Do you know why Machinery Loans are essential to the growth of MSMEs? Well, let us explain it to you. Machinery Loans are credit facilities that enable businesses to borrow funds to purchase, lease, repair, or upgrade machinery. Be it a new enterprise, one in its initial stages, or one growing at a steady rate, top-of-the-line machinery, and equipment are the key to consistent productivity, better sales, and accelerated expansion of operations. Good quality machinery helps MSMEs stay competitive in the marketplace and meet peak season demand, ensuring more sales and profits.
In a nutshell, a loan for machinery purchase is the absolute tool for an MSME to buy or upgrade machinery without using the working capital. Machinery loan finance enables a positive inflow of cash thereby creating a business growth opportunity for the company.
However, financing the purchase of machinery can be challenging owing to other day-to-day expenses such as rent, vendor invoices, staff salaries, etc. Therefore, you can opt for a Machinery Loan to expedite growth.
How Machinery Loan helps MSMEs Growth?
1. It Helps Your Business Grow
Agriculture, Construction, Manufacturing, etc., are the sectors that largely rely on the latest technology and machine speed to run and maintain a smooth production process. Investing in upgraded machinery can help a faster production rate, high sales volume and overall business growth. The continuous updating and maintenance of existing machines are as crucial as purchasing the latest ones.
Financial institutions like Kinara Capital provide Machinery Loans for MSMEs to purchase machinery up to ₹30 lakhs, which can help add production capacity and improve the quality of goods delivered by the MSMEs, resulting in growth in terms of orders and revenue.
2. It Helps to Unlock Better Business Opportunities
Every company gets opportunities based on its potential. An enterprise with low-quality machinery cannot afford to produce high-quality products. Hence, MSMEs might need to limit their focus on low-budget orders as they don’t have enough funds to grow their business by purchasing advanced machinery. This situation can be solved by opting for a Machinery Loan that can help businesses easily and quickly access funds for buying the required updated machinery.
High-quality and powerful machinery can increase their potential and start getting more opportunities with high-budget orders. The production process will be conducted much quicker at a lower price with fast machinery.
3. It Helps in Availing of Tax Exemptions
The Indian Government provides tax advantages for various Business Loans, particularly for small enterprises. One such loan with tax benefits is a loan for machinery. i.e., you can deduct the interest you pay on the machinery loan from your taxes. However, the loan’s principal portion is not covered by the same rule. In any case, your total taxable income for the fiscal year will fall if you are servicing a machinery loan, reducing the actual tax owed.
4. Repair or Upgrade the Expensive Machinery
The intensive wear and tear that heavy-duty machines go through can damage their productivity or cause various flaws in the product output. Any machinery and equipment need to go through regular updates and repairs from time to time to work flawlessly. In some businesses, there might be some machinery that has not been used for a long time, so in this case, these machines also need good repair.
Small businesses cannot always afford to spend on machinery from their savings as they have many other expenses to manage daily to run their business smoothly. Hence, opting for a Machinery Loan is an excellent choice for MSMEs to repair or upgrade their machinery.
Grow your MSME with collateral-free business loans
Why is Machinery Loan the Ideal Option for MSMEs?
While many consider the idea of opting for a machinery loan not to be an ideal one. But be it a machinery loan without collateral or with collateral, it is an ideal option for the MSME to opt for funds to upgrade the machinery. Here are the reasons why:
- Investment in Modern Technology: A quick machinery loan helps MSMEs get access to easy funds. It allows a business to invest money in modern technology and equipment which is a major necessity in today’s world. It enhances the quality and quantity of production thereby giving the business a much-needed boost.
- Increase in Production Capacity: Investing money in modern equipment helps reduce human error. It also enhances the production capacity of a business through office automation.
- Ahead of the Competitors: A machinery loan is a perfect instrument that helps you acquire modern equipment and machinery which gives you a competitive edge over your competitors
- Enables Smooth Cashflow: Through a machinery loan, an MSME gets easy access to unlimited funds. It helps the business to acquire modern machinery without using the working capital. It reduces the financial burden on the business at the same time enables a smooth cash flow in the business.
- Exemptions from Tax: In many countries including India, MSMEs can enjoy a tax deduction on the interest of the machinery loan. So, a machinery loan helps in tax reduction as well.
6 Benefits of taking a Machinery Loan from Kinara Capital
The primary benefit of Machinery Loans is that it allows you to invest in expensive machinery and equipment without breaking the bank. Machinery used in production and other business activities is typically specialised and can be prohibitively expensive if you don’t plan ahead for the expense. Instead of compromising on other business activities or making a dent in your cash flows by spending out-of-pocket on machinery, you can opt for a Machinery Loan to purchase. Here are 6 advantages of obtaining unsecured machinery/equipment loans for MSME from Kinara:
- Collateral-free Business Loans: There is no requirement for security to get an MSME Loan from Kinara. With a flexible and digital application process, Kinara provides collateral-free MSME Loans with minimal documentation.
- Machinery Loan up to Rs 30 lakh: Kinara offers Machinery Loans for MSMEs ranging from Rs. 1 to 30 lakhs.
- Purchase New or Second-Hand Machinery: Kinara Capital does not limit MSMEs only to buy new machines. Kinara’s Machinery Loans can also help buy second-hand machinery and repay the amount in easy installments.
- Apply Online: Kinara has made the entire application process for Machinery Loan online so that you can do it quickly and conveniently.
- Loan in 24 Hrs: As Kinara’s online document submission speeds up the loan application procedure, the loan amount can get disbursed within 24-hours.
- Doorstep Customer Services: Kinara provides multi-lingual support to all customers with doorstep customer services in their preferred vernacular language to make the loan application process easier.
Eligibility Criteria for MSME loans
To opt for an MSME loan, every MSME has to go through an elaborate process of eligibility check. Even though every lender has their criteria for eligibility, here are some common requirements for the eligibility of machinery loans in India:
- The applicant’s age should range between 21 years to 65 years.
- The vintage of the business should be at least 2 years.
- The business should have an average yearly turnover of Rs 10 Lakhs.
Main Documents Required for Machinery Loan
To apply for a Machinery Loan from Kinara Capital, you will need the following documents:
- Applicant KYC (PAN required)
- Co-applicant KYC (PAN optional)
- Business KYC (PAN, Udyam etc.)
- Special Licence if applicable (e.g. Pollution NOC)
- Bank Statements of last 12 months
- Machine Details and Purchase Invoice
- Information about other Machines owned by the business
- GST Return Filings (optional)
What is Hypothecation?
The process of pledging an asset to secure a loan is known as hypothecation. Kinara Capital doesn’t require any additional assets as collateral to issue a loan. Instead, in the case of Kinara’s machinery loans, the machinery being purchased serves as a form of security. In this form of hypothecation, you must submit a machine purchase invoice and relevant documents when acquiring the loan. As long as you keep making your EMI payments on time till the loan is repaid, your ownership of the machinery will be completely secure.
Calculate your EMI using our Machinery Loan EMI Calculator
Conclusion
Every business needs to adopt the latest technologies and techniques to maintain its position in the marketplace. When a business doesn’t own machinery equipped with the latest technology, it will get fewer opportunities and have to take a step back from the front position in the line of competitors. Hence, MSME business owners have to change or upgrade their low-quality machinery and get a high-quality machine to produce the best in the industry products.
Equipment Financing or Machinery Loan is a credit facility specially designed for purchasing machinery or business equipment. It is an excellent option worth considering for MSMEs looking to scale up their operations. Equipment financing helps businesses in gaining additional productivity through the usage of upgraded equipment and machinery. With increased production or output, businesses can further their profits through sales and distribution.
For MSMEs, availing of Machinery Loans without property collateral is a cakewalk now with leading last-mile lenders like Kinara Capital offering easily accessible business loans. Small business entrepreneurs can obtain the loan amount with a fast and flexible application process. The documentation requirements are minimal, and the loan amount can get disbursed quickly in the applicant’s bank account within 24-hours. You can apply now with myKinara App, where it takes only 1-minute to check your loan eligibility. Call us at our toll-free number, 18001032683 from Monday to Friday, 9.00 am to 6 pm to talk to our in-house customer support team.
FAQs
1. How quickly can I get a Machinery loan from Kinara Capital? What is the maximum amount possible?
You can use myKinara App to start the application process and receive the Machinery Loan upto Rs. 30 lakhs disbursed into your bank account within 24-hours. We are also here to help you over the phone, or a representative from Kinara can visit you to help complete the process.
You can call us at our toll-free number, 18001032683 on Monday to Friday 9.00 am to 6 pm to talk to our in-house customer support team.
2. Can I use a Machinery loan for any business expense?
An Machinery Loan can only be used to acquire equipment or machinery needed for the operation of the business. For instance, a manufacturing business can utilise the loan amount for purchasing CNC machines. Machinery Loans from Kinara can be used to buy both new and second-hand machinery and equipment. However, no part of the loan amount can be allocated to other business-related expenses.
3. What are the steps for getting a Machinery Loan via myKinara app?
myKinara App can take you through the process of acquiring an Machinery Loan for your business with an easy 3-step process. First, check your eligibility in just 1-minute.
If you are eligible, you will be guided through these steps:
Step 1: Personal and Business KYC
Step 2: Income Verification (e.g. bank statements)
Step 3: Loan Sanctioning and Disbursement (with eSigning)
4. Will the machine I want to buy be hypothecated?
Yes, the machine is hypothecated for issuing a Machinery Loan. As long as you meet your EMI obligations, machine hypothecation will not occur. Machine purchase invoices and relevant documents will be required in exchange for the Machinery Loan.
5. Can MSMEs of all sizes access machinery loans?
Yes, MSMEs of all sizes can access Machinery loans.
6. What types of machinery can be financed through machinery loans?
Through a machinery loan, an organisation can buy any machinery or equipment required for the functioning of the business, like, manufacturing machinery, advanced technology, vehicles or any equipment required for the business.
7. Are collateral requirements common for machinery loans?
Yes, loans against machinery are usually secured loans and therefore require collaterals as a security against the loan. However, Kinara Capital provides unsecured machinery loans as well which does not require any collateral.
8. What support do lenders offer MSMEs throughout the machinery loan process?
While different lenders offer different support to MSMEs, Kinara Capital, however, provides multilingual support to all customers with doorstep customer services in their preferred vernacular language to make the loan application process easier. Kinara also provides flexible loans within 24 hours and the process is completely digital.
