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.

Equipment Machinery Loan

Drive Business Growth with a Machinery Loan

Planning to buy new equipment to boost your business but not confident about your finances? A machinery loan can provide the financial backing you need without compromising your daily cash flow.

At My Mudra, we connect you with the top lenders offering competitive machinery loan options designed for your business.

Minimal Documentation Requirements

High Loan-to-Value Ratio

Flexible Repayment Options

Instant Approval and Disbursal

Last Updated: 30-09-2026

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Quick Guide

What is a Machinery Loan?

A machinery loan is a specialised business credit facility designed for the acquisition, upgrade, or repair of industrial machinery and equipment. With this, you will no longer need to rely on your working capital to make large asset purchases. Good equipment financing allows you to spread the total costs over a manageable repayment tenure.

When you apply for a loan, the funds are disbursed directly to your business account to facilitate the purchase. This ensures that your business can adopt the latest technology and increase production capacity. You can also stay up to date in your market without experiencing a sudden shortage of cash flow.

Loan Types

Types of
Machinery Loans for Business

Understanding the different types of equipment financing can help you choose the right product for your specific operational needs.

Secured Machinery Loans

In a secured machinery loan, the newly purchased equipment itself typically serves as the collateral. If the borrower defaults, the lender has the right to repossess the machinery. Since the risk is lower for the lender, these loans generally offer the most competitive machinery loan rate of interest.

Unsecured Machinery Loans

An unsecured machinery loan requires no collateral or assets. Lenders approve these loans based entirely on the business's creditworthiness, financial history, and cash flow. These loans are generally processed faster. However, they often have slightly higher interest rates due to the increased risk to the lender.

Term Loan

A term loan for machinery provides a lump-sum amount that must be repaid on a fixed schedule. This predictable structure makes financial planning easier for many businesses. This loan against machinery can help if you want to make significant, one-time equipment purchases.

Equipment Leasing

This type of financing allows businesses to use expensive equipment without owning it. Instead of purchasing machines outright, you can lease them by making regular payments for a certain period of time.

Line of Credit

This option provides flexible access to funds as required. You are approved for a maximum amount and can draw from it repeatedly. In this type of equipment financing, you will pay interest only on the amount that you have used.

Key Benefits of a Machinery Loan

Investing in new assets can be a critical business decision. Opting for equipment financing provides the required funds while offering several advantages.

Saves Working Capital

A machinery loan covers the high cost of equipment purchases. This allows you to keep your cash reserves intact for daily operational expenses, payroll, and emergency needs.

Enhances Productivity and Efficiency

Acquiring advanced machinery speeds up production and improves operational efficiency. With the latest equipment, your business can manufacture premium quality products.

Flexible Repayment

With a good machinery loan, you can choose repayment terms that suit your cash flow. They offer flexible repayment options according to the specific needs of your business. This flexibility can be beneficial for businesses with seasonal income or those in the early stages.

Tax Benefits

The interest paid on a machinery loan is generally considered a business expense and can be tax-deductible. Additionally, businesses can claim depreciation benefits on the purchased equipment. This further reduces your tax liability.

Eligibility

Machinery Loan Eligibility Criteria

Meeting the eligibility criteria is essential for a smooth approval process. While specific requirements vary, the standard criteria for equipment financing are:

Age

The primary applicant or business owner should be between 21 and 80 years of age at the time of loan maturity.

Business Vintage

The business must be operational for a minimum of 2 years to demonstrate stability.

Credit Score

A strong credit history is very important. A CIBIL score of 700 or above can give you the best chances of approval and favourable interest rates.

Past Defaults

In order to be eligible for a loan, you must not have a history of loan or credit card EMI defaults on your profile.

Documents Required for Machinery Loan

Documents

Providing accurate machinery loan documents ensures a rapid verification and approval process. Keep the following paperwork ready:

KYC Documents

Aadhaar Card

PAN Card

Voter ID

Passport

Address Proof

Utility Bills

Registered Rent Agreement or Property Documents

Business Registration Proof

Valid Business License or Trade License

GST Registration Certificate

Certificate of Incorporation or Partnership Deed

Financial Documents

Audited Balance Sheet

Profit and Loss Statements

Income Tax Returns

Bank Account Statements

Equipment Documents

Proforma Invoice or Quotation from supplier

Machinery cost

Equipment Specifications

Loan Against Machinery — Is Collateral Required?

For a traditional loan against machinery, the equipment acts as the primary collateral. This means that you will not need to pledge your personal property or other business assets to get the loan.

A machinery loan without collateral is often approved based on:

Business finances

GST returns

Credit score

Machinery Loan Interest Rates and Charges

Securing a good interest rate is crucial for keeping your borrowing costs low. A secured loan will generally have lower rates. Unsecured equipment financing will have a higher rate.

Lender	Interest rate	Loan Amount
Axis Bank	10.75% p.a. onwards	Upto ₹5 crores
HDFC Bank	10.75% – 25% p.a.	Upto 90% of equipment cost
IDFC First Bank	10.49% p.a. onwards	Upto ₹10 crores
Kotak Mahindra Bank	Upto 24% p.a.	Upto ₹3 crores
Tata Capital	16% p.a. onwards	Upto ₹90 lakhs
Bajaj Finserv	14% – 23% p.a.	Upto ₹80 lakhs

Disclaimer: Interest rates and fees are subject to change based on the lender's policies and your credit profile.

Machinery Loan EMI Calculator

Before committing to a loan, it is crucial to understand your future EMI obligations. A machinery loan EMI calculator by My Mudra helps estimate the EMI amount.

This allows you to find a payment plan that your business can comfortably sustain without disrupting your cash flow. It also provides a clear breakdown of the total interest payable over the loan tenure.

Loan Details

Loan Amount

₹

₹1,000₹10,00,00,000

Interest Rate

1%50%

Tenure

months

6 months180 months

Results

Monthly EMI

₹23537

Total Payable

₹564882

Interest Amount

₹64882

11.5%

PrincipalInterest

Simple Online Process

How to Apply for Machinery Loan in India

Applying for a machinery loan through My Mudra is a streamlined process designed to save your time. Follow these steps:

Step 1

Visit My Mudra and click on ‘Apply Now’. You will enter your mobile number and complete the CAPTCHA verification. You can then proceed with your application.

Step 2

You will have to enter the type of firm you run, asset details, as well as the date of incorporation of your company. Once all details are filled, click on ‘Proceed’.

Step 3

You will have to enter the details of the loan that you want. Enter the loan amount and the tenure that you are looking for. You will also have to enter the annual turnover of your business.

Step 4

Enter the personal details that are being requested on the screen.

Step 5

Once you have entered all required details, you will need to select the city in which your business is based. After that, click on the ‘Proceed’ option.

Step 6

My Mudra believes in secure transactions. Confirm that your registered mobile number is correct by verifying with a One-Time Password.

Step 7

Once your OTP has been verified, our dedicated team of financial experts will reach out to the contact information you have provided.

Machinery Loan for MSME and Startups

Small businesses and new ventures often face unique challenges when seeking capital. Fortunately, specialised loan products exist to support them.

Machinery Loan for MSME

A machinery loan for MSME is specifically structured to support the backbone of the Indian economy. These loans often have relaxed eligibility criteria, faster processing times, and highly competitive interest rates. Furthermore, under certain government-backed schemes, these loans can qualify for interest subsidies.

Machinery Loan for New Business and Startups

Securing a loan for new business ventures can be challenging since traditional lenders prefer a 2-year vintage. However, a machinery loan for startup is absolutely possible.

Several banks and NBFCs now offer tailored financing programs for startups showing strong market potential. However, you might require a personal guarantee or a slightly higher down payment. This type of loan provides the early-stage capital needed for manufacturing or operations without demanding massive equity.

Top Lenders

Which Banks to Prefer for Machinery Loans

Choosing the right lending partner is as important as choosing the right equipment. My Mudra partners with India's leading financial institutions to bring you the best equipment financing options.

Axis Bank

Axis Bank offers machinery loans at interest rates starting from 10.75% per annum, with a processing fee of 1%. The loan amounts can be up to ₹5 crores, with tenures ranging from 12 to 60 months.

HDFC Bank

HDFC Bank offers machinery loans with interest rates between 10.75% and 25% p.a. and charges a 1.5% processing fee. This bank provides funding up to 90% of the equipment cost, and allows repayment tenures of 48 to 72 months.

IDFC First Bank

IDFC First Bank offers loans at competitive interest rates starting from only 10.49% per annum, with a processing fee of 3.5%. They offer loan amounts up to ₹10 crores, and flexible tenures ranging from 12 to 120 months.

Kotak Mahindra Bank

Kotak Mahindra Bank provides loans for machinery at interest rates of up to 24% p.a. and charges a 3% processing fee. This bank offers loan amounts up to ₹3 crores, and allows tenures of up to 60 months.

Tata Capital

This NBFC provides loans starting from 16% per annum, with a processing fee of 4%. The loan amounts can be up to ₹90 lakhs, with tenures between 12 and 60 months.

Bajaj Finserv

Bajaj Finserv provides machinery loans with interest rates ranging from 14% to 23% per annum. This NBFC charges a 4.72% processing fee and offers loan amounts up to ₹80 lakhs. They also allow repayment tenures from 12 to 72 months.

Why Choose My Mudra for Machinery Loan

Navigating the best financing solutions can be complex and time-consuming. My Mudra simplifies the entire process of getting a machinery loan so that you can focus on running your business.

Vast Lender Network: With over 70 partner banks and NBFCs, we ensure you have access to a wide variety of equipment financing options. We will match you with the lender that best fits your specific profile.
Transparent Processing: We provide clear, upfront information regarding the rate of interest, processing fees, and repayment terms. There are no hidden charges.
Tailored Financial Solutions: Whether you need a term loan for machinery, a specialised loan for MSME, or loans without collateral, our experts find the exact product that you are looking for.
Dedicated Support: From application to final disbursal of funds, our dedicated team handles the negotiations, paperwork, and follow-ups on your behalf.