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What is a machinery loan?
Hence a machinery loan paves the way for financing of equipment easily and removes any hurdles in getting success for the business. In other words, a machinery loan is regarded as a category of business loan which is very essential for those business entities, entrepreneurs or business owners who are getting financed to purchase machinery/equipment for varied business purposes. Such financial help for machinery purchase assists business owners in achieving more productivity with the help of newly purchased machinery and equipment. As we all know, increased output or production thereby results in an increase in profits as well from distribution and sale.
Eligibility Criteria for Machinery Loan
Applicant age must be within 21- 65 years in order to be eligible for applying for a loan for machinery.
Business should be at least 2 years old.
Income Tax Return documents for the last two years.
Bank statement of last twelve months
Applicants cannot afford to be a defaulter on any previous loan.
A machinery loan’s purpose can be either to repair a faulty or broken machine or to get upgraded to a better version.
Advantages of machinery loan
Some advantages of getting machine loans from are as following:
Loans upper limit up to as high as 2 cr
Loans are offered up to 2cr, to provide working capital whenever needed.
Collateral-free Machinery Loan
No necessity for any collateral or guarantor to obtain equipment financing in the country of India.
The facility of Flexi loan
An innovative and unique feature of this type of loan is that it permits the borrower to manage his cash fund in a much smarter and effective manner
Documents required for a Machinery Loan
If you are looking to opt for a loan to facilitate equipment financing, then there are certain documents that must first be procured and made ready.
1. Proof of Business: For proof of business, one must keep at hand a certificate of practice that states the nature of business. This certificate acts as legal proof of the legitimacy of the business and establishes the reason for the machinery loan subsidy.
2. Past accounts: The financing and the accounts for the last 3 years must be attached with the rest of the documents. The accounts for the past 3 years are required to understand the amount of revenue that is earned by the business or company.
3. Residential proof: Proof of residence of the business and/ or office must be provided. For this, the company PAN card or any legal document that has an affiliation with the company’s residential address may be provided.
4. Identity proof: For identity proof, the KYC or “know your customer” documents must be attached with the rest of the forms and documents to apply for a machinery loan in India.
Benefits of machinery loan
It is also called an equipment financing loan as it aids in buying new machinery/equipment.
It helps in modifying, refurbishing or changing the present machinery/equipment
It helps in repairing faulty equipment or machines or in upgrading.
It assists in buying new machinery for new business
It provides relatively quite flexible options for loan repayment with easy EMIs
It is termed as equipment finance or working capital loan
For startup companies or new businesses, it is an additional benefit
This loan is collateral-free or it does not require any guarantor from selected Small Finance Banks, NBFCs, etc.