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How to apply for a Machinery Loan?

  • 21-Mar-2022
How to apply for a Machinery Loan?

What is a Machinery loan?           

A Machinery loan is a loan that helps Business owners, administrative, and other business individuals in attaining finance to purchase equipment and machinery for several business purposes. Such a loan is also known as a business loan

The Online process for Machinery loan: 

Before applying for a machinery loan, the borrower must have to choose and compare the banks or lenders that offered the best deal.  

  • Step 1: The borrower must have to visit the official website of the lender, and fill out all the necessary details in the loan application form online.
  • Step 2: Attach all the required documents with Passport-sized photographs and proofs.
  • Step 3: Bank representatives will audit your application form and call you for further loan procedures.
  • Step 4: Once your application gets approved, you will be dispensing a sanction letter to your respective e-mail address.
  • Step 5: After the approval of the loan, the loan amount will be disbursed in your Bank account.

Offline process for Machinery loan: 

  • The borrower has to personally visit the Banks or financial institutions.
  • An applicant should carry all the necessary documents for a machinery loan with a correctly filled application form.
  • Once you submit all the required documents and application forms, the bank representative will proceed with the further loan process.
  • After the approval of documents, Banks will disburse the loan amount in your Bank account within a few days.

Benefits of Machinery loan  

  • It helps to purchase new machinery and equipment.
  • It is a security or collateral-free loan from various financial institutions or NBFCs.
  • It has a flexible loan payback option with suitable EMIs.
  • To upgrade equipment or to repair damaged machines.
  • It is used as equipment finance or working capital loan.
  • A Machinery loan for a startup is an additional benefit for the executive.
  • It is used to modify, recondition, or change existing equipment or machinery.
  • To buy machinery loans for a new or existing business.

Machinery Loan EMI Calculator 

A machinery loan EMI calculator is an online tool that helps in evaluating the monthly a006Dount that an applicant has to pay back. You can evaluate the amount by using an EMI calculator. The only thing that you have to do is enter the interest rate, loan amount, and loan tenure (in no. of months). 

Eligibility criteria for Machinery loan 

Eligibility criteria depend on several factors such as business/sales turnover, age of an applicant, total Work experience, creditworthiness and repayment history, etc. 

For self-employed individuals: 

  • The Age criteria of a self-employed individual are in between 24 to 65 years of age.
  • Both private and public companies are eligible for machinery loans.
  • The Balance sheet of a company must be audited by a registered Chartered Accountant.
  • Income tax should be filled for at least for the last 1 year.
  • The Business record must be in profit for last 3 years.

The Interest rate for Machinery loan 

Interest rate 5.50% onwards 
Loan tenure  Up to 10years 
Loan amount Up to Rs. 100 crores 
Without security Up to Rs. 3 crores 

Compare Interest rates and processing fees by Top Banks in India 

Bank name  Rate of interest Processing fee 
Union Bank of India 8.80% 1% 
UCO Bank 8.70% 1% 
State Bank of India 8.45% 1% 
Indian Bank 8.75% 1% 
Punjab National Bank 8.50% 1% 
Indian Overseas Bank 8.45% 1% 
Small Industries Development Bank of India (SIDBI) 8.00% 1% 
Hero FinCorp Limited 12.00% 1% 
Bank of Baroda 9.35% 1% 
Canara Bank 8.00% 1% 
Bank Of Maharashtra 9.00% 1% 
Punjab & Sind Bank 9.00% 1% 
United Bank of India 8.50% 1% 
Bank of India 8.50% 1% 
Tata Capital Financial Services Limited  12.00% 4% 
Central Bank of India 8.50% 1% 

Documents required for Machinery loan 

For individual: 

  • 2 passport-sized photographs
  • Aadhar Card and Passport
  • Copy of PAN Card
  • Permanent address proof and also required if rented
  • ITR with computation of income of last 3 years form-16 (if file)
  • Sanction letter and loan schedule (if running)
  • Appointment letter and last 3 months' salary slips
  • Bank statement of salary account of last 1 year.
  • Order in hand
  • A Cheque for processing fee in Favour of bank.
  • Complete property documentation with MAP + ATS and Chain
  • Machine quotation

Therefore, knowing the facts financeseva allows you to choose and compare the best deals for machinery loan. 

Also read: - Machinery Loan for New Business

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