Machinery / Equipment Finance
In India, Lots of financial institutions (including SIDBI) extend funding assistance for acquiring machines or equipment for a business. Such loans are secured by hypothecation of the machinery being financed.
- The Machinery / Equipment Finance is depend upon the usage criteria i.e. whether it is standard machine readily re-usable if repossessed or customize machine which is relevant to the business of the borrower only
- For a standard category machine the funding is available at a margin of 25%-30% whereas for a customized machine it is decided after thorough analysis of its life & usability but margin requirements are higher than the standard machine.
- The eligibility criteria is somewhat similar to normal funding proposal like cash flow generation capacity after installation of new machine, life of machine & residual value.
- The funding tenure can be up to 7 years & refinancing options available after the initial period based on the residual value & usage capacity.
FAQ -Machinery & Finance
What is the Eligibility Criteria & Documents Required ?
- you should be between 25 to 60 years of age
- business should be at least 2 years old
- Financial Documents of last 2 years
- KYC of Promoters
- Bank Statement
What is the Maximum Amount can be borrowed ?
For Machinery/ Equipment Loan, Based on the quantum of investment generally financial institutions funds up to 75% to 80% of machines value.
What is the Maximum Tenure of Repayment ?
The Maximum Tenure can be up to 7 years.
What is the Interest Rate ?
Rate of Interest varied on type of machines, resale value & quantum of funding sought on total investment, in broader sense it remains within prime lending rates of Banks/ Financial Institutions as announced by RBI.
Can we raise funding for Used Machines/ Equipment’s ?
yes, used machines are also eligible provided they have sufficient resale value after finance.
Do i need to give collateral ?
No, Such loans are secured by hypothecation of the machinery being financed.