SMEs and MSMEs are an integral pillar for the growth of our economy. And in order to gain a competitive edge in the market, it becomes imperative that they have access to the equipment financing, which can aid the installation of modern machinery that can fasten up the work and at the same time increase the productivity without compromising on the quality of the products. The following discussion will highlight the advantages of machinery loans and various lenders offering this loan.
What is a machinery purchase loan?
Modern tools and equipment are an integral part of business growth. These state-of-the-art types of equipment are in great demand because of their flawless results and delivering quality products. But all these come at a cost which may sometime fall on the higher side for Small and Medium Enterprises. Business loans for SMEs and MSMEs is a great way to expand the business and machinery loan is one such type of loan that offers special benefits to the borrower.
Sectors like construction, packaging, and manufacturing depend on machinery which helps in efficiently completing the tasks on time. The purchase of such machinery can be a costly affair, especially, if the company is new and is of small and medium size. Machinery loans offered by different banks and NBFCs have made it easy for SMEs and MSMEs to purchase equipment which can give them a competitive edge.
What are the advantages of machinery loan?
- Access to money easily - To ensure that there are no roadblocks on your way to achieving business success, you must have machinery that can ensure higher productivity. Machinery loans give access to the loan amount which you can use for your business advantage.
- Collateral-free loan - Most of the machinery loans are collateral-free and hence there is no need for a guarantor.
- Instant access to the loan - One of the best features of machinery loans is that they are processed quickly and hence you get instant money in the account.
5 Top Machinery Loan Providers-
There are various machinery loan providers. Some of the banks and NBFCs name it as equipment finance. Some of the prominent names include the following:
1. Bajaj Finserv - It is one of the most prominent Non-Banking financial institutions providing funding for various purposes. Machinery loan is one of its popular loans.
- The borrower must be between the age of 22-25
- The business should be at least 3 years old
- Your business should have its ITR filed for at least 1 year
- Machinery loans at Bajaj Finserv come at an interest rate of 18%
- The processing fee is up to 3% of the loan amount
Documentation - Bajaj Finserv has a very simplified machinery loan application process. It comes at a lucrative interest rate but to apply for a loan, you must submit the following documents:
- Passport size photographs
- ID proof – Submit documents like PAN card, Adhaar card, Passport, Voter ID
- Address Proof- Business address proof like a rent agreement, business registration number, utility bills, PAN card
- Certificate of Business existence
- ITR of last one year
- Balance sheet and Profit and Loss account certified by CA
2. MAS Financial Services Limited - Starting off in 1995, MAS got its NBFC license from RBI in 1998. Since then the company has been rendering loans for different purposes at attractive interest rates.
The following are eligible for machinery loan from MAS:
- Small and Medium Enterprise, traders, service providers, etc.
- The business must have a vintage of at least 3 years
- Property owners must be of 1 year (it is mandatory)
- Machinery loan for different product ranges up to 24%
- You can apply for a loan, the amount of which ranges from Rs. 2.5 lakhs to Rs. 2 crores
Documentation - To avail machinery loan from MAS, one needs to submit the following documents to qualify:
- Passport size photographs
- ID proof like Voter ID, Driving license, Aadhaar card, Bank sign verification plus photo
- KYC documents
- Proof of income like sales purchase bill, ITR of the last 3 years
- Bank statement of last one year
- Original and valid quotation of the machine to be purchased.
3. DHFL Machinery Loan - It is one of the most popular choices when it comes to machinery loan. The loan comes at competitive interest rates and easy repayment options thus making it easy for people to apply for the same.
The following are eligible to apply for machinery loan from DHFL:
- Partnership companies
- Limited Liability Partnerships
- Private Limited Companies
- Machinery loan tenure comes to be up to 6 years.
Documentation - To apply for a business loan from DHFL, the applicant must submit a duly filled application form along with the following documents:
- Identity Proof- It can be a PAN card, Aadhaar Card, Voter ID, Passport.
- Address Proof- Driving License, Passport, Aadhaar card, Utility bills
- Documents of property ownership
- ITR for the last 2 years
- Profit and Loss account certified and verified by CA for the last 2 years
- The balance sheet for the last 2 years.
- Last 6 months bank statement
- Loan Processing Charges- It is up to 1.25% - 2% of the loan amount plus taxes.
- Invoice of the machinery for which the loan has been applied for
- Business existence certificate
- Property documents
4. Mahindra Finance - When it comes to machinery loan providers then Mahindra Finance emerges as a popular option. It offers machinery loan quickly and comes with easy repayment options thus making it one of the most preferred choices when it comes to machinery loan.
- You can get a loan for up to Rs. 25 crore
- The loan tenure can range between 6 months to 5 years
The following are eligible for machinery loan:
- Partnership firms
- The company must have at least 3 years of experience
- Greenfield projects but only from the established player
- KYC documents of the owner
- Security offered
- Audited balance sheet (last 3 years)
- Performa of the invoice of the machinery to be purchased
Growth of business is the primary objective of every business and machinery loan proves to be very helpful in this direction. There are many machinery loan providers; they compare their interest rates and other charges before choosing the one that can be best for your business. Fill this blog form, we would contact you at the earliest.