Whether it’s a new business, one that is in its initial stage of development, or one that is existing business/ growing at a steady rate, advanced machinery and equipment are the key to consistent productivity and better sales. Not only do they help in reducing the need for manpower but also help in meeting the peak season demand and this ensures greater sales and profits. Enterprises whose working capital is insufficient for equipment financing can opt for a machinery loan.
What is a Machinery Loan?
A machinery loan is a varied type of business loan that is availed for the purpose of financing the purchase of new equipment or machinery for a business.
Modern business tools and state of state-of-the-art the art equipment are a great way to expand your business but finding the right financing for them can be difficult at times.
A machinery loan makes equipment financing easy and removes any roadblocks in achieving business success.
Maximum Loan Amount- Under machinery loan, it offers a wide range of customized loan options ranging from Rs.5 lakh to Rs.75 lakh to meet machinery requirements.
Loan Tenure – A machinery loan can be obtained for a tenure that ranges from 12 months (one year) to 36 (three years).
No Collateral Needed – Getting such a loan comes with no collateral facility, which means you will not be required to provide collateral.
Easily Qualifying Eligibility – When it comes to machinery loans, the eligibility criteria are easier as compared to other loans and it increases your chances of qualification.
Small Business Loan
When planning for a small business loan, as a borrower you would be more concerned about the interest cost and monthly EMIs that you will be paying for a specified tenure period.
Want to know, what factors affect interest rates for small business loans. Here’s the list of critical factors that influence interest rates are as follows:
Credit Score: Usually, lenders use your credit score to assess your repayment capacity. A credit score is a 3-digit numerical number that ranges from minimum 300 to maximum 900 that defines your ability to repay the loan based on your past credit performance/history.
However, there are several benefits associated with a higher credit score which should of 750 or above are considered to be good score by lenders. In case you have a bad or poor credit score, then the interest rate for your business loan will be higher and lenders consider your profile to be a riskier customer as well as it reduces the loan approval chances. Always make sure that you check your credit score before applying for business loan in India.
Financial Record: Another crucial factor that impacts on your business loan application is, lack of a good financial record. If you have a long and good financial record, then the interest rates that you will get from your lender will be comparatively low. This is because your lender will view your past transactions with your previous transactions to check your creditworthiness.
Suppose if you have a positive and long credit history, the lender will consider you to be reliable and will lend to you at a lower interest rate. If you have a bad credit history, the interest rate will be higher as you will be viewed as a risky customer.
Loan Amount: A maximum business loan amount entails a lower interest rate than a small business loan amount. So, it is better to take a large loan for your business apart from a small loan as the interest rates will according to your selected loan amount.