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Machinery Loan – A Convenient Funding Option for Your Business’s Equipment Financing Needs

Equipment financing is an inevitable capital inclusion you need to make whether you are up for starting a new business or in the stage of expansion. Not to mention, top-of-the-line machinery installation can be a game changer for the business, giving it the much needed edge in market competition, inviting growth. It is, however, also followed by heavy capital investment for updated machinery establishment, and businesses often need additional funds to scale up their quality, efficiency, and capacity with new machinery installation.

It thus brings to the fore the need and utility of one of the most convenient external financing options, i.e., a machinery loan. Here’s an elaboration on aspects you need to know about the loan for suitable equipment financing.

Machinery Loan – Its Meaning and Working

A machinery loan is a secured funding option that allows you to avail fund against the a business asset provided as collateral. Some of the best financial institutions provide a high LTV of up to 75% for machinery financing, which indicates that you can avail as much as 75% of the asset’s market value as loan.

The financing allows businesses to purchase new as well as refurbished machinery while also funding for repair and installation related costs for new purchase or upgradation. With long tenures extending up to 7 years, these loans are also affordable to repay in easy EMIs.

Working of a machinery loan is similar to any other secured loan, whereby the borrower needs to provide an asset as collateral to avail funding against its market value. Once the asset is verified and eligibility confirmed, the financial institution approves the loan and disburses.

The borrower is required to make repayment of the loan through pre-determined EMIs. Ownership of the collateralised property remains with the lender as long as the borrower hasn’t repaid the loan liability in full. Once repaid, the business can obtain an NOC stating cleared dues and release of collateral, thus returning encumbrance-free ownership.

Eligibility and Document Requirements to Fulfil

You must meet the following standard requirements to avail machinery financing –

1. Age must not be less than 2 years.
2. Business must meet a minimum credit score requirement as per lender selected.
3. The business should be operating successfully for at least 3 years.
4. It should also be registered under either proprietorship, private, self-employed or public category.
5. The business should also be a profitable venture satisfactorily meeting industry standards.

Document requirements for machinery loan financing include –

a. Identity and address proofs of concerned business owners, partners, and directors.
b. Audited financial statements of the business for at least 3 years.
c. Proof of business establishment like registration certificates, Memorandum of Association, etc.
d. Planned growth projections of the business with document backing through sufficient financial and trend-based proofs.

Once you have met the eligibility and document requirements, you can proceed to apply for the loan with your selected lender. Access to the funds can bring about the following highlighted benefits.

- Enhanced productivity through new equipment installation and easy demand fulfilment for business growth.
- Consistent cash flow for the business through timely order fulfilment.
- Easy addressing of widespread equipment financing needs, from machinery purchase to repair and upgrade.

Proceed to apply for your machinery loan online to experience streamlined application process with fast-tracked approval and disbursal. Take care to arrange all the documents before applying to eliminate any last-minute hassles.


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by Hero FinCorp on 2021-05-06 04:19:24