Regardless of whether your business is old, new, or gradually growing, you will need state-of-the-art equipment/machinery to keep it standing. One cannot argue with the fact that top-of-the-line machinery is basically the backbone of most businesses across India today. They are integral in helping companies achieve stable productivity and consistent sales.
That being said, most companies do not possess the capital sufficient to acquire such equipment that their enterprise needs to function day after day. Fortunately, business owners can apply for a machinery loan, which they can secure by meeting certain eligibility criteria and formalities.
In this article, we would like to shed light on this particular type of business loan and potentially cover everything there is to know about it.
So without much further ado, let’s understand what a machinery business loan in India entails.
What is a Machinery Loan?
As we mentioned before, a machinery loan is a type of business loan that is taken to finance the acquisition of new equipment or machinery to serve a commercial purpose. Due to their exorbitant cost, businesses… especially smaller ones, find it difficult to purchase them. This is where a machinery loan can come to their rescue. The loan essentially makes the job of buying new equipment very simple, thus eliminating any hurdles to ensuring higher sales and profits.
The Advantages of Getting a Machinery Loan
Considered to be an essential loan for small business, the following are the benefits a budding enterprise can reap by applying for a machinery loan:
- Facilitates easy purchasing of new equipment
- Facilitates modification or refurbishment of existing machinery.
- Can be used to repair part of or the entire machinery.
- Easy EMIs and flexible repayment privilege
- Faster turnaround time and higher ROI due to an upgrade to new machinery.
Eligibility for Machinery Loan
Typically, you’ll need to meet the following eligibility criteria to successfully secure a machinery loan:
- You should be aged between 25-65 years old.
- Balance sheet assessed by a registered CA.
- You also need to present ITR of the past two years.
- Applicant must not have a past record of defaulting on a previous loan
- You will need to submit financial statements with your business showing an upward trend.
We suggest you consult a reputable business loan provider in India like FinDestination to find out whether your enterprise is eligible for the loan.
Other Documents Required when Applying for a Machinery Loan
- Photo identity proof like driving license, passport, Aadhaar card, etc.
- Documents of business proof like a sales tax certificate, trade license, etc.
- Certified bank statements of the past 6-12 months.
Types of Commercial Machinery Loans that Businesses can apply for in India
Indian business owners have a handful of options in front of them when it comes to machinery loans. They are as follows:
1. Business Loan for Machinery
These types of loans are basically unsecured advances that are offered to businesses so they can finance the purchase of new equipment. These loans can range from anywhere around a few lakhs to crores. These loans facilitate the purchase of most types of machinery, both small and large.
On the downside, however, these loans can be very difficult to acquire for small businesses. Some lenders only offer these loans to companies that possess a vintage of three years, maybe more.
2. Government Loans for MSMEs
SIDBI, aka The Small Industries Development Bank of India, which operates under the GOI’s department of financial services, offers a specialized loan to MSMEs called ‘SPEED’. A business that is registered under the MSME act can easily avail of these loans. On the other hand, businesses that do not fall under the MSME act will have a tough time securing this loan.
3. Gold Loans
Gold Loans are considered one of the most secure loan options to get. Such loans can allow businesses to maximize the utility of their assets by acquiring advance funds without having to go through the hassle of satisfying any eligibility criteria or lengthy documentation processes.
Securing a Machinery Loan with FinDestination
Machinery loans help businesses, especially small and medium-sized enterprises buy costly machinery even if they do not possess the capital to do so. These loans help them meet their sales and productivity goals. That said, the process involved in getting a machinery loan can be a tad bit confusing and frustrating.
This is where the services of FinDestination come into play. Being a leading business loan provider in India, we’ve helped several start-ups and established enterprises secure loans that helped them purchase top-of-the-line machinery/equipment. Needless to say, we can do the same for you if a hassle-free process to acquire machinery loans is what you seek.
Contact us now to learn more.