Things you need to know about Equipment Loan or Machine Loan

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Equipment-Loan-Machine-Loan
Equipment-Loan-Machine-Loan

When you have a small business of your own where you manufacture goods, it is extremely essential for you to have proper means of production like land, labor, capital, and most importantly ‘machinery and equipment’.

To ensure that your business runs smooth you must have appropriate machinery so that there is efficient production of goods. Many a times there comes a situation where the machinery has turned old or has stopped functioning. At such times it is important to have capital in hand so that you can maintain you existing machinery or purchase new machinery and equipment. An equipment loan or a machine loan is required at such times so that you have enough means to easily purchase new machinery whenever you need.

What is a Machine loan?

A Machine Loan is the financeprovided by Banks, Non-Banking Financial Companies (NBFC’s) and Online Lenders to business owners for buying new equipment and machinery. This helps the business owners to have maximum productivity in the company without any halt in work.

A machine loan can be of 2 types:

  1. Secured Loan

A secured loan is commonly provided by banks against a security like property or collateral. It is the most preferred type of loan by business owners as it has low interest rates. It takes a while to process Secured Loans as the bank first checks the eligibility of the owners and secondly it requires a lot of paperwork.

  1. Unsecured Loan

An unsecured machinery loan can be provided by small financial institutions or NBFC’s without any security. Although unsecured loans can get processed quickly without extra eligibility criteria’s or any security, the interest rates for these types of loans is quite high.

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How to Apply for an Equipment Loan/Machine Loan

You can apply for a Machine Loan either Online or Offline.

  • Online Method

To apply for a Machine Loan online, you should visit the website of the online lender or financial institution and fill in the required owners and business details. You can submit the required documents through the online portal and wait for it to get verified. Once the documents are verified, your loan will be funded in your bank account shortly.

  • Offline Method

To apply offline, the business owner is required to visit the nearest branch of the bank or the NBFC he/she is interested in. A representative from the bank will assist regarding the eligibility and documents. Submit the required KYC and documents in the branch. If your documents are verified, the Machine Loan will be granted to you by the bank.

Eligibility criteria to avail a Machine Loan:

When taking a Machine loan from a bank, it is compulsory to fulfill all the eligibility criteria’s required by the bankor else the bank does not sanction your machine loan.

The eligibility criteria differfrom bank to bank. Here are some common criteria’s that a business owner must fulfill in order to be eligible for a Machine Loan:

  • Business should be running from 3 years at least
  • The age of the business owner must be between 25 to 55 years
  • Income Tax must be filed for at least one year
  • The owner must possess at least one property compulsorily
  • Business owners of small and medium sized business can apply for the Machine Loan
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If you fulfill the above mentioned eligibility criteria, you can easily avail a Machine Loan at a bank.

List of required documents for Machine Loan

Identity Proof of the applicant 1.      Adhaar Card, PAN card, Driving License, Voter ID or any government approved valid document

2.      KYC documents of the applicant

 

Address Proof of the applicant 1.      Adhaar Card, Passport, Driving License, Electricity Bill
Documents of the company 2.      Income Tax record of last one year

3.      Bank account statements

4.      Income proof

5.      Audited Balance Sheet

6.      Audited Profit and Loss statement

 

Ownership Proof 1.      Registration documents

 

 

Features of a Machine Loan

Below are listed some of the main features of a machine loan:

  1. Grants loan up to INR 50 Lakhs
  2. Payback period of the loan ranges 1 year up to 3 years
  3. Interest rates are charged up to 24% only
  4. Loans are granted quickly without any hassle
  5. Easy to access through online and offline mode
  6. After verification, the loan is sanctioned within 72 hours to the bank account
  7. Government Schemes are also available on some Machine Loans

What are the advantages of getting a Machine Loan?

Taking a machine loan means purchasing new machinery for manufacturing or upgrading the existing machinery for better production.

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Machine loans make it possible for the business owners to maintain the production in the company without any cessation in work. If the machine or equipmentis found to be faulty, the owners can upgrade or buy new machinery with the help of the funds provided by Machine loans. Here are some of the advantages procuring a Machine Loan.

  • Better Productivity

Machine Loans ensure better productivity in an organization or company as they help the owners to carry on with the production by providing funds for new machinery.

  • On Time Production

It helps the business in manufacturing the required goods on time without any halt or delay in production.

  • Low Chances Of Defect In Products

Business owners take machine loans to upgrade the existing machinery or to purchase new ones therefore if there is any fault in any machinery it can easily be replaced with the help of a machine loan therefore the chances of defect in the products is very low.

  • Increased Profit

Due to new and upgraded machinery, the productivity of the business boosts and more number of products can be manufactured in less time.Increase in productivity results in more products which in turn affect the sales. The sales of the business increase hence, giving more profit to the owner.

These were some of the benefits of taking a Machine Loan therefore, it is a great option for business owners as they can avail the loan easily within no time and upgrade and purchase new machinery and equipment’s according to their needs to ensure better and smooth production and maximum efficiency in the manufacturing.

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