What is CMA data? The report your lender uses to read your business
CMA data is the standard set of past and projected financial statements lenders use to assess credit. What it contains and how to prepare it.
CMA stands for Credit Monitoring Arrangement. CMA data is a set of financial statements in a standard format that shows a business's past performance, its current year estimate and its projections. When your lender asks for "CMA", it wants to read your business in a format it can compare with every other borrower.
Why lenders use a standard format
Audited accounts are drawn up for tax and company law. Every business arranges them a little differently. A standard format lets the lender:
- see several years side by side;
- compute the same ratios for every borrower;
- check whether the projections are consistent with past performance;
- assess the working capital requirement and the repayment capacity in one place.
What CMA data usually contains
The exact layout varies by lender, but the content is broadly the same.
| Part | What it shows |
|---|---|
| Particulars of existing and proposed limits | Current borrowings and what is being requested |
| Operating statement | Sales, costs, profit before and after tax, for past, current and projected years |
| Analysis of balance sheet | Liabilities and assets, classified as current and non-current |
| Comparative statement of current assets and liabilities | Holding levels of stock, receivables and creditors, in amounts and in months |
| Computation of working capital gap and permissible bank finance | How much of the working capital need the bank can finance |
| Fund flow statement | Where funds came from and how they were used |
| Key ratios | Current ratio, TOL/TNW, DSCR, interest coverage, turnover ratios |
Typically you will be asked for two or three years of actuals (audited), the current year's estimate or provisional figures, and projections for the coming years (for a term loan, usually the whole loan period).
Maximum permissible bank finance (MPBF)
One of the CMA forms computes the working capital gap: current assets the business needs, minus the current liabilities other than bank borrowing (mainly trade creditors). The borrower is expected to fund part of that gap from long-term funds (the margin). What remains is the maximum permissible bank finance: the most the bank is prepared to lend as working capital. If your requested limit is higher than the MPBF in your own CMA, expect questions. See understanding MSME working capital.
The ratios that get the most attention
- Current ratio: current assets ÷ current liabilities. A sign of short-term liquidity.
- TOL/TNW: total outside liabilities ÷ tangible net worth. How leveraged the business is.
- DSCR: whether cash accruals can service term debt. See understanding DSCR.
- Holding periods: how many months of stock and receivables the business carries. Sudden jumps raise questions.
What level a lender considers acceptable for each ratio is set by its own credit policy.
Common mistakes
- Projections that do not match history. Sales growing 40% a year when the past three years show 8% will be questioned. If you expect a jump, explain why: a new order, a new machine, a new market.
- Inconsistent numbers. The CMA, the audited accounts, the GST returns and the bank statement should tell the same story.
- Ignoring working capital in projections. If sales double, stock and receivables usually rise too. A projection that grows sales but not current assets looks unrealistic.
- Treating CMA as a formality. It is the lender's main analytical document. Read it before you sign it.
Note
Your chartered accountant usually prepares the CMA. It is worth sitting with them to understand every assumption, because the lender will ask you, not your CA, why the numbers are what they are.
References
- Frequently Asked Questions: Micro, Small and Medium Enterprises (updated as on July 29, 2025), Q.7, Reserve Bank of India (accessed 3 November 2026)
- Master Direction: Lending to MSME Sector (July 24, 2017), Reserve Bank of India (accessed 3 November 2026)
Educational content only, not financial advice or an offer of credit. Rules and rates change: confirm with the official source and your lender before acting. Disclaimer · Editorial policy