What is Machinery Loan and How Does it Work?

Introduction

What is a Machinery Loan?

A machinery loan falls under the equipment loan category. Under an equipment finance program, the new machinery qualifies as collateral. Therefore, the borrower does not have to pledge outside collateral to get the loan. With this loan, it will be easier to finance the purchase of new machinery for your business. Lenders usually designate a machinery loan for financing business equipment only. A machinery loan is a great option for business owners who need new updated machinery to  carry out lucrative operations. Small businesses may also qualify for machinery financing. This loan allows you to get advanced machinery to provide the best service and overall grow your business and boosts the value of your company.

Financing With Machinery Loan

It is possible to secure used or new loans with business machinery financing. You can also finance more machines in a single bundle, which would simplify the terms and borrowing amount. Leasing manufacturing machinery often calls for multiple applications and payment setups that can be confusing. Instead, you need to do your research on all the options available and choose a lender that will group your business requirements a single package. More importantly, find a lender that strives to create a flexible monthly payment option. Before applying for a machinery loan, determine how much the machinery would cost. This will help you decide how much you need to borrow when getting a machinery loan.

Advantage of Business Loan For Machinery

Let’s have a look at the various advantages a machinery loan helps your business be more profitable.

• Improve Output of Business:

  Using new machinery will improve the output of your product quality. So a large number of units can be produced in a short amount of time, this will significantly affect your sales.

• Build Quality Products:

  Advanced machinery and technology will automatically produce good quality products. With the help of new or upgraded machinery, you will be able to produce better quality products for your business. This will increase the trust of your customers in your products.

• Saves Time and Energy:

  Machines have always taken less time than getting things done manually. If you produce a product with the help of a machine then the possibility of delay is very low. You can produce good quality products in large amounts with less time taken for production.

• No Chances of Product Defect:

  Product defects tend to happen with products created with machines. But with the use of updated machinery and the latest technology the production will be high and there will be no possibility for defect products. Hence, this works in favour of your business.

• Increase Profitability of the Business:

  If your business sales are high then this means that your business generates profit. Higher production also reduces the overall costs incurred in the business and will give you higher profit margins, this will work well for any business in the long run.

Also read what are the benefits of business loan online only at Finserv MARKETS

Eligibility Criteria for Machinery Loan

• The applicant needs to be between the ages of 25 to 55 years to be eligible for the loan.

• The applicant should have the business running for at least 3 years.

• The business should have filed an Income Tax Return (ITR) of at least 1 year.

Document Required for Machinery Loan

• Identity Proof such as PAN Card, Aadhaar, passport, driving license, etc.

• Address Proof such as Passport, Voter’s ID card, driving license, utility bills, etc.

• Passport-size photographs

• Business Proof Continuation Proof (Any One) – ITR, Trade licence, Establishment, Sales Tax Certificate

• Income Proof

• Existing facility sanction letter

• Original quotation of machinery you want to purchase with the loan

By getting a business loan at Finserv MARKETS, you can get the finance you need to purchase machinery for your business. Finserv MARKETS offers small business loans at attractive interest rates for undertaking various business operations, such as an expansion of your business, acquisition of other companies, buying high-value and getting new machinery or equipment, etc.

Finserv MARKETS business loans are collateral-free, which means no form of security is required to avail the loan. You can apply for Bajaj Finserv business loan of up to Rs. 30 lakhs online. With the Finserv MARKETS App you can get pre-approved offers for an instant loan with ease. The app also lets you check your CIBIL score for free and also obtain a Financial Health Check Report (FHCR). The business loan funds can help in finance purchasing machinery for your business, and will give your business the much-needed boost.