Many businesses like woodworking factories, engineering workshops, steel furniture workshops, etc. rely on high-quality machines, to produce the output. For them, these equipment are the lifeline.
So, if you are willing to start a business that requires the use of such machinery or trying to expand the one you are running, then you are looking for some really heavy investment. While if you already have enough funds in hand, then go ahead. But even if you don’t, there is nothing to worry about as there are specific loans available to help you fund your buying of new machines.
6 Important Machine & Equipment Loan Questions
Now, before you go ahead and apply for your loan, here are commonly asked questions about such loans that you must know about. Some these you will have to answer to the loan representative, and the rest will simply help you plan your investment better.
#1. What can I use the Machinery & Equipment loan for?
As the name suggests, you can use this loan to cover up for most of the machine and equipment-related expenses. This includes leasing/purchasing machines, repairing and upgrading to installing and maintaining them. Mostly equipment loans are availed to Earth Moving equipment, CNC machines, Industrial equipment, Dental equipment, Cranes, Precision tool cutting equipment etc.
#2. How much loan can I get?
The maximum loan amount varies from lender to lender, but in general, the loan is likely to cover around 80% of the total cost of the machine. An initial down payment of around 20% is generally required for most small business equipment loans.
#3. What will be the duration of the Machinery & Equipment loan?
Both short-term and long-term loans are available for financing your equipment. The duration varies from lender to lender and also depends on the total value of the loan. A common trend is that long-term loans will have higher interest rates.
#4. Do I need to give any security for these loans?
No, machinery and equipment loans are collateral-free. This reduces the hassle of the entire process and makes it more convenient. This also means that it will take less time for the lender to approve (or decline) your loan.
#5. Is my credit score important while getting the loan?
Your credit score, which includes your personal credit score and your business’ credit score, matters when applying for such loans. Most lenders take a good look at your past credit behaviour when considering whether to approve your loan. So, it is always a good practice to keep monitoring your credit profile regularly.
#6. Do I need to demonstrate my future business plans?
Yes, the lender is most likely to invest in someone who has a concrete business plan. So, you will need to demonstrate to your lender your plans for the business and how you expect to repay the loan. These answers are vital and must be based on solid facts and not on sheer emotions.
Now that you have the answers to these commonly asked questions about equipment loans, it’s time you start preparing for the application process. Think you are ready? For expert guidance, an easy application process and quick loan disbursal, contact Gromor Finance today!