Funding of a New Hospital Project-Hospital Management Topic

Project Report on Funding of a New Hospital Project-Hospital Management Topic

Funding of New Hospital Project

Loan is the key component for any project. In case of hospital project it is more since the equipment required are very costly and they require some sort of support from the financial institutions. Here in this section various bank offers are discussed and also the steps involved in obtaining the bank loans.

Standard offerings from bank

All the public sector banks have special loan products for entrepreneurs to suit almost all types of
requirements. The standard products are as follows:

•  Term Loan: This is to support capital expenditure plans of the unit.
•  Differed Payment Guarantees: This is to support purchase of capital equipments.
•  Corporate Loans: This loan is offered to meet some of the emergency requirements of the unit.
• Working Capital Loan: These funds are targeted for meeting the operational needs of the unit. It is either a fund based loan (case credit) or a non-fund based loan (Letter of Credit, Bank Guarantee and others).
• Export Credit: Given to support export initiatives of the unit.

While it is relatively simple for an existing business venture to get bank finance for expansion, it is slightly difficult for a new entrepreneur to impress upon the lending institutions for sanctioning a loan. While in the first case bank / banks may build some confidence from their past performance, in the latter case, since the project is normally an entirely new venture of the promoter, the bank prefers to take a cautious step. However, it may be remembered that a fundamentally strong and well planed project will always have a higher chance of getting finance quickly.

Some of the strategies that can be adopted by the management to ensure success in getting bank finance are:

•  Thorough Ground Work: It is essential that an entrepreneur builds a detailed understanding about the entire project. In some cases, the entrepreneurs may be very strong in technical or engineering areas, but may not have a clear understanding of the overall project which includes even the financial areas. Making a good homework helps in developing confidence of the bank. In this regard, a good feasibility report either prepared internally or from a competent external consultant, helps in identifying all the critical areas of the project and brings in more clarity in thoughts for the entrepreneur.

Besides, how to dress in a professional manner for the interview is equally important. During the interview with the bank manager the entrepreneur must be ready to answer all the questions. Some of the general questions asked are:

o What is the project?
o How much funding is required for the project?
o When you need the funding?
o For what period you need the loan?
o When and how you will repay the loan?
o What will you do if you do not get the loan?
o What are the risks involved in the project?
o How much security (including co-lateral) you can offer?

• Confident in negotiating with the banks: As a promoter needs finance, so as the banks need good projects to finance. Hence, promoter need not be shaky or scared in approaching banks. A confident promoter is highly regarded by the financial institutions. 
•  Research on the banks: Different banks will have different loan policy including level of exposure in different sectors, which may vary in different zones of the same bank. It is desirable that the entrepreneur should do some research in this area to select a few banks wherein he may initiate discussion.
•  Approach two, three banks instead of one: For a new entrepreneur, the predictability of getting the loan sanctioned is little lower than an existing businessman. In this case, the entrepreneur may approach multiple banks for his/her project. This is because, if he fails to get the loan from one bank there will be opportunities open from other banks. In this way he reduces lot of time in case the loan application is rejected by one bank.
•  Be Truthful: Do not distort facts in the loan application. The lender can easily find out the wrong statements if any.
•  Maintain neatness in the proposal: A neatly typed properly sequenced documents with a cover letter is preferred. Untidy documentation makes bad impression with the bankers.
•  Maintain tactfulness in discussion with banks: Avoid pressurising for loan sanctioning or processing faster. It should be done in a very tactful manner. The banker cannot make a decision until all documentation and reports are received, scrutinised and acceptable to a team of people in the bank. To ensure a speedy decision, make sure that the loan application is complete in all respects.
•  Discuss risk related issues and how the risks can be mitigated in the loan application: There is no business that has no risk. If risks are not discussed in the application, the bank may feel that the entrepreneur has not thought of the risk factors. Discuss possible risk factors and how the risks can be managed.

Some of the documents required for bank loan are:

• The most important document for any project is the feasibility report that a promoter prepares. This report should contain all the required information about the project covering management competence and experience, business model, technical details of the project, commercial aspects including pricing & competition and financial aspects. The company should submit this report to the bank after initial discussion with the concerned authority in the bank.
•  Normally bank will have its own application formats. The promoter will have to fill up this form and submit it with the following documents: 

1. Last three audited balance sheet, if it is an old company
2.  Bio-data of promoters and directors. (If this forms a part of the feasibility report, there is no need for submitting separately.)
3. Copy of latest IT/ wealth tax return of the directors/ partners/ guarantor
4. Project Profile
5. Copy of Permissions/ Licenses (If permissions/ licenses are not received at the time of application it should be mentioned in the feasibility report). The company should invariably submit copies of all the permissions/licenses as they are received.
6. Pollution control clearance certificate
7. Memorandum and Article of Association in case of private/public limited company
8. Copy of partnership deed in case of partnership firm
9. Copy of the latest search report from ROC (Registrar of Companies)
10. Copy of Legal/ Valuation Report
11. Present banking arrangement and statement of A/C of at least last 6 months
12.  Banker’s report on Associates/ Sister Concerns/ Group Companies

If you want Project Reports on Funding of a New Hospital, than contact Research Writers at Mahasagar Publications.