1A term loan is a loan granted for the purpose of acquisition of capital assets, such as purchase of land, construction of, buildings, purchase of machinery, modernisation, renovation or rationalization of plant, and repayable from out of the future earnings of the enterprise, in instalments, as per a prearranged schedule.
1There are four broad aspects of appraisal, namely
a. Technical feasibility, b. Economic feasibility, c. Financial feasibility, and d. Managerial competence.
1The purpose of appraisal is to ascertain whether the project will be sound – technically , economically, financially and managerially – and ultimately viable as a commercial proposition.
l Technical Feasibility – To determine the suitability of the technology selected and the adequacy of the technical investigation and design;
l Economic Feasibility - To ascertain the extent of profitability of the project and its sufficiency in relation to the repayment obligations pertaining to term assistance;
l Financial Feasibility – To determine the accuracy of cost estimates, suitability of the envisaged pattern of financing and general soundness of the capital structure; and
Managerial Competency – To ascertain that competent men are behind the project to ensure its successful implementation and efficient management after commencement of commercial production
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