What is Machinery Loan?
Machinery loan is considered as a type of business loan that helps entrepreneurs, business owners and other business entities in acquiring finance to buy 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 production or output, results in higher profits from sale and distribution.
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Interest rates offered by banks and NBFCs for their machinery loan are attractive and shall vary depending on business requirements and customer’s profile. Let’s further discuss regarding some of the popular providers of machinery loans in India.
Machinery Loan: Eligibility Criteria
- Applicant must be between 21 years to 60 years to apply for machinery loan
- Business vintage to be minimum 3 years
- Business should be in profit in last 2 years
- Last 2 years’ ITR proof
- Machinery loan without security is not provided by any bank
- Indian citizen with no criminal record
- Applicant should not have defaulted on previous loan
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Benefits
- It helps to buy new equipment/machinery and is also term as equipment financing
- Used to refurbish, modify or change existing machinery/equipment
- To repair faulty machines or equipment or to upgrade
- To buy machinery loan for new business
- No collateral required by most of the lenders
- Unsecured loan for machinery and equipment by many lenders
- Flexible loan repayment options with easy EMIs
- Used as working capital loan or equipment finance
- Machinery loan for startup is an additional benefit for new businesses
How to Apply for Machinery Loan?
Machinery loan can be applied via online and offline procedures
Online Process
Step 1: Applicant need 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 documents submission, bank’s representative shall contact the applicant to proceed the loan procedure
Step 5: If the application and documents are approved, bank shall approve the loan within defined working days
Step 6: After loan approval, money shall be disbursed in the mentioned bank account of the applicant
Offline Process
- For offline loan processing, applicants are required to personally visit the bank or financial institution.
- 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, bank shall approve the loan and disburse the loan amount in the mentioned loan amount within defined working days
What documents are required for machinery loan application?
- KYC documents
- Latest passport-sized photographs
- Identity Proof: PAN Card, Aadhaar, passport, driving license, etc.
- Address Proof: Passport, Voter’s ID card, driving license, utility bills, etc.
- Proof of income
- Last 1 years’ bank statement
- Existing facility sanction letter
- Original and valid quotation of machine – To be purchased
- Additional documents, as required by the bank or lender
Machinery loan finance is also offered to small and new business, as well as to start-ups for the purchase of new equipment and to buy machinery items that shall help in the increase of the productivity of their business and eventually resulting 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
1. HDFC Bank
| Commercial Construction Equipment Finance – 2021 | |
| Avail 100% finance on | Commercial and construction equipment |
| HDFC’s IRR | Min. 8.71% – 15.52% |
| Processing fees | New Loan: up to 1% of the loan amount Used Loan: up to 1.5% of the 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 |
Note: The mentioned interest rates, fees and charges are subject to change and depends on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
2. Bajaj Finserv
| Machinery Loan – 2021 | |
| Interest Rate | 18% onwards |
| Loan amount | Up to Rs. 32 lakh |
| Collateral / Guarantor | Not required |
| Processing Fees | Up to 2% of the loan amount + taxes |
| Bounce charges | Up to Rs. 3000 |
| Penal interest | 2% per month |
| Document processing charges | Rs. 1449 + taxes |
Note: The mentioned interest rates, fees and charges are subject to change and depends on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
3. Lendingkart Finance
| Machinery Loan – 2021 | |
| Interest Rate | 1% – 2% per month |
| Loan Amount | From Rs. 50,000 – Rs. 1 crore |
| Processing Fees | 2% of the loan amount |
| Repayment Tenure | From 1 month – 1 year |
| Part-payment Charges | Nil |
| Pre-closure Charges | Nil |
Note: The mentioned interest rates, fees and charges are subject to change and depends on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
4. Dewan Housing Finance Corporation Limited (DHFL)
| Plant and Machinery Loan – 2021 | |
| Interest rate | Depends on applicant’s profile |
| Application fees | Rs. 5000 + applicable GST |
| Processing Fee | 2% of loan amount + GST |
| Repayment Tenure | Up to 6 years |
| Collateral | Industrial machinery |
| Collateral not required | For loan up to Rs. 2 crore |
| Pre-payment / part-payment charges | Nil |
Note: The mentioned interest rates, fees and charges are subject to change and depends on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
5. Bank of Maharashtra
| MSME Machinery/Equipment Scheme – 2021 | |
| Interest rate | Depends on business requirements |
| Loan amount | Up to Rs. 20 crore |
| Repayment Tenure | Maximum up to 7 years |
| Collateral | For amount up to Rs. 1 cr is not required |
| Margin | Min. 25% |
Note: The mentioned interest rates, fees and charges are subject to change and depends on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
6. Electronica Finance Ltd. (EFL)
| Machine Loans – 2021 | |
| Interest rate | Depends on business requirements |
| Loan amount | Up to 75% of the value of equipment of Rs. 3 crore (whichever is lower) |
| Repayment Tenure | Up to 5 years |
| Collateral | Not required |
| Loan disbursement | Within 3 days |
| Credit score | Above 600 |
Note: The mentioned interest rates, fees and charges are subject to change and depends on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
Devices and equipment that can be purchased using machinery loan include blow and injection molding, Computerized Numerical Control (CNC), Vertical Milling Center (VMC), and embroidery, printing and wood cutting machines.
7. Ziploan
| Machinery Loans – 2021 | |
| Interest rate | Depends on business requirements |
| Loan amount | From Rs. 1 lakh – Rs. 5 lakh |
| Repayment tenure | From 12 months – 24 months |
| Processing Fees | 3% of the loan amount |
| Foreclosure charges | Nil |
| Collateral | Not required |
Note: The mentioned interest rates, fees and charges are subject to change and depends on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
8. Flexiloans
| Machinery Loans – 2021 | |
| Interest Rate | Depends on business requirements |
| Minimum Age Criteria | 21 years |
| Monthly business turnover | At least Rs. 2 lakh |
| Business experience | At least 12 months |
| Collateral | Not required |
| Loan disbursal time | Within 48 hours after loan approval |
Note: The mentioned interest rates, fees and charges are subject to change and depends on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
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 machineries and industrial plants.
FAQs on Machinery loan
Q. Is it really possible to get machinery loan without collateral security?
Ans. Yes, you can avail machinery loan without collateral security from various NBFCs, Small Finance Banks and Micro Finance Companies. Some of the leading financial institutions to offer Machinery loan without security are Bajaj Finerv, Lendingkart, Ziploan, Flexiloans, etc. The interest rate offered by these entities shall vary and depend on the applicant’s profile and nature of business.
Q. Is there any subsidy on machinery loan?
Ans. There are a few Government initiated schemes that offer subsidies on machinery loans that include the Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation and Small Industries Development Bank of India (SIDBI).
