All kinds of equipment that facilitate production are must-have assets for business enterprises of any size. Manufacturers need financing in order to purchase business equipment to transform their production processes and make them more efficient. Manufacturers may also seek financing to repair faulty equipment or purchase upgraded versions.
Machinery loan is considered as a type of business loan that helps entrepreneurs, business owners and other business entities in acquiring finance to buy machinery / equipment for various business purposes. Loan for machinery purchase helps business entities in gaining more productivity while using new equipment and machinery. Increase in production or output, results in higher profits from sale and distribution.
Eligibility Criteria for Machinery Loan
- Applicant must be between 21 years to 65 years to apply for machinery loan
- Business vintage to be minimum 2 years
- Last 2 years’ ITR
- Last 12 months’ bank statement
- Applicant should not have defaulted on any previous loan
Benefits of Machinery Loan
- It helps to buy new equipment/machinery and is also term as equipment financing
- Used to refurbish, modify or change existing machinery/equipment
- To repair faulty machines or equipment or to upgrade
- To buy machinery loan for new business
- Flexible loan repayment options with easy EMIs
- Used as working capital loan or equipment finance
- Machinery loan for startup is an additional benefit for new businesses
- Collateral free loan from selected NBFCs, Small Finance banks, etc.
Documents Required for Machinery Loan
- Duly filled application form with latest passport-sized photographs
- KYC documents of the applicants and co-applicants, if applicable, such as PAN Card, Aadhaar, passport, Voter’s ID card, Aadhar card, Driving License, Utility Bills (Water and Electricity Bills)
- Proof of income
- Last 1 years’ bank statement
- Existing facility sanction letter
- Original and valid quotation of machine(s) – To be purchased
- Additional documents, as required by the bank or lender
Frequently Asked Questions
Is it really possible to get machinery loan without collateral security?
Yes, you can avail machinery loan without collateral security from various NBFCs, Small Finance Banks and Micro Finance Companies. Some of the leading financial institutions to offer Machinery loan without security are Bajaj Finerv, Lendingkart, Ziploan, Flexiloans, etc. The interest rate offered by these entities shall vary and depend on the applicant’s profile and nature of business.
Is there any subsidy on machinery loan?
There are a few Government initiated schemes that offer subsidies on machinery loans that include the Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation and Small Industries Development Bank of India (SIDBI).