Advance your business with Equipment Machinery Loan
Considering purchasing new equipment to boost your business but not confident about your financial stand? An equipment machinery loan for business can give you the fiscal backing without compromising the cashflow!
Minimum Documentation
No Collateral
Instant Disbursal
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What is an Equipment Machinery Loan?
An equipment machinery loan is a business loan for machinery purchase available for the acquisition and upgrade of new machinery, as well as repairing old equipment. Small, medium, and large business enterprises and startups, as well as self-employed professionals, can qualify for the machinery finance. This loan allows businesses to improve productivity without utilising any of the working capital.
Equipment financing can be both secured and unsecured. When purchased machinery serves as collateral, or any other asset is put up, the loan becomes secure in nature. In addition to flexible repayment options, machinery loans in India offer tax benefits. These loans present a convenient solution for machine updates and business growth against minimal documentation and with high loan-to-value ratios.
Key Benefits of Machinery Loan
Investment plays a crucial role in business development decisions like buying or upgrading equipment and machinery. Equipment financing supplies the required funds without creating any gap in the cash flow.
Check out three key benefits of opting for an online machinery loan:
Efficiency in Business:
Aid businesses speed up production and improve operational efficiency by acquiring advanced machinery.
Enhanced Productivity:
The latest machinery and equipment enable businesses to manufacture premium quality products faster, improving their position in the market.
Competitive Advantage:
Through the purchase of new equipment, downtime is reduced, output is increased, and a higher production quality is assured.
Equipment Machinery Loan Eligibility Criteria
An MSME machinery loan or equipment financing for large enterprises typically has the following eligibility criteria:
- Business Vintage: The business must be operational for a minimum of 2 to 3 years.
- Business Type: Some loans are available for MSMEs or specific sectors only; for instance, agriculture and manufacturing
- Minimum Turnover: Steady yearly turnover and supporting proof are compulsory. The loan amount depends on it.
- Credit Score: 750 or above credit score gives businesses the best chances of approval.
- Documentation: Business licenses, Financial records, tax returns, and such documents are crucial.
Documents required for Machinery Loan
Along with a duly filled form, the machinery loan bank may ask for proof of business stability and financials. The basic documentation requirement includes:
- Identity Proof: Aadhaar Card and PAN Card
- Address Proof: Rent agreements, utility bills, or voter ID (for individual applicants)
- Business Registration Proof: Business license and GST registration
-
Financial Documents:
Audited account statements for the last two years.
Bank account statements for the past six months.
- Invoices: Details of the machinery cost from the respective supplier
How to Apply for Machinery Loan in India?
Types of Machinery Loan for Business in India
Businesses are open to choose from various types of machinery loans in India, depending on their financing requirements.
Here are some popular options:Term Loans
Businesses requiring significant financing for investing in expensive machinery are best to opt for long-term, term loans. These loans have scheduled repayment facilities, allowing some certainty to make budgeting decisions easier. For instance, a firm can avail of a term loan to buy an excavator and pay it back over time.
Machinery Loan for MSME
These loans are designed for Micro, Small, and Medium Enterprises (MSMEs). Low interest rates and government-guaranteed advantages are prime features of such loans. For example, a small cloud kitchen can use the loan amount to buy some new kitchen appliances at competitive rates.
Machinery Loan without Collateral
These loans are ideal for companies with no valuable assets to offer as collateral. Consider these growth potential loans as they concentrate on the potential for expansion over collateral. For instance, a business with limited assets can invest in new equipment without risking losing anything.
Which Banks to Prefer for Equipment Machinery Loans for Businesses in India
Check out the varying rates of interest offered by different banks to decide which bank best suits your finances:
| Bank/NBFC | Interest Rate (Per Annum) | Loan Amount | Processing Charges |
|---|---|---|---|
| HDFC Bank | 7.50% - 14.93% | As per requirement | 1% - 1.5% |
| Kotak Mahindra Bank | Up to 24% | As per requirement | Up to 3% |
| Bajaj Finserv | 9.75% - 30% | Up to Rs. 50 Lakh | 3.54% |
| Axis Bank | 9% - 14.50% | As per requirement | 0.30% or Rs. 10,000 (whichever is lower) |
Machinery Loan Rate of Interest
Interest rates for equipment and machinery loans vary from one lender to another and one borrower to another. Factors that help determine the final rate include the loan type, the terms of the lender, and the creditworthiness of the borrower. Find attractive equipment and machinery loan rate of interest on on My Mudra!
Factors that Affect the Interest Rates of Machinery Loan
Multiple factors play an important role in the evaluation of the machinery loan application and its approval.
The major factors to keep in mind for avoiding loan application rejection or any other hassle are:
- Credit Score: A strong credit score, 750 or above, with a reliable credit history is crucial
- Loan Amount and Tenure: A high loan amount borrowed for a short term can fetch lower rates as the risk is reduced for the lenders.
- Financial Health: A steady business performance, stable finances, and efficient financial management work in the favour of loan applicants.
Details of Business Loan for Machinery Purchase
Category |
Details of Machinery Loan |
|---|---|
| Purpose | Equipment and machinery finance allows businesses to acquire new or pre-owned machinery and also upgrade existing equipment, boosting productivity and efficiency. |
| Eligibility | New startups, small and medium companies, large enterprises, proprietors of enterprises, and self-employed individuals are eligible for business equipment loans. |
| Interest Rate | Depends on the lender, the type of loan, the business profile, and the credit history of the applicant; the interest rate is generally on the lower end if the loan has been secured. |
| Processing Fee | Typically ranges from 1% to 1.5% of the loan amount. |
| Collateral Requirement | The machinery itself can be collateral or a loan applicant can pledge any other asset to avail of secured loans. Unsecured loans are also available, but the rates of interest might be higher, and the loan terms may not be as favourable. |
| Repayment Tenure | The repayment tenure for equipment loans typically ranges between 12 months and 60 months; it varies from one lender to another |
| Interest Rate Type |
Fixed: Same rate of interest throughout the loan term. Floating: The machinery loan rate of interest changes with market fluctuations. |
| Business Vintage | Most machinery loan providers require businesses with a minimum of 2 to 3 years of history. |
Why do you need a Machinery Loan for Business?
The reason behind machinery finance may not be the same for every business
Here are some of the common motives:
- New Equipment or Machinery Purchase: Enterprises and businesses can purchase new equipment to enhance efficiency, raise production standards, and accommodate increasing needs without dipping into their working capital.
- Existing Equipment Repairing or Replacing: Replacing or repairing defective equipment ensures uninterrupted processes, reduces downtime, and maintains constant productivity levels.
- Reduced Repair Expenditure: New machinery investment eliminates regular repair bills, avoiding sudden breakdowns and assuring steady, long-term operation.
- Flexible Loan Repayment: The easy repayment facility via EMIs helps maintain better financial management without affecting cash flow. Some lenders provide tailored repayment terms based on business requirements.
Why My Mudra for Your Machinery Loan?
- Quick and Easy Approval: Access funds quickly so you can buy machinery without any delays.
- Reasonable Interest Rates: Competitive rates to secure your costs and keep them affordable.
- Flexible Repayment Schedules: Select a repayment schedule according to your business cash flow.
- Large Loan Amounts: Obtain the amount needed to buy advanced machinery and expand your business.
- Expert Guidance: Our professionals assist you in selecting the optimal loan facility suiting your business requirement.
- Transparent Process: No concealed fees—fully know what you are signing up for.
- Minimal Documentation: No messy paperwork—just a hassle-free process.
What our Customers say about us
Sunita Singh
Verified CustomerIt was easy to upgrade our machines with My Mudra's machinery loan. The procedure was hassle-free, and the low interest rates on repayments were a breeze.
Ravi Pandey
Verified CustomerWe were able to purchase new equipment easily without a second thought for the budget with My Mudra's equipment loan. Quick approval and simple EMI deals made a huge impact.
Kanika Rajput
Verified CustomerWe required new equipment to expand our business, and My Mudra's machinery finance came through. The loan calculator allowed us to plan better, and the interest rates were reasonable.
Praveen Gupta
Verified CustomerGetting a business loan for machinery purchase from My Mudra was quick and smooth. The flexible EMIs and low-interest rates made it easy to manage repayments.
Frequently Asked Questions on Machinery Loan
Q1. Are machinery loans available for second-hand equipment?
Ans: Second-hand equipment in good condition can prove to be a cost-effective way for a business to initiate growth. You will find multiple machinery loan options to purchase second-hand equipment.
Q2. How does the machinery loan work?
Ans: The machinery loans must be used to purchase equipment or repair an existing machine. It may ask for collateral or be unsecured in nature. In any case, you will have a repayment schedule and must make timely payments.
Q3. Are machinery loans available for startups?
Ans: Yes, machinery loans in India are available for startups of all sizes. The business history is essential; most lenders require a business to be at least 2-3 years old to consider it eligible for financing.
Q4. What are the tax benefits of machinery loans?
Ans: The interest payment towards some machinery loans may be applicable for a tax deduction, which, however, does not apply to the principal repayment.
Q5. How is the process of a secured machinery loan application different from unsecured financing?
Ans: The application process mostly remains the same. The only matter of difference is the collateral pledging. The pledged asset will belong to the lender till the tenure ends and the entire repayable amount has been repaid.
Q6. What is a machinery loan, and how does it work?
Ans: A machinery loan is offered to businesses for the purpose of buying new equipment or repairing existing machinery. The loan is available for small, medium, and large businesses and startups, along with self-employed professionals. The loan is credited at a preset interest rate and tenure. It can be both secured and unsecured.
Q7. Who is eligible for a machinery loan?
Ans: Businesses with an operational history of at least 2 years are eligible for a machinery loan. A minimum turnover cap is applicable based on the lender’s policy.
Q8. What is the interest rate for machinery loans?
Ans: Interest rates on machinery loans vary from one lender to another. The range starts at 7.50% and can go up to 30% or more.
Q9. Can I get a machinery loan without collateral?
Ans: Yes, you can get a machinery loan without any collateral. It will be considered an unsecured loan.
Q10. What is the maximum loan amount I can get for machinery purchase?
Ans: Depending on the lender and the financial profile of the business, the maximum amount you can borrow for machinery purchase can be Rs. 5 crore.
Q11. Is there any government subsidy available for machinery loans?
Ans: Yes, government subsidies are available for machinery loans. An example is the Credit Linked Capital Subsidy Scheme (CLCSS), which offers a 15% subsidy to MSMEs for upgrading to the latest technology.
Q11. Is there any government subsidy available for machinery loans?
Ans: Yes, government subsidies are available for machinery loans. An example is the Credit Linked Capital Subsidy Scheme (CLCSS), which offers a 15% subsidy to MSMEs for upgrading to the latest technology.
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