How Can A Term Loan for Machinery Benefit You?

Finance

In case your company is a part of a manufacturing industry, there are chances when you are in urgent need of finance; and you may want to purchase new machinery or upgrade the existing ones.  During such times, a standard business loan serves as good option, but a more customised loan scheme would offer more features & benefits.

Several financing companies provide loans specifically meant for machine and equipment purchase. The whole idea of offering these loans is to help business owners grow and meet their short & long term business objectives.

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Buy it, instead of leasing

Your ongoing business operations may require a specific type of machinery for a longer duration, possibly for a decade or two. Leasing machinery for the entire duration turns out to be quite expensive. Moreover, nothing can guarantee the life of the machinery being leased. On the other hand, a new machine has a longer life and will not require replacement or any kind of repairs in the near future. In such cases, opting for a term loan for machinery would be a feasible option and an inexpensive solution.

Benefits of a machine loan

Lenders facilitate machine and equipment financing for multiple industries, from Indian as well as global suppliers. Some of the industries that are served include, but are not limited to, printing, plastic, packaging, wood works, textile, solar and pharmaceutical.

The tenure of the loan is generally 4 to 5 years; which means you get sufficient amount of time to repay the loan. One can opt for an amount that ranges anywhere between 5 lakh to 5 crore.

Interestingly, most of the financing institutions ensure that you get the loan amount within seven days. All you need to do is simply submit the necessary documents and maintain a good credit score.

Are you eligible for a machine loan?

Financial institutions have their eligibility criteria in place based upon which the loan is either approved or disapproved. First, you need to be at least 21 years of age to be able to acquire the loan. Most of the institutions even have an upper age limit of 60 years.

Apart from the age, the lender would also be interested in understanding the nature of the business of your company. All operations carried out within the company should be legal and authorised. Finally, the stability of the business in the recent years is another factor taken into consideration by the lenders when assessing your loan application.

What are the documents needed?

The lender would want to have complete details of the machinery or the equipment you intend to buy; right from its price to the supplier you plan to buy it from. Next is the ‘Know Your Customer’ (KYC) proof, which will include a PAN card copy of yourself and the guarantor, address proof of the residence, business address proof, business registration copy, six months bank statement and an audited balance sheet of the last three years. Once you have submitted the necessary documents, you are half-way there.