Get the Tata Capital App to apply for Loans & manage your account. Download Now


Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required

Tata Capital > Blog > Loan for Business > Things You Need to Know Before Taking a Machinery Loan

Loan for Business

Things You Need to Know Before Taking a Machinery Loan

Things You Need to Know Before Taking a Machinery Loan

Machinery loans add extra cash to a business’ kitty for a specific purpose i.e., purchase or up-gradation of machinery without disturbing the money available for daily working capital. Planning to avail a business loan for machinery purchase? Here are a few things you need to know before you seal the deal.

1. The Vintage of Your Business

Lenders thoroughly assess business performance and continuity, especially before offering a machinery loan for startup. In fact, machinery loans are typically offered to businesses that have been in existence for a minimum of 2 years. However, if your company has been funded by renowned investors, getting machinery loan for startup becomes relatively easy.

2. Your CIBIL Rating 

CIBIL assesses an individual’s past credit history and assigns a credit score to you. Ensure that you have a neat record of loan repayments in the past. A high credit score improves your overall eligibility to avail a machinery loan.

3. The Estimated Loan Amount You Need

It is always advisable to take an estimate of the loan amount you need for machinery finance. If you borrow more, you might struggle with repayments and if you borrow less, you might face a cash crunch. However, you can avail a machinery loan amount slightly higher than the estimate to be prepared for any unforeseen circumstances. Estimation of the loan amount is pretty straightforward if you are taking a business loan for machinery purchase.

4.  Final Cost of the Loan

Machinery loans can be a costly affair. Therefore, you must carefully look for all the options available in the market. Business loans for machinery purchase can have charges for processing, documentation, prepayment, faulty payments etc. Some financial planning can help you bring down your monthly EMIs and the overall cost. This step can prove to be especially significant if you are availing machinery loan for new business.

5. Submission of Documents

Some basic documents are required for a business loan for machinery purchase. Your lender will ask for KYC documents, ITR for the last two years, balance sheets, business ownership proof and bank statements, etc. If your financial records and KYC details are in place, lending agencies can take a quick decision. You might have to present a report of current year’s business performance if you are planning to take a machinery loan for startup.

6.   Availability of Multiple Options

Before choosing a loan for machinery finance, compare and analyse various available machinery loan options. Interest rates, repayment structures, other processing charges, collateral requirement are a few features that can help you choose the best machinery loan finance option.

Additional Read: All You Need to Know About Machinery Loans in India

Machinery and equipment is an important asset required for the growth of a company. Tata Capital’s machinery loans come with high eligibility, minimum documentation, and a quick disbursal process. Tata Capital offers collateral-free machinery loan finance at attractive interest rates. Get in touch with us to know more.

Leave a Reply

Your email address will not be published. Required fields are marked *