparative statement of current asset and current liability

This analysis helps to decide the capacity of the borrower to meet the working capital requirements and the actual working capital cycle for the projected period.

Calculation of ABF/MPBF

This includes a calculation that indicates the Asset Based Finance and Maximum Permissible Bank Finance. It shows the borrower’s capacity to borrow money.

Cashflow statement

The main objective of this statement is to capture the movement of the fund for the given period.

Ratios

This indicates the financial strength of the unit at different parameters

Why is CMA data necessary?

CMA provides a financial roadmap of a company’s success through time. CMA data may assess the general financial situation, loan eligibility, repayment ability, etc. A well-planned and written CMA Data is enough to demonstrate loan eligibility.

While a CMA Report conducts a highly thorough examination of a company’s profit and loss account and balance sheet, only a select few ratios and indices determine loan eligibility.

Crafting an effective CMA Report has two key components. First, convey that money is required for development. Second, outline a sound financial estimate. The firm needs to find the right balance between being strong enough to repay the loan and not so healthy that it can grow without needing one, as shown by the CMA Data.

Experts at Finline skillfully create CMA Data and Project Reports for various businesses and industries. We are confident that we possess the necessary expertise to provide our clients with accurate CMA Data and Project Reports. Furthermore, a well-written CMA Data set with precise and understandable financial performance metrics forms the foundation for a loan request. Increase your chances of securing a loan by using our simple help tool.

In his fifth address to the nation, Prime Minister Narendra Modi launched Atma-Nirbhar Bharat Abhiyan(ABA). The objective of this ‘Self-Reliant India Mission’ is to bring a special economic package that will offer relief measures across all the sectors in the country. Also, the package announced is estimated to be 10 per cent of India’s GDP. At the same time, it is a supporting key to all businesses after Covid-19. 

To regain economic power amidst the pandemic, the relief packages announced the total amount whooping Rs.20 lakh crore. Finance Minister, Nirmala Sitaraman, addressed the fiscal policies and relief measure that comes under this package. With the ongoing economic ramifications, the ABA policy ensures that it doesn’t leave any sector untouched by the revival, particularly in MSMEs, which are the heart of the economy.

Who is eligible to avail of the benefits of ABA?

The Aatmanirbhar Bharath Abhiyan has mapped out a clear plan for the Micro, Small and Medium Enterprises (MSME). These enterprises employ almost 40% of all the employees in India. Thus all the owners, laborers, and workers who are part of the Indian MSMEs greatly benefit from the new ABA policies. This will majorly include the Manufacturing and Services enterprises but not limited to the industries, plants, and machinery-dependent management. Importantly, even the stressed enterprises are included under the scheme. 

Thus, with the new reforms, the MSMEs get to grow in size and enjoy the benefits. However, the elaboration on relief measures taken under ABA provides five important takeaways.

MSME Redefined

The government altered the definition of MSMEs to offer great support and benefits. Earlier, the authorities defined the MSMEs only based on the investments. Now, in contrast, they will be described as a composite matter of considering both investment and turnover. The table given below highlights the differences.

Extension of Emergency Credit Line for MSMEs

To begin all the operations post-pandemic, the Government offers Rs.3Lakh crores as additional funding. Lenders provide this collateral-free automatic loan to MSMEs with a tenure of 4 years along with a 12-month moratorium on the principal. No guarantee fee is levied on additional collaterals, and the Government covers 100% of the credit as a guarantee through banks. It is estimated that around 45Lakh business units in India benefit, and the scheme will be open until October 31, 2020.

Debt Value to NPA or Stressed MSMEs

The Aatmanirbhar Bharath Abhiyan provides an additional debt of Rs. 20,000 crores to the MSMEs categorized as NPA or stressed. Considering the valuables provided to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), we offer a partial credit guarantee of Rs. 4,000 crores to the banks. Expect banks to provide this fund as infused money for the equity given to the enterprises.

Equity Infusions

The Government also provides equity funding for the potential growth under the introduced reform policy called “Fund of Funds.” With a corpus amount of Rs.10000 crore, the Mother Fund and Daughter Funds leveraged for  MSMEs. This is bringing an opportunity for companies to enlist them on the Stock Exchange.

Global Tenders Dissolved

By making amendments to the General Financial Rules, the Government has disallowed the Global tender of up to Rs.200 crores. As a measure to promote Make-In-India and also to save Indian ventures from foreign competitors, this policy has become one of the primary agenda under ABA.

How do MSME owners apply for the ABA funding?

Even though the details of the application for Aatmanirbhar Bharath Abhiyan are yet to be announced, there is one primary thing you need to do beforehand. Start your business project report. Project reports are one of the determining factors to take your application forward.

Generally, the report will give an overview of the company. For example, current status of the projects, the number of employees, the budget for each project, balance sheets, expenditures, employee salaries, taxation, etc. With the perfect project report, there is a high probability that you may have a successful funding or loan process/

If you have never created a project report before, then don’t worry. You can find the right tool for creating one. Check Finline, a platform that allows you to create a project report. You can create a powerful project report in ten minutes. That too in your language. Also,all public and private sector banks working in India accept our project report. Click to create your report.

Cash is the lifeblood of every business. Run out of cash, and your business will be dry and out of the blood. you can’t pay your bills or make payroll. Even if you’re not up and running yet and just planning on launching a new business, you’ll need to know how much cash you need to get started and stay in business during those first crucial months. To prevent the horrible situation of running out of cash from ever happening to you, it’s critical to understand how cash is moving into and out of your business. Accounts payable is the total of the bills that your business has, but that you haven’t paid yet.

Accounts payables are considered as short-term debt. It includes things like your business rent, electricity cost and anything associated with running your business month to month.

A cash flow statement shows how cash is moving in and out of your business over a certain period like a month/quarter/year. This statement is one of three key financial statements for every business—the other two, are an income statement (also known as a profit and loss statement) and a balance sheet. These three statements give you the complete picture of your business from a financial perspective and tell you exactly how your business is doing.

Account payable is an important parameter in the cash flow and balance sheet. Accounts payable is the amount of money that you owe to your vendors and suppliers. Essentially, it’s a total of all the invoices that you have received but that you haven’t paid yet. In your company’s financial statements, accounts payable will show up on your balance sheet as a liability. Ideally, you should keep your business’s financial books organized and enter your bills into your accounting system as they arrive. This doesn’t mean you have to pay your bills right away, but it helps you keep track of who you owe and what your liabilities are.

Tracking your accounts payable is a critical component of managing your cash flow. As your business grows, you may be spending money on different services for your business. You will also receive invoices that need to be paid. If you can’t manage your debts, you could find yourself in a cash crunch, or worse, defaulting on a debt. Especially when you are growing quickly, you may need to buy more inventory and invest in business expansion at a faster rate than your customers are paying you. This means that you will have bills that come due before you receive money from your customers.

In general, having a lower accounts payable balance is better. This means that you are paying your bills on time. Of course, as your company grows, your accounts payable will also naturally grow as you purchase more supplies and have bigger bills to pay. Don’t worry, though. This is normal. If you are growing, you’ll want to track what’s called the accounts payable turnover ratio to make sure the percentage of accounts payable compared to your total purchases remains fairly constant.

How to reduce your accounts payable?

If your accounts payable are growing and you need help paying your bills, there are a few strategies you can explore. This will help to reduce your AP or at least manage it better:

1. Negotiate with your suppliers:

Most suppliers would rather see you pay their bills than have you default and not pay at all. A simple call to your vendors to negotiate a payment plan can often help ease the pain. Also, this method can keep you in good standing with your supplier so you can continue to do business with them.

2. Encourage your customers to pay faster:

For most businesses, getting cash in the door from customers is the best way to help pay bills faster. 

3. Establish a business line of credit:

You should do this before you have an accounts payable problem as banks are less likely to lend to you if you already have too much debt. That can help ease the pain of certain times of the month when you have less cash on hand. Just be careful not to overextend your business and add even more debt. Instead, think of a line of credit as a very temporary loan that allows you to pay your bills.

4. Lower your costs: 

This is probably the most obvious option for lowering your accounts payable, but it’s always worth mentioning. When you shop around for different vendors, you might be able to lower your expenses and therefore lower your bills. It’s always good to be on the lookout for better deals for your business. So reserve some time every few months to look at your expenses and see where you might be able to cut costs.

About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline will help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. All public and private sector banks working in India accept our project report. Click to create your report.