What is a machinery loan?
A machinery loan allows you to finance the purchase of machinery and equipment essential for smooth operations of your business. It helps in funding the lease or purchase of new machinery, as well as the repair of existing machinery that may have broken down.
Machinery loans are suitable for micro, small and medium scale manufacturing units, which are in need of urgent capital to buy and upgrade equipment and also for increasing overall productivity. The loan offers much-needed support to any manufacturing business.
For instance, if you have a printing business and you had to purchase printing machinery with the latest technology and expand your business, but don’t have the necessary funds to buy the expensive machinery. You can approach the financial institution for machinery loan and can purchase the machinery for fuelling your business requirements.
Machinery loan can be used to support new equipment purchase and financing or for maintenance and repair of existing equipment thereby increasing the overall productivity for the business.
Eligibility & Documents Required
When applying for a machinery loan, make sure you meet the eligibility requirements below:
- You must be at least 25 years old and less than 65 years
- Your business must be profitable for 3 consecutive financial years
- Your turnover needs to show an upward trend
- Your balance sheet must be audited by a registered chartered accountant
Also, make sure that you have all the relevant supporting documents listed below before you apply.
- Know Your Customer (KYC) Documents – Address, Age & Nationality proofs like Passport, Aadhaar, PAN card and other documents of the Directors or Partners.
- Proof of Business (ITR/Trade License/Establishment/Sales Tax Certificate)
- Sole Proprietorship Declaration or certified copy of Partnership Deed
- Certified true copy of Memorandum and Articles of Association
- Bank statements for last 6 months
- Income Tax Returns along with computation for last 3 years
- Audited Financials for Last 2 years
- Qualification Documents – Like degrees of graduation & higher education
FAQs: Machinery Loan
1. What is the maximum machinery loan you are eligible for?
You can avail a maximum funding of your equipment value.
2. What is the typical tenure for machinery loans?
Loan tenure varies from 3 months to 5 years.
3. How much EMI do I need to pay?
You can use our business loan EMI calculator to calculate the EMI you need to pay based on your convenience.