Small and medium enterprises (SMEs) are the backbone of our economy. Under this genre, a wide variety of businesses operate in our country, which ranges from local restaurants to pharmacies to inventory management to engineering workshops and many more.
While real estate and construction mostly require humongous manpower and investments, they survive on the manufacturing of many heavy machinery equipments. Closely tied to this heavy machinery industry, many small businesses have cropped up that specialise in selling, installing, and repairing these heavy-weight machineries.
These companies may not directly manufacture equipment like cranes or tractors or water pumps, but acquire a license from the parent company to sell their products. They usually hire service engineers who visit the factories to install the machines and show demos to the workers. These companies also serve as the first point of contact during any repair or maintenance work.
Apart from the construction industry, they also supply machines to agricultural, steel fabrication, woodworking, and engineering workshops. Some have even equipped themselves to manufacture the machines themselves.
What is A Machinery and Equipment Loan?
These loans are available to businesses to cover up for all machines, equipment, and servicing-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.
Now, before you think of securing a loan for your business, let’s try to understand whether your business really needs financing:
- If you are thinking of launching a business and running short of capital, a business loan may be the perfect solution for you;
- If you are thinking of expanding your business, hiring more staff, or buying more machines, a quick loan can support your ambitions;
- If your business is going through a prolonged financial crisis or there is an accident, a small business loan can help you get through it.
Something to always keep in mind is that without a foolproof future plan for your business, loans will be hard to repay and become bigger liabilities.
Features of Machinery and Equipment Loans in India
You can avail these loans from banks as well as Non-Banking Finance Corporations (NBFCs), and the details of the loan will vary according to the lender. However, the common facts about machinery loans are:
- You can avail loans up to Rs. 50 lakh.
- The loan will cover almost 80% of the equipment financing cost, while 20% will have to be borne by the business.
- The repayment tenure ranges between 1 year and 3 years.
- The application process is generally simple. You can visit the official website of any lender which offers machinery loans and apply for the required scheme by uploading the necessary documents.
- Once you have submitted all the documents, the lender will verify them, and if they are found to be correct, the loan amount will be disbursed to your bank account within 72 hours of the time you applied for the loan.
- The success of the loan application depends on the credit score of the business.
Common Eligibility Criteria for Getting a Machinery Loan
- Your business must be at least 3-years-old.
- It is mandatory to have ownership of at least one property.
- Your business should have its income tax filed for at least 1 year.
- Your age should be between 25 years and 55 years.
Still have questions regarding Equipment Loans? Check out these 6 Commonly Asked Machinery Loan Questions. For expert loan guidance, an easy application process, and quick loan disbursal, contact Gromor Finance today!