Machinery Loan is a must for Micro, Small and Medium Enterprises (MSMEs) in India to upscale, increase productivity and stay ahead in the competition. However, applying for loan can be a nightmare for owners.

This blog will help you understand how to get machinery finance for your MSME and increase the probability of your application getting approved.

Why MSMEs Businesses Need Machinery Loans in India

Machinery is backbone for majority of MSMEs business in India, specially manufacturing, agriculture, textile industry. Any new machinery investment can give –

  • Increased production efficiency
  • Reduced operational costs
  • Improved product quality
  • Enhanced competitiveness

But, buying new machinery implies substantial capital investment which may be not easy for MSMEs to arrange. Here the machinery loans come into the picture.

Steps on How to Secure a Machinery Loan for Your MSME Business in India

Following is the step-by-step guide for you to secure machinery loans for your MSME business in India:

1. Assess Your Machinery Needs

    Before you apply for a loan, it is best to first assess your machinery requirement. You have to determine the type of machinery that you need, the total cost of the machinery that you are planning to purchase and how can it contribute to the growth of your business so as for you to calculate how much loan you really need.

    2. Check Your Eligibility

      Lenders have specific eligibility criteria for machinery loans. Common requirements include:

      • Business Vintage: Your business should be operational for at least 1-3 years.
      • Credit Score: A good credit score (usually 650 and above) is essential.
      • Annual Turnover: A minimum turnover requirement, typically starting from ₹50 lakhs.
      • Profitability: Your business should be profitable for at least the last 2-3 years.

      Ensure you meet these criteria before applying to avoid rejection.

      3. Prepare Necessary Documents

        Commonly required documents include:

        • KYC Documents: PAN card, Aadhar card, Passport, etc.
        • Business Proof: GST registration, Udyam registration, business license.
        • Financial Statements: Bank statements, balance sheets, profit & loss statements.
        • Quotations for Machinery: Detailed quotation or invoice for the machinery to be purchased.
        • Credit Report: Your business and personal credit reports.

        4. Choose the Right Lender

          Various lenders have different machinery loan products to offer with different rates of machine loan interest rates, loan amounts and tenures. Compare between:

          Banks: Both of public and private sector banks generally offer competitive interest rates though the latter may have stiffer terms of credit.

          NBFCs: Non-Banking Financial Companies (NBFCs) could provide loans at more lenient terms but marginally higher interest rates.

          Government Schemes: Schemes like the Credit Linked Capital Subsidy Scheme (CLCSS) provides subsidies and other benefits.

          Choosing the right lender can significantly affect your loan experience.

          5. Apply for the Loan

            Once you’ve chosen your lender, complete their machinery loan application form. Most lenders will allow you to do this online so it’s quick and easy. Just make sure that all of the necessary information is correct and everything has been filled in – otherwise this could hold up your application being processed.

            6. Submit the Application and Await Approval

              After you submit your application, the lender will go through your papers to decide if they will lend to you. Depending on how complete your application is and if it meets all the requirements it could take from 2 days – 2 weeks to get approved.

              7. Utilize the Loan Effectively

                After the loan is disbursed, see to it that the funds are put to use only for the machinery for which you had asked loan for. If you make proper use of the sanctioned amount, then it will not only help in the growth of your business but also create a good rapport with your lender. This also helps while applying for loan in future.

                Benefits of Securing a Machinery Loan for Your MSME

                • Increased Productivity: Modernizing equipment can greatly increase output, while reducing costs.
                • Better Quality Products: New machinery usually means better quality products – which can only do good things for your brand reputation.
                • Flexible Repayment: Options are offered by many lenders to repay the loan in a way that fits your business’s cash flow.
                • Tax Benefits: Interest paid on heavy equipment loans is often tax deductible, which helps you in managing additional savings from your taxable income.

                Final Words!

                Getting a machinery loan for your MSME Business in India is not that difficult. All you have to do is get along with Ruloans and we will help you out throughout the process to make sure you select nothing but best loan terms enabling your business growth as and when required whether you are looking forward to upgrading machinery or to expand the operations.

                Looking forward to avail machinery loan for new business, get started with Ruloans today and feel the difference.

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