Starting and running a business is a big investment. You need constant cash flow so that your work is done smoothly, without hampering production or services. However, not all business is running high on funds.

And if you are an entrepreneur wanting to start a business and don’t have your own funds to invest you don’t have to fret too much because there are lenders such as Tata Capital, an NBFC, who offer business loans up to Rs 50 lakh to help you in your endeavour. Business loans cover a wide variety of your needs including buying machinery, working capital, overdrafts and term loans. They offer a business loan with minimal formalities and quick disbursal and easy and convenient repayment options.

Who can take a machinery loan?

If this sounds like a good deal to you, here are a few things that you should know before you avail a business loan:

Under business loans category one of the important components is the machinery loan which relates to buying or leasing equipment and machinery for your business. You can avail a machinery loan specifically for buying new machinery. This could be over and above your term loan if any. Typically, you can avail a machinery loan for

  • New machinery purchase – you could be starting a new business such as construction business which would require excavators, wheel loaders, and backhoe loaders and you can buy these through a machinery loan
  • Old machinery replacement –replacing old machinery in your printing press with the latest machinery to improve the quality of printing along with other aspects,
  • Additional machinery purchase–you could be running a small machine tool operation and want to add a second machine to increase your production capacity
  • Existing machinery repair – your bore well rig could be breaking down frequently and you want to repair it thoroughly
  • Existing machinery upgrade – your tipper needs an upgrade to handle automatic tipping
  • Leasing or hiring equipment – you can opt for the loan without purchasing equipment or machinery but leasing or hiring it

In short, you can avail a machinery loan under business loans for almost any aspect affecting the business on account of machinery or equipment.Advantages of machinery loan

Since a machinery loan is a subset of a business loan, the same advantages accrue which include

  • Collateral and guarantor-free loan
  • 100% of machinery value as the loan amount
  • Flexible repayment options – Step Up, Step Down and Bullet EMIs suitable to match your cash flow requirements
  • Online access to the loan account to track various parameters
  • Interest rate based on your credentials as a business and your creditworthiness
  • Convenient tenure – 3 months to 60 months

As can be seen from the above there are many benefits that you can enjoy by taking the machinery loan under the business loan category.Check your eligibility to avail a Machinery loan

If you are already a customer of the lender by taking a term loan or any other type of business loan, it is quite easy to become eligible for a machinery loan. More broadly, you need to satisfy the following business loan conditions to become eligible

  • You should be between 25 and 65 years of age
  • Your unit should be profitable for the last 3 consecutive financial years
  • Your unit’s turnover should show an upward move
  • Your financial statements need CA’s certification
  • You need to submit an application for machinery loan
  • You need to submit relevant documents supporting the application for machinery loan – KYC documents, proof of business and ownership, ITR for last 3 years, bank statement for the last 6 months

Even if you are a new customer of the lender you could check out your eligibility as above and apply for the business loan.

Due diligence is a must

While availing the business loan or machinery loan is quite simple, the real issue is the repayment. You should take into consideration all aspects of your business and carefully evaluate all options before deciding to take a machinery loan. It is advisable for you to use the business loan EMI calculator which can help you in deciding your repayment plan. By varying the information fed into the business loan EMI calculator you can see for yourself how the EMI changes. From these outputs of the business loan EMI calculator you can arrive at the optimal EMI you would be comfortable with.

Thus, machinery loan as a part of business loans is a great opportunity for you to enhance your business prospects as you can utilize the funds from the business loan judiciously to improve the quality of your products and also productivity by buying new machinery, upgrading existing machinery, repairing old machinery or adding new machinery.