As one of the world’s largest economies, India brings in a competitive ecosystem for businesses to thrive. Easing financial access for young entrepreneurs, the country post-pandemic had been taking giant strides towards a successful future.
Rapidly progressing in providing loans for the manufacturing industry, the government had eased out the availability of machinery loans for young entrepreneurs. Before we delve further, let’s pledge to understand the basics. A machinery loan is an example of a financial scheme the government provides. It is a business loan that allows customers to lease, repair, and buy new machinery, amounting to a loan of up to 50 lakhs.
This loan increases the productivity of the company and the employees with guaranteed efficiency. Users get a flexible repayment option and can register for the said loans either online or offline.
Along with several benefits, these loans improve the quality of machines used in office or factory premises. Applying for these loans is painless, helping young entrepreneurs upgrade their business infrastructure. Taking a machinery loan is a crucial decision for a business involved in manufacturing, construction, or any other sector that relies on heavy or specialised equipment to improve productivity. To secure a machinery loan, you should consider the following factors:
Factors to Consider in Machinery Loans
If opting for such a loan, there are several factors one needs to consider to prevent hurdles in the future. Some of them are discussed below.
- Keeping Multiple Options: Comparing the loans provided by different lenders has proven beneficial to users. This can help decide which lender offers a lower interest rate and the option to choose the best machinery loan. Regarding making a loan application process, you may go for acquiring an unsecured business loan to invest in buying machinery and other equipment.
- Avoiding Risky Loan Offers: The internet has a vast majority of options for disbursing online loans. Certain websites offering ideas for taking a loan might appear to be legitimate. But often, these websites turn out to be hoaxes and hold gimmicks between the lines. Some lenders do not reveal the hidden costs while ensuring detailed paperwork. Being mindful not to fall for such traps might prove beneficial to the users and their businesses.
- Repaying Loans: One needs to assess one’s ability to repay the borrowed loan within the stipulated framework. It is important to remember the required amount and one’s income while lending. Taking a loan is crucial to running a business, although the user must pay back their loans on time and avoid unnecessary predicaments.
Eligibility Criteria for Taking a Machinery Loan
While applying for a machinery loan, a person needs to fit certain criteria to prove eligibility for borrowing such loans. Some of them are listed below.
- Business Financials: Your business should demonstrate profitability over the past few years, depending on the lender’s requirements. Submission of ITRs for the past 2-3 years is usually mandatory to prove your business’s financial health.
- Stability: The receiver must have authorised and stable business/credit facilities when applying for a business loan. This keeps a certificate of eligibility and authorisation provided by the bank, making the process easier and hassle-free.
- Receiver’s Age: An individual looking to apply for a machinery loan should be between 24 and 80 years old and have their business standing for at least 2-3 years. Users need to be a citizen of India to be eligible.
Documents Required for Machinery Loan
To apply for a machinery loan efficiently, an individual needs certain documents.
- Identity proof, such as a PAN or Aadhar card, is an important document to carry when making a valid application.
- Address proof such as passport and driver’s license or evidence of utility bills.
- Having an authorised document proving you own a business is also crucial. This includes bank statements and tax returns as well.
Conclusion
In conclusion, applying for a machinery loan is straightforward, provided you have the required documents to prove eligibility. While traditional banks have been the mainstay for business loans, NBFCs are emerging as a strong alternative.
Their eligibility criteria can be more flexible, particularly regarding collateral requirements. Additionally, NBFCs often boast faster application processes and disbursement times, allowing you to access funds quickly.
With changing market dynamics, it is important to note that the government of India has implemented several schemes. These loans are the backbone of a country’s infrastructural and technological development and are a blueprint or starting point for the growth of start-ups.
Nevertheless, before applying for a machinery loan, you should carefully evaluate the factors to ensure that your decision is good enough and supports your company’s strategic goals.
