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Machinery Loan

Introduction

Be it a new enterprise, one that is in its initial stages, or one that is growing at a steady rate, top-of-the-line machinery and equipment are the key to consistent productivity and better sales. Not only do they help in reducing the need for manpower but they also help in meeting peak season demand, ensuring greater sales and profits. Businesses whose working capital is insufficient for equipment financing can opt for a machinery Loan.

What is a Machinery Loan?

A machinery loan is a type of business loan taken for the purpose of financing the purchase of new machinery or equipment for a business. Modern business tools and state-of-the-art equipment are a great way to expand your business but finding the right financing for them can be difficult at times. A machinery loan makes equipment financing easy and removes any roadblocks in achieving business success. 

 

Product Offerings

Tata Capital’s machinery loans involve the following features -

  • Loan Amount – Tata Capital offers a wide range of customised loan options ranging from Rs. 5 lakhs to Rs. 75 lakhs to meet machinery upgrade needs, both big and small

  • Loan Tenure – Our machinery  loans can be issued for a tenure that ranges from 12 months (one year) to 36 months (three years)

  • Interest Rates – We charge competitive interest rates on our machinery loan offerings, starting at 19%

  • Multiple Product Offering – Our machinery loans offer businesses flexibility and can be customised to meet unique business needs 

  • No Collateral Needed – Getting a  business loan for machinery with Tata Capital is hassle-free as we do not ask for any collateral 

  • Structured EMI Options –We offer businesses the flexibility to choose an EMI option that is best-suited to meet their budget 

  •  Easy Eligibility – Even if others may say no, we will not. Rather, we will closely work together with you to design a loan that is custom-made for you 

Features and Advantages

Equipment financing via a machinery loan offer the following advantages –

  • Higher Productivity – A machinery loan allows you to upgrade to newer technologies using which you can produce more units in lesser time. As a result, you will experience greater sales and be able to meet your customer needs in a timely manner 

  • Better Quality – Naturally, as you upgrade to newer machinery, you will be able to manufacture products that are high in quality, strengthening the trust your customers have in you

  • Faster Turnaround Time – The machinery you invest in via machinery finance solutions will improve your manufacturing efficiency and result in timely delivery of products. With faster turnaround time, you can meet your production targets and improve your business relations

  • Higher Profits – Improved productivity will naturally improve sales, leading to greater ROI. Moreover, the increase in productivity will reduce the cost per unit, further enhancing your profits

What is the Eligibility for Machinery Loan?

To get a machinery loan with Tata Capital, you must meet the following eligibility criteria –

  • You must be within 25 to 65 years of age  

  • Your business turnover must show an upward trend 

  • Your business must have been profitable for three consecutive financial years 

  • Your balance sheet must be audited by a registered Chartered Accountant

For further details on the eligibility criteria for machinery loans, visit our business loan eligibility page

What are the Documents Required for Machinery Loan?

The following documentation in addition to the duly filled loan application is required for the approval of a machinery loan with Tata Capital –

  • Photo Identity Proof – copy of Voter ID/Passport/Driving License/Aadhaar Card

  • A copy of certified bank statements of the last six months 

  • Business Proof documents – Trade License/Sales Tax Certificate/Sole Proprietorship Declaration/ Partnership Deed/Income Tax Returns along with computation for the last two years/Profit and Loss Statement and Balance Sheet for the last two years 

Additionally, you will also be required to prepare and submit a report detailing how you plan on using the business loan. To know more about the list of documents required to apply for a machinery loan, visit our business loan documents page.

What are the Interest Rates and Charges for Machinery Loan?

Tata Capital charges on machinery loan can be classified in three broad categories, namely general charges, miscellaneous charges, and foreclosure charges, each involving  particular charges – as mentioned in separate table.

 

General Charges 

 

Type of Fees

Applicable Charges

Interest Rate

Starts at 19%

Processing Fee

Upto 2.75% of the loan amount + GST

Penal/Additional Interest Rate

3% on Overdue amount per month + GST

 

The following three components make up the general charges -

  • Interest Rate- The rate at which you are required to repay your business loan, inclusive of the Principal amount and the interest amount, is known as the interest rate of a business loan
  • Processing Fee - Processing fee is a one-time fee charged by lenders at the time of processing the loan application. It is non-refundable even if the loan does not get sanctioned
  • Penal Interest/Additional Interest - Penal interest is the rate of interest that will be charged on delayed monthly instalments. The borrower will now be required to pay the delayed instalment inclusive of the additional interest

 

Miscellaneous Charges 

Refer the table below to know all about the miscellaneous charges involved in Tata Capital machinery loan 

 

Type of Fees

Applicable Charges

Bounce Charges

Rs. 2,000 for every cheque/Payment Instrument Dishonour + GST

Mandate Rejection Service Charge

Rs. 450 + GST

CCOD Annual Maintenance Charges

0.25% on Dropline amount or Rs. 1,000, whichever is higher per year

 

Document Processing Fees

Rs. 999 + GST

Outstation Collection Charges

Rs. 100 + GST per repayment tenure

Statement of Accounts

Soft Copy – Nil.

Branch Walk-in – Rs. 250 + GST

Loan Cancellation Charges

2% of loan amount or Rs. 5,750, whichever is higher + GST

Instrument Swap Charges

Rs. 550 + GST

Duplicate Repayment Schedule

Soft Copy – Nil

Branch Walk-In – Rs. 550 + GST

Duplicate NOC

Rs. 550 + GST

Post-dated Cheque Charges

Rs. 850 + GST

 

The following are the miscellaneous charges involved under machinery loan –

 

  • Bounce Charges- Bounce charges are those charges that are levied in case your EMI gets bounced. In other words, these charges are levied when you miss an EMI payment due to insufficiency of funds in your bank account
  • Mandate Rejection Service Charge - Mandate rejection service charge is the charge levied on the rejection of any of the services rendered by the lender
  • CCOD Annual Maintenance Charges - CCOD Annual maintenance charges are the charges levied on those who have chosen a flexible funding option such as Cash Credit or Overdraft. It is charged for the maintenance of the Overdraft account. 
  • Document Processing Charges - There are a number of documentation stages that need to be completed – business loan agreement, indexing, etc. The charge levied on the processing of such documents is known as document processing charges
  • Outstation Collection Charges - If the cheque you have issued for payment has been made to a non-local branch, lenders will levy an outstation collection charge for the collection of such cheques
  • Statement of Accounts - To get your Statement of Accounts – a bank statement wherein is given a list of all transactions made from your bank account during a given period, a certain amount will be charged. But this amount will be charged only for a hard copy, the soft copy being free of cost.
  • Loan Cancellation Charges - Loan cancellation charges are levied by the lender when you wish to cancel your business loan following the process of loan disbursement
  • Instrument Swap Charges - If you wish to exchange or swap your business loan liability or the cash flow with a different financial instrument, you can do so after paying instrument swap charges.
  • Duplicate Repayment Schedule - You will receive a repayment or amortisation schedule from your lender – a table that displays how your loan evolves over time. If for some reason, you need a duplicate of this schedule, you can apply for a new one, available in both hard and soft copies. While the soft copy is free of charge, a certain fee will be charged for a hard copy. 
  • Duplicate NOC - If you end up losing your NO Objection Certificate by any chance, you can apply for a new one after paying a certain fee
  • Post-Dated Cheque Charges - If you make an EMI payment using a post-dated cheque – one in which the date mentioned is subsequent to the date in which the cheque was drawn, you will be charged a fee known as post-date cheque charge

 

 

Foreclosure Charges 

Below is a table that shows the foreclosure charges levied by Tata Capital on our machinery loans -

 

Type of Fees

Applicable Charges

Foreclosure Charges

4.5% on the future Principal outstanding on existing loan + GST

No foreclosure allowed for the first nine months

Foreclosure Charges for Top-up

2.25% on the future Principal outstanding on existing loan + GST

Foreclosure charges shall be levied only if new rate is lower than the existing rate

Foreclosure Charges in CCOD Cases

4.5% on the Dropped Down limit amount + GST

No foreclosure is allowed for the first nine months

Foreclosure Letter Charge

Soft Copy – Nil

Branch Walk-In – Rs. 199 + GST

 

  • Foreclosure Charges - Foreclosure charges are levied at the time of pre-payment of a business loan, whether in part or in full. No foreclosure charges are levied on loans with floating interest rates
  • Foreclosure Charges for Top-Up - If you wish to pre-pay, whether in part or in full, the top-up loan that you had taken over and above your existing business loan, the lender will levy what is known as foreclosure charges for top-up. These charges will only be levied if the new interest rate is lower than the old one
  • Foreclosure Charges on CCOD Cases - If you wish to pre-pay, whether in part or in full, your business loan taken as Cash Credit or Overdraft, the lending authority will levy a foreclosure charge for the same
  • Foreclosure Letter Charge - When you fall behind on your loan EMI payments, the lender will issue a foreclosure notice or letter notifying you of the same. A soft copy of this letter is free of cost whereas the lender will charge a specific foreclosure letter charge for a hard copy.

How to Apply for Machinery Loan?

To apply for a machinery loan, Tata Capital offers the following four methods of application -

  • You can apply online via our website and have your loan approved 

  • You can apply by contacting our customer care number at 1860 267 6060, open from 9am to 8pm Monday to Saturday. You can even request a call back

  • You can even apply via our 24/7 virtual assistant TIA 

  • You can physically visit any of our nearby branches and talk to one of our Tata Capital representatives

FAQ

A machinery loan is a form of business loan extended for the purpose of purchasing advanced machinery and equipment for various business needs. Using a machinery loan, enterprises can enhance productivity, increase output, improve turnaround time, and generate higher profits.

You can apply for a machinery loan in a number of ways depending upon the options given by your lender.

  • Online – Go to your lender’s website and apply for your machinery loan online

  • Phone – Give a call on your lender’s customer care number and talk to their relationship managers

  • Email – Send a mail expressing your desire to apply for a machinery loan to your lender’s customer support mail address

  • Virtual Assistant – Use your lender’s 24x7 virtual assistant feature to apply for a machinery loan

  • Physical Branch – Visit your lender’s nearby branch and talk to their lending experts face-to-face

The following is the minimum eligibility criteria an applicant must meet to avail a machinery loan –

  • You should be between 25 to 65 years of age.

  • You should own a business that must be profitable for three consecutive financial years

  • You should have a CIBIL or credit score of 700 or above.

  • Your business turnover must show an upward trend.

  • Your firm’s balance sheet and Profit and Loss accounts must be audited by a registered Chartered Accountant.

Still not clear about the eligibility? Read about Machinery loan Eligibility in detail.

The following are the basic Machinery Loan documents necessary to to avail it–

  • Duly filled loan application form with two passport-sized photographs

  • Copy of Photo Identity Proof documents – Passport/Driving License/Voter ID/Aadhaar Card

  • Copy of certified bank statements for the last six months

  • Business Proof documents – Trade License/Establishment/Sales Tax Certificate, Sole Proprietorship Declaration or certified copy of the Partnership Deed, business ownership documents, Income Tax Returns (ITR) for the last two years, balance sheet and P/L Profit/Loss account statements for the last two years 

The following fees and charges are involved while applying for a machinery loan –

  • Processing fee charged to cover the cost of processing your business loan application

  • Foreclosure charges levied at the time of advance repayment or foreclosure of your business loan

  • Document processing charges

Read more in detail about our Machinery Loan fees and charges

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