Project Reports & CMA Data · Question

What assumptions do lenders challenge most in a project report?

Short answer

Lenders push hardest on sales growth, operating margins, capacity utilisation in the early years and the working capital cycle. These are the inputs that drive repayment capacity, and they are also the easiest to inflate. An assumption survives scrutiny when it is tied to evidence such as orders, quotations, comparable units or your own past performance.

In more detail

A credit officer reads a project report backwards. They start from the repayment figures, then ask which assumptions had to be true for those figures to appear. A few recurring ones attract most of the questions.

Smooth, steep growth from the first year invites doubt. Officers compare your projected growth with the sector, with your history if you have one, and with the number of customers you could realistically serve. A price assumed higher than competitors charge needs a reason.

Margins that improve every year without a stated cause look optimistic. Raw material cost, power, wages and freight are checked against what comparable units report. Missing overheads such as maintenance, insurance and marketing are a common gap.

A new plant rarely runs near full capacity at once. Quick ramp-up is questioned unless firm demand supports it.

Stock, receivable and payable days are compared with industry norms. Short receivable days with long payable days, assumed without any supplier agreement, tends to be challenged.

Show the source beside the number

For each major assumption, add a one-line basis: a customer quotation, a supplier offer, a published industry range or an earlier year of your own books. Questions then become confirmations.

A useful discipline is to test your own downside. If sales came in noticeably lower or costs rose, would the project still service its loan? A report that shows this honestly usually earns more trust than one that shows only the favourable case.

Key points

Repayment capacity is built from sales, margin, utilisation and working capital assumptions, so these get the most scrutiny.
Steady, unexplained improvement in margins is read as optimism, not strength.
Attach a source to every important assumption, even if it is only a quotation or a past-year figure.
Showing a cautious downside case helps credibility more than hiding it.

Who this applies to

Promoters presenting a project report to a bank or NBFC for the first time.
Owners whose earlier proposal was returned with queries on projections.
Consultants and accountants preparing financial projections on a client's behalf.

Last reviewed 3 October 2026

This answer is general information, not advice on your particular case. Terms, eligibility, and requirements change, so check the current position with the relevant institution or authority.