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07 Jul
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Upgrading old commercial equipment or replacing them with advanced machinery is essential for small businesses to grow and operate safely and efficiently. Better machines mean greater productivity. Moreover, for businesses to recover from COVID-related losses, they need machines that can adapt to changing customer demands. However, it’s not easy for small businesses to cover the cost of new machines. And this is where machinery loans turn out to be such a blessing. By ensuring efficiency, growth, and improved customer satisfaction, new machines justify their costs. Applying for a machinery loan simply means you are availing all the above benefits and not letting go of growth opportunities.
 
Moreover, these loans can be availed quickly, affordably and easily, given that you satisfy certain basic criteria. Also, with the Indian government announcing numerous measures to support the MSME sector, getting a machinery loan for new businesses to boost productivity, is a simple and prudent decision. 
 
Read on to find out all about these loans and how to apply for them.
 
What exactly is a loan for machinery? 
 
A machinery loan is an unsecured business loan with a higher loan-to-value ratio (can be up to 75 percent) that is extended to manufacturing firms to buy new equipment, repair old parts, or upgrade the existing machinery. Businesses prefer it due to the long and flexible repayment terms, as some financial institutions offer tenures that go up to seven years.
 
Also Read: Growth Strategies for Small Businesses
 
How can a machinery loan help you? 
 
Using new and advanced machinery that enables the business owner to conduct uninterrupted operations can be a long-term money saver for the following reasons:
 
Enhanced productivity
 
This is one of the biggest advantages of taking a machinery loan to get new equipment, as enhanced productivity ensures the maintenance of your reputation in the market due to on-time delivery. Furthermore, the newer machines can go a long way in reducing defects and the turnaround time for projects. Greater productivity will also translate to more sales, which can boost profits. 
 
Versatility and practicality
 
It makes sense to get a machinery loan for business expansion due to the flexibility of schemes that can suit any business. Since this loan type does not need collateral, your assets can be put to productive use. 
 
Sustained cash flow
 
When you are able to ensure that the production takes place ahead of schedule in an efficient and an almost defect-free manner, you can expect your business’s cash flow to be positive consistently. This extra cash can be used to pay your vendors and improve your credit score in the process. 
 
Top-notch production quality in lesser time
 
Although it sounds too good to be true, it is possible to achieve this with the new and enhanced machinery that you buy with the machinery loan. You can deliver your products on time without affecting the supply chain negatively, while also standing out for high quality.
 
Also Read: Small Business Loan - How to Get One?
 
Who can apply for the loan for machinery purchases?
 
Availing a loan from one of the top machinery finance companies in India is simple. All you need to have is:
 
  • A decent credit score
  • A satisfactorily profitable (as per industry standards) venture
  • Successful operation for three years
  • Registration under self-employed, public, private, or proprietorship category
 
As for the machinery loan documents, all you need are:
 
  • Profiles and KYC documents of the directors and partners of the venture
  • Justifiable growth projections
  • Audited financial statements from the past three years 
  • Legal documents, such as registration certificates and company constitution document. 
 
How to apply? 
 
  • Once you zero in on the ideal financial institution that provides machinery loans without security, you need to fill up an online form with necessary details, such as name, mobile number, and email address. 
  • Make sure you also provide your city details and select ‘SME and Commercial Loan’ in the product field. 
  • An executive will reach out and brief you on the remaining steps. 
 
Benefits of availing machinery loan from leading lenders
 
Apart from offering flexible and adequate tenures, reputed financial institutions offer attractive and competitive interest rates. Therefore, if the borrower has a decent credit score, he can easily bargain for low rates. Moreover, leading lenders do not charge pre-payment or foreclosure charges in case you are able to pay back the entire loan amount before the tenure is complete. Once the loan is approved, the amount is disbursed within a short time, so that your operations can run efficiently. All a business owner needs to do is compare multiple lenders, based on loan features, advantages, and interest rates, read the terms and conditions of each carefully, and then make a choice.  
 
Also Read: Fuel Your Business Growth With Unsecured Business Loans
 
To conclude
 
Performing well in a dynamic market requires you to proactively meet ever-changing client demands. However; this cannot be achieved without the flexibility to run your business operations smoothly. In other words, disruptions brought about by your machinery breaking down or becoming irrelevant can stall your business’s growth. Hence, machinery finance can provide you the edge you need over your competition to survive, thrive, and reach greater heights. 
 

Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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