For businesses looking to buy new equipment without dipping into working capital funds, machinery loans offer an easy and effective funding route. What’s more, many such business loans demand no collateral as security. If you’re considering applying for a loan for machinery purchase in India, the guide below will tell you all that you need to know.
What is a Machinery Loan?
A machinery loan is a type of unsecured business loan that can be availed to buy new equipment for a business. The loan amount and the interest rate depend on the credit history of the borrower. Availing of a loan for machinery purchase is a smart way to fund the purchase of machinery and equipment by small and medium enterprises.
Eligibility and Documentation for Machinery Loan
When it comes to eligibility, there are specific criteria that are common across lenders-
- Vintage – Banks and NBFCs typically don’t fund new projects, unless a well-known investor backs them. Thus, they require a business track record of at least a couple of years to offer a machinery loan.
- Good CIBIL score – Lenders will use the borrower’s credit history to determine their eligibility and risk profile. If you have a good CIBIL score, your chances of securing a business loan at a favourable interest rate increase.
- Turnover – Before approving your loan application, lenders will ask for the business’ financial records to check if its turnover meets their threshold.
Additional Read:- When You Need to Opt for Business Loan
Keep primary documents ready for your business loan application – PAN Card, ID proof, address proof, Income Tax returns, etc. Unlike other options, machinery loans require minimal documentation, making it easy for business owners to avail financing right when they need it.
How to Get a Machinery Loan in India
Always do your research and compare options to find the right lender. Many banks and NBFCs offer business loans in India. Make sure the lender you choose is 100% transparent with its charges and provides relaxed eligibility criteria. Once you’ve found such a lender, the next step is to keep documents ready before starting the application process. However, before applying for a machinery loan, make sure to find out what your monthly EMIs will look like with the help of an online business loan EMI calculator – input key information and see how your EMIs change with different tenures and interest rates.
Whether you want to expand your business, hire aggressively, or buy new machinery, you need a stable supply of capital. Unsecured business loans are designed to meet a variety of business needs with easy and hassle-free funding.
Additional Read:- Types of Business Loan Agreements You Should Know
The rigours and demands of running a business are many, the most important of them being investments. Tata Capital understands this perfectly, which is why we bring you complete financial support with our easy machinery loans. With business loan interest rates starting at 19% and flexible repayment options, you can stay ahead of the curve with Tata Capital. For quick machinery loans in India, get in touch with us today!