Machinery Loan for New and Existing Businesses

Machinery loan is considered a type of business loan that helps startups, entrepreneurs, business owners, self-employed professionals other business entities in acquiring finance to buy new or pre-owned machinery/equipment for various business purposes. Loan for machinery purchase helps business entities in gaining more productivity while using new equipment and machinery. Increase in the production or output results in higher profits from sales and distribution.

 

Interest rates offered by Banks/NBFCs for their machinery loan shall vary depending on business requirements. Let’s further discuss some of the popular providers of machinery loans in India.

Know: What is the average interest rate on a business loan

Eligibility Criteria

• Applicant’s age must be between 21 years to 65 years at the time of loan maturity
• Business vintage to be minimum of 2 years
• Applicant should not have defaulted on any previous loan or credit card EMIs
• Applicant with good credit score and repayment history

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Benefits

• It helps to buy new equipment/machinery for new or existing business
• Used to refurbish, modify or change existing machinery/equipment
• To repair faulty machines or equipment or to upgrade
• Flexible loan repayment options with easy EMIs
• Machinery loan for startups is an additional benefit for new businesses
• Collateral-free loans from selected NBFCs, Small Finance Banks (SFBs), etc.

Steps to Apply for Machinery Loan – Online/Offline

Machinery loans can be applied via online and offline procedures as mentioned below:

Online Process

Step 1: Applicant needs to visit the official website of the bank or lender

Step 2: Fill in and submit the loan application form online

Step 3: Submit all the required documents along with proofs and photographs

Step 4: After the submission of the documents, the bank’s representative shall contact the applicant to proceed with the loan procedure

Step 5: If the application and documents are approved, the bank shall approve the loan within defined working days

Step 6: After loan approval, the money shall be disbursed to the mentioned bank account of the applicant

Offline Process

• For offline loan processing, applicants are required to personally visit the bank or financial institution.
• The applicant shall carry all the required documents along with duly filled application form
• After submitting the application form and documents, the bank’s representative shall proceed with the loan process.
• Once all the documents are approved, the bank shall approve the loan and disburse the loan amount in the mentioned loan amount within defined working days

Documents Required

• KYC documents of the applicants and co-applicants, if applicable, such as PAN Card, Aadhaar, Passport, Voter’s ID card, Aadhar Card, Driving License, Utility Bills (Water and Electricity Bills)
• Proof of income
• Business vintage and existence proofs
• Last 2 year’s ITR & Last 1 year’s bank statement
• Existing facility sanction letter
• Original and valid quotation of the machine(s) – To be purchased
• Additional documents, as required by the lender

Machinery loan finance is also offered to small and new businesses, as well as to start-ups for the purchase of new equipment and to buy machinery items that shall help increase the productivity of their business and eventually result in their business growth and expansion. Individuals with no or less credit history can also avail machinery loans from NBFCs and MFIs at comparatively higher interest rates as compared to banks.

Machinery Loan Top Providers

HDFC Bank

Commercial Construction Equipment Finance
Avail 100% finance on	Commercial and construction equipment
Interest Rack Rate	Varies as per business requirements
Processing fees	New Loan: up to 1% of the sanctioned loan amount Used Loan: up to 1.5% of the sanctioned loan amount
Overdue EMI Interest	2% per month on unpaid EMI
Loan Cancellation charges	Nil
Asset verification charges	Nil
Stamp Duty	At actuals
Cheque bouncing charges	Rs. 550
Repayment Schedule Charges	Rs. 200
Cheque Swap Charges	Rs. 500
Service/Documentation Charges	Up to 1% of the loan amount

*Bank IRR & Annual Percent Rate (APR) offered for loans extended to individual customers.

Lendingkart Finance

Machinery Loan
Interest Rate	1% – 2% per month
Loan Amount	Rs. 50,000 – Rs. 2 crore
One time Processing Fees	2% of the sanctioned loan amount
Repayment Tenure	1 month to 1 year
Part-payment Charges	Nil
Pre-closure Charges	Nil

TATA Capital

Machinery Loan
Age Criteria	25 years – 65 years
Interest Rate	19% p.a. onwards
Loan Amount	Rs. 5 lakh – Rs. 75 lakh
Repayment Tenure	From 12 months to 36 months
Collateral/Security	Not required
Business Tenure & Profitability	Minimum 3 years
Balance Sheet	Audited by registered CA

Ziploan

Equipment Machinery Loans
Business Loan Interest rate	1% – 1.5% per month (Flat Rate)
Loan amount	From Rs. 1 lakh – Rs. 7.5 lakh
Processing Fee	1% – 2% of the sanctioned loan amount
Repayment tenure	From 12 months – 36 months
Eligibility Criteria	Annual Turnover should be more than Rs. 10 lakh
Loan Disbursal Time	Within 3 working days
Collateral	Not required
Prepayment Charges	Nil after 6 EMis are paid in time

Flexiloans

Business Loan for Machinery
Interest Rate	1% per month onwards
Loan Amount	Up to Rs. 1 crore
Processing Fee	2% of the sanctioned loan amount
Repayment Tenure	Up to 36 months
Monthly business sales	At least Rs. 2 lakh
Business experience	At least 12 months
Collateral	Not required
Loan disbursal time	Within 48 hours after loan approval

Note: All the above-mentioned interest rates, fees, and charges are subject to change and depend on the sole discretion of the bank, NBFC, and RBI. 

Machinery loans offered by Flexiloans can be used for various manufacturing business segments that include machinery and supplies, plastic works and processing tools, metal equipment and machinery, and industrial plants.