How to Get a Machinery Loan for Heavy Machinery Businesses

Cattle Farming Loan

India is home to around a million small businesses, some of which are fighting for survival while others are looking for avenues to grow. There are approximately 42 million Micro, Small and Medium Enterprises (MSMEs) in India. Millions of MSMEs operate in the manufacturing sector which contributes significantly to the GDP along with employing millions in India.

For a business to have any kind of potential to grow and expand, it mainly needs human resources, substantial capital, and physical resources. Every asset addition can have a significant impact on your overall revenues and profit margin as a small business owner.

In some cases, MSMEs are production-based and may require new machinery or technological improvements to existing machinery and equipment. These machines play a crucial role in improving the overall outcome and revenue for the business. However, it is not easy to raise a huge amount of capital to purchase costly machinery or equipment. This is where banks and NBFCs provide financial assistance by providing loans to businesses. Loans for machinery are often offered without collaterals which makes them more convenient for loan applicants.

What are Machinery and Equipment Loans?

Technological advancements have helped mankind get access to modern innovations, cutting-edge tools, and advanced equipment which facilitates business owners with not only a competitive edge but also grows business. Small businesses can save on maintenance and repair costs by purchasing new and refurbished machinery which leads to improvement in overall productivity. With technological advancements, modern machinery involves less money spent on repairs. As a result, it becomes affordable for businesses to own such modern machinery and equipment. The loans are collateral-free which means they can be used to purchase new equipment. This makes it possible for small and medium-sized businesses to finance machinery and equipment purchases.

Benefits of Machinery and Equipment Loans

Loans are quite beneficial for SMEs and MSMEs as they cannot afford expensive machinery and equipment with their existing capital. While buying Machinery and equipment for high-tech companies could be an expensive affair, various banks and NBFCs do offer loans to bridge this gap which facilitates business expansion. Let’s take a look at the benefits of a machinery loan.

1. Instant Fund access

You can get instant money in your account by applying for an equipment loan since they are simple and quick to obtain. There is no delay in receiving the loan amount as the funds are received within 24 hours, once your loan application is approved.

2. No guarantor required

When applying for a machinery loan, you are not required to provide a guarantor or pledge any personal assets as security. Additionally, the loan policies are straightforward and have no hidden fees, which makes them trustworthy. All you need to do is follow MSMEs business loan eligibility criteria and submit the required documents.

3. Pre-approved offers

The best way to finance your business' equipment needs, regardless of whether it’s minor repairs or new equipment purchases, is with a loan. Pre-approval is provided in case you are applying for a loan from a lender with whom you have previously done business. Being a current customer simplifies the procedure because the lender already has all of your personal information. All that’s left to do is provide additional information for machinery loan. This helps with quick loan approval and disbursement.

Machinery and Equipment Loans in India

Many banks and Non-Banking Finance Corporations (NBFCs) provide machinery loans with interest rates and every lender has a different set of criteria for loan eligibility. Here are some facts about machinery and equipment loans:

● Loans up to 50 lakh rupees are available.
● The loan will cover almost 80% of the equipment’s cost while 20% will be borne by the business.
● Repayment tenures range from 1 to 3 years.
● The application process is generally simple. Visit the official website of any lender offering machinery loans and upload all necessary documents to apply for the required scheme.
● Once you have submitted all documents, the lender begins the verification process. Within 72 hours of a loan application, the loan amount will be disbursed to your bank account considering the information provided is accurate.
● Land registration documents
● It is the credit score of the business which determines whether the loan application will be successful.

Eligibility criteria for Machinery and equipment loan

● Applicant's age must be in the range of 21-65 years to be eligible for machinery loan application.
● A business should be at least 2 years old.
● Income Tax Return documents for the last two years.
● Bank statements for the last 12 months.
● Applicants cannot afford to be a defaulter on any previous loan.

In conclusion, machinery and equipment loans are great financial assistance to buy new machinery and repair or upgrade existing machinery which in turn helps in growing the business.

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