What Do Funders Look for in a Feasibility Study? A Guide to Preparing Your Financing File in Oman

Many entrepreneurs walk into a bank or financing fund with an excellent idea and plenty of enthusiasm, only to walk out with an application that is on hold or declined for reasons they never anticipated. The problem is rarely the idea itself. More often, the file was not written in the funder's language and did not answer the questions every credit analyst asks before signing off on a recommendation.

In this guide we explain how a funder reads a feasibility study, what exactly they look for, and how to prepare a coherent file that respects their time and shortens your path to a decision.

Funders Do Not Buy the Idea, They Buy the Ability to Repay

The first thing to understand is that a bank or fund is not a partner in your profits; it is an institution that wants its money back on schedule. Its perspective therefore differs from an investor's. The investor asks: how much will I earn? The funder asks: will this project be able to repay, even when conditions are less than ideal?

This difference changes how the study should be written. Emphasising high returns alone is not enough. The study must also highlight:

• Stability of cash flows month by month, not just annual profits.
• The safety margin between available cash and financing installments.
• Alternative sources of repayment if revenues are delayed.
• The owner's commitment, demonstrated through their own equity contribution and experience.

The Core Components a Funder Expects in the File

Detailed requirements vary from one institution to another, whether it is a commercial bank, an Islamic bank or a development financier such as the Development Bank (Oman), so always review the specific institution's own conditions. That said, there are components almost everyone agrees on.

Executive Summary

One or two pages summarising the project, the amount of financing requested and its purpose, the sources of repayment, and the key financial indicators. Many analysts form their first impression from this page, so make it clear, direct and free of exaggeration.

Market Study

The funder wants to see evidence of genuine demand, not general statements. Rely on credible sources such as data from the National Centre for Statistics and Information, documented field surveys, and an analysis of competitors by name and price. To go deeper on this point, read our guide to estimating demand in the Omani market.

Technical and Operational Study

Location, equipment, production capacity, suppliers, management structure and the licences required. The aim here is to reassure the funder that the project can actually be delivered and that the stated costs are based on real price quotations.

Financial Study

This is the heart of the file. It covers investment costs, the projected income statement, the cash flow statement, the projected balance sheet, the financing repayment schedule, and the evaluation indicators.

The Financial Indicators an Analyst Looks at First

An analyst does not give every figure in the study the same attention. They go straight to a handful of specific indicators:

If these concepts are new to you, we explain them in detail in our article on net present value, internal rate of return and payback period.

A Hypothetical Example: How Does a Funder Read Cash Flows?

Suppose a small water-bottling plant is requesting financing of OMR 200,000, with an estimated annual installment of OMR 48,000.

• Expected operating cash flow in the first year: OMR 60,000.
• Coverage ratio = 60,000 ÷ 48,000 = approximately 1.25 times.

At first glance the figure looks acceptable. But an experienced analyst will ask: what if sales fall by 15%? If that would push cash flow down to OMR 45,000, the project cannot cover the installment. This is where sensitivity and scenario analysis proves its value: it shows the funder how the project behaves under pressure and proposes remedies such as a longer grace period or a larger owner contribution.

The figures above are entirely hypothetical and for illustration only. They do not represent any real project or the financing criteria of any institution.

Collateral and Financing Structure

Even the strongest cash flows do not remove the funder's need for a second source of repayment. The file should therefore set out the collateral available, whether real estate, personal guarantees or assignment of contracts, and propose a sensible financing structure: a tenor that matches the economic life of the assets, a grace period that covers construction and trial operation, and installments aligned with any seasonality in revenues. If you are dealing with an Islamic bank, make sure your needs are framed in terms of Sharia-compliant financing structures such as Murabaha, Ijarah or Musharakah, because the nature of the structure affects how assets and cash flows are presented.

It also helps to distinguish between two kinds of need: financing fixed assets such as equipment and buildings, and financing working capital such as inventory and early operating expenses. Mixing the two in a single undifferentiated request confuses the analyst, while separating them shows that you understand your project's needs precisely.

Mistakes That Weaken a Financing File Even When the Project Is Sound

From our experience with a wide range of financing files, certain easily avoidable mistakes keep recurring:

1. Unjustified optimism: steep sales growth with no backing from the market or from contracts.
2. Neglecting working capital: costing equipment and buildings but forgetting inventory, receivables and the expenses of the first months before revenues stabilise.
3. Inconsistency between sections: production capacity in the technical study that does not match the sales volume in the financial study.
4. No price quotations: estimated costs with no supporting documents.
5. Ignoring risks: funders know every project carries risk, and a study that does not mention any loses credibility.
6. A weak presentation of the management team: the prior experience of the owner and their team is a core element of trust.

A Practical Pre-Submission Checklist

Before you submit your application, go through this list:

• Have you obtained the official list of requirements from the financing institution itself?
• Are your commercial registration and licences valid and up to date through the Oman Business Platform or the relevant authorities?
• Have you attached recent price quotations for equipment and construction works?
• Do the financial projections cover at least the entire repayment period?
• Have you presented a conservative scenario alongside the base case?
• Have you explained the source of your own contribution and the collateral available?
• Does the executive summary answer the five questions: what, why, how much, when, and how will it be repaid?

The Role of an Independent Study Provider

Funders tend to place more trust in studies prepared by a specialist firm with a clear methodology, because it signals that the figures have undergone professional review rather than reflecting the owner's wishes. That does not mean any study from any firm will do; the analyst will test the assumptions independently and will not accept a methodology that cannot be traced.

What makes the difference is transparency: every assumption stated and justified, and every figure traceable to its source. If you are still at an early stage, you might begin with a preliminary study before a comprehensive one; we explain the difference in our article on preliminary versus comprehensive studies.

Conclusion

Funders are not looking for a long study; they are looking for a convincing one: a documented market, realistic execution, cash flows capable of repayment even in difficult conditions, and a committed owner who understands the risks. Always remember that the financing decision rests with the financing institution alone, and that your role is to give it a file that makes a confident decision easier. If you are preparing a financing application and want a file built in the funder's language, we would be glad to help: request your study.