Detailed Project Report for a School & getting Loans from the Banks(DPR)

It is now time to address this topic since a lot of questions lately are being asked on this;

Background: A School will require funds initially to met its Capital Expenditure and later on Operational Expenditure. There will be different forms of capital which will be required at different stages like Term Loans, Over Draft Facility, Current Account Facility / Savings Account Facility, Vehicle Loans, Top-up Loans, Personal Loans etc. School as I have mentioned earlier is a Capital intensive project as the initial capital requirement is very high since for a decent level infrastructure, one is looking to build a minimum of 15,000 – 20,000 sq feet in the first stage. The process of raising capital can only start after the Society / Trust / Section 8 Company is in motion and the resolution is ready giving the directions to the entity to seek out for propositions from different banks.

Steps for getting Money / Finance / Loan / Project Finance / Project Loan / Term Loan from the bank

1. Get the Land in order – in terms of Lease / Diversions Papers
2. Get you Map made & approved from the following
   • An Architect
   • Town & Country Planning / Panchayat – whichever is applicable
   • Other Land office if required in terms of permissions based on location of the plot
3. Get a Chartered Accountant and get a Detailed Project Report (DPR) made, you should be ready with the following assumptions
   • Amount of Construction required
   • Number of Students over a period of time
   • Costs involved with the School set up
   • Means of finance
   • Other ways a school will generate income other than School Tuition Fee – Like Conveyance Fee, Usage of the premises in the evening or weekends, Auditorium on rent, Canteen, Food Facility, Mess etc
   • Capacity utilisation – No of students per classroom
   • Schedule of Construction
   • No of Staff Required and Salary structure
   • Conveyance Facility and expenses
   • Other issues like CBSE regulations in terms of reserve funds, Affiliation Fee etc
   • An idea about the costs involved with ongoing school
     • Leaseline
     • Furniture Requirement
     • Telephone
     • Computers
     • Library
     • Landscaping
     • Decoration
     • Branding & Marketing
     • Play grounds
     • Activity Studios
     • Others
   • At the end of the day DPR should have the following for you

     – CAPEXL assumption
     – Hard cost
     – Soft cost
     – Revenue assumption
     – Class rooms details
     – Student details
     – Capacity utilizations prudent
     – Logistics cost and revenue
     – Books cost and revenue
     – Uniform cost and revenue
     – Estimated Results based on facts shared : 10 years projections
     – Cost of the project and the means
     – Balance sheet
     – Profit and loss
     – Pay back period
     – Term loan schedules
     – Repayment schedules and EMI’s
     – Depreciation calculations
     – Tax calculations

4. Get you assets valued from a third party valuer (this can be done later also from an empaneled valuer of the bank) along with you Net worth statements from your CA
5. Approach  a Bank – Here I advent seen any Private Bank coming forward and giving loan to a Greenfield School Project, so I suggest don’t waste time and approach a Nationalised Bank. Now a day CAs help in getting a Bank who can finance
   • Banks are going to ask for Collaterals (should be 130% – 150% ) more than the loan required
   • Banks are going to ask for Schedule of Payments
   • Initially banks are going to give a moratorium period where you will be exempted from paying back (later on all that will be saddled on EMIs to be paid later on)
   • Banks will keep Originals of the Property being mortgaged
   • Please remember the land on which School building is proposed to be built can also be kept as Collateral / Security in the bank.

I hope all of this will help you in getting finances. My School Consultancy company helps in arranging loans for promoters, let me know if you are facing any difficulty.

MONEY is important, Plan for it well. Cheers

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Abhiney Singh

Managing Director at Brighton International School

I run a school called Brighton International School (www.brightoninternational.in). I am also now a partner with a School consulting company which helps budding educators or investors start school or gain access to help related to school. The help could be in the form of Turnkey School Consultation, Detailed Project report, Project Finance, Business Plan consulting, Recruitment planning, Infrastructure consultation, Affiliation Consultation, Teacher’s Training, Academic and Curriculum Planning. I now have a decade of work experience. I strongly believe in improving every day and I have tremendous respect for people who pursue their dreams with undying passion and enthusiasm.

I am a Marketing-Media professional which has helped me in shaping what I am today. I am Chemical Engineer with an MBA in Marketing.
You can know more about me at www.linkedin.com/in/abhineysingh

You can mail me on abhiney@brightoninternational.in or call me on +91 70002 40006. This number is also on whatsapp.

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