No matter 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 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?
You can use this loan for all your machinery-related expenses like leasing, purchasing, repairing, upgrading, installing and maintaining them.
The benefits your business can gain from a machinery loan include the following:
- This loan is collateral-free, which means you don’t have to pledge business assets in exchange for funds.
- A machinery loan is ideal for a business, as cash flow is not affected in the short term. Often, a glitch in the manufacturing process entails 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 work continues with optimal efficiency.
- A machinery loan gives you access to up to Rs. 50 lakh with minimal documentation, easy eligibility and a flexible tenor. Your business can enjoy all this at a nominal interest rate.
- It also increases the business’ net asset value as more equipment is added to the books.
When you opt for a machinery loan, you can usually avail of up to Rs. 50 lakh.
3. Do I have to plan for collateral?
There is no need to pledge any collateral for a machinery loan. This makes the application process hassle-free and convenient. It also takes your lender less time to process your application because they don’t need to assess any collateral.
Additional read: How to choose the right machinery supplier
4. How do I qualify for a machinery loan?
Typically, you need to meet the following criteria:
- You should be between 24 years and 70 years years* of age
- Your business should be at least 3 old
- The previous year’s turnover should have been audited by a chartered accountant
5. What documents do I need to submit?
You need to submit the following documents:
- Accurately filled application form and passport-size photographs
- KYC documents
- Certificate of the existence of business
- Financial documents of the business
- Bank account statements for the previous month
6. How long does it take for the money to be disbursed?
Quick loan disbursal within 48 hours means you can secure finance for your new machinery in no time.
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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