Commonly Asked Questions Around Machinery & Equipment Loans

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Commonly Asked Questions Around Machinery & Equipment Loans

Commonly Asked Questions Around Machinery & Equipment Loans

  • Highlights

  • Know how machinery loans work

  • Learn the benefits of machinery loans

  • Know the documentation required for machinery loans

  • See if you match the eligibility criteria for machinery loans

No matter what the size of your business, having top-of-the-line machinery is a major component of your growth journey. So, whether you want to buy or lease machinery, upgrade it or repair it, a machinery loan helps your business capitalise on its most important asset. Read these frequently asked questions about machinery loans to be better informed about this source of finance.

1.What can I use it for and what are its benefits?

As the name suggests, you can use this loan for all your machinery-related expenses. These can range from leasing/purchasing, repairing and upgrading to installing and maintaining them.

The benefits your business can gain from a machinery loan include the following:

1. This loan is collateral-free, which means that you don’t have to pledge business assets in exchange for funds.

2. A machinery loan provides the ideal solution for a business, as the cash flow is not affected in the short term. Often, a glitch in the manufacturing process requires high capital expenditure, an expense that is not provided for in your cash flow. A machinery loan helps the business tide over this short-term cash crunch and ensures that it continues its work with optimal efficiency.

3. A machinery loan gives you access to up to Rs.30 lakh with minimal documentation, easy eligibility and a flexible tenor. Your business can enjoy all this, along with a nominal rate of interest.

4. It also helps the net asset value of your business increase as more equipment is added to the books

2. What is the maximum amount of loan I can get?

When you opt for a machinery loan, you can usually avail up to Rs.30 lakh.

3. Do I have to plan for collateral?

There is no need to pledge any collateral for the machinery loan. This makes the application process hassle-free and convenient. It also makes it easier and faster for you to apply, while also taking your lender less time to approve your application as it doesn’t need to assess any collateral.

Additional Read: How to Choose The Right Machinery Supplier

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Should you lease or buy equipment for your manufacturing business

In order for a manufacturing business to be successful, it needs to have the latest technology. Having the best-in-class equipment means that you can produce more goods in less time, while maintaining or even improving quality. However, such machinery is usually expensive to purchase, and it may not always be the best financial decision to do so. So, how can you tell when you should lease new machinery, and when you should buy it? This infographic will help you know how to make the correct decision for your business.

4.How do I qualify for it?

Typically, you need to meet the following criteria:

1. You should be between 25–55 years of age

2. Your business should be at least 3 years old

3. Your business should have filed its Income Tax returns for at least the last financial year

4. The previous year’s turnover should be audited by a chartered accountant

5.What documents do I need to submit?

You need to submit the following documents:

1. Filled form and passport size photographs

2. KYC documents

3. Certificate of the existence of business

4. Financial documents pertaining to the business

5. Bank account statements for the previous months

6.How long does it take for the money to be disbursed?

With a fast disbursal time of 48 hours, you can secure finance for your new machinery quickly.
Now that you know more about the features of a machinery loan, it’s time to check your business needs and see how this loan can help you.

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