Small Business

Follow Simple Steps For Application Process for a Machinery Loan

Follow Simple Steps For Application Process for a Machinery Loan

Irrespective of the type of business you have or the type of goods you manufacture, machinery is of crucial importance.

With the advances in technology, it has become important to invest in new machinery from time to time.

However, machinery does not come cheap and no business owner has enough cash flow or emergency funds to spend on the purchase of new machinery. This is where a machinery loan can make all the difference.

Financial institutions in the country offer a loan for the purchase of new and refurbished machinery and the loan is available at low interest rate.

Once you decide the machinery you want to buy, you need to research the market for lenders who will help you with the purchase.

Every lender will have varying eligibility criteria and you need to compare the same online. You can be a sole proprietor, partnership, private limited company or a corporation and you will be eligible for the loan.

However, lenders might have specific requirements with regard to the turnover and profit of the business.

You need to show that the business is profit generating and has been in existence for a long period of time. You can compare the eligibility criteria online and then make an application.

In order to make an application, you will be required to make a down payment. No lender will offer a loan for the entire cost of the machinery and you will be required to make a down payment.

You can make the minimum amount of down payment required by the lender and if you have excess funds on hand, you can choose to make a higher down payment.

Once you make the down payment, you can fill up the application form and submit relevant documents.

You will have to provide KYC of the partners, proof of existence of the business, ITR for the last three years, bank statements for the last six months, invoice of the machinery, proof of down payment and photographs of the applicants.

The loan application will be processed in 10 to 15 working days. If you have a good credit score, the loan application will be approved in no time.

You can use the EMI calculator to get an estimate of the EMI payable on the loan. It helps to be aware of the amount of monthly outflows you will have to manage each month. Keep the cash flows in mind before you agree on an EMI amount.

Do not rush this process because if you default in the EMI payment, it can hurt your credit score. A machinery loan is the best way of bringing new machinery to your business.

No matter where you reside or what business you are in, the loan will help serve your purpose.

Understand the terms and conditions of the loan thoroughly before you sign on the dotted line and make the right borrowing decision.

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