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December 14, 2022

How can Machinery Loans help MSMEs grow their businesses?

    • December 14, 2022
    • By Team Kinara
    • < 1 mins read

    MSME Loan

    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 is 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.

    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.

    7 Common Types of Machinery Loans

    Financial institutions offer Machinery Loans to MSMEs from different sectors to purchase new or second-hand machinery. Each type of Machinery Loan has been designed to meet the needs of specific business domains.

    1. Construction Equipment Loan

    Every construction project needs the right machinery to complete the work on time efficiently. Construction Equipment Loan helps MSMEs from the construction sector to purchase essential machinery for building activities. Some of the machinery that comes under this sector are Construction Lifts, Sand Screening Machines, and Concrete Mixer Machines.

    2. Manufacturing Equipment Loan

    Manufacturing MSMEs have a major role to play in the Indian economy because they meet both domestic demand and cater to exports. MSMEs dealing with manufacturing goods can use manufacturing equipment loans to purchase tools and machines that boost the manufacturing capacity and quality of the products. Some of the manufacturing equipment are CNC machines, lather machines, metal cutting machinery, etc.

    3. Corporate Aviation

    MSMEs have a significant role to play in aerospace products manufacturing as they manufacture a huge per cent of the parts and subassemblies in the sector. Corporate Aviation Loans help small businesses to cover purchasing on-flight equipment and airport-related expenses. Pressurisation Systems, Auxiliary Power Units, AC/DC Generators, etc., are a few significant Corporate Aviation machineries.

    4. Automobiles and Allied Industries

    This type of Machinery Loan is apt for MSMEs engaged in the automobile industry, including those dealing in manufacturing or assembling automobile parts. Auto Chasing Machine, Automatic Milling Machine. Automobile Machine Tools, etc., are examples of machines used in this industry.

    5. IT and Office Equipment

    IT and Office Equipment loans help MSMEs in all sectors to purchase digital tools. MSME entrepreneurs can use the loan amount to buy Computers, Workstations, Servers, Gadgets, Projectors, POS machines like card readers and other electronic supplies.

    6. Electronics & Appliances

    MSME entrepreneurs can use a Machinery Loan to purchase electronics and appliances like Laminators, Binding Machines, Paper Trimmers, etc., for the efficient functioning of their business.

    7. Health Care

    Machines related to the healthcare industry can be costly, and purchasing them outright may interrupt other business tasks. Therefore, MSME business owners can count on Healthcare Equipment loans to buy expensive equipment. Some of the common medical equipment include ECG Machines, X-ray Machines, and Ventilators.

    Machinery is an integral part of a business to achieve difficult processes easily. But not every MSME entrepreneur can afford to buy high-end machinery due to limited funds. They may face several challenges in finding sufficient funding from various sources. This leads many MSMEs to apply for Machinery Loans, which help them acquire upgraded machinery to take their business to a higher level. Let’s dive deep into this point by exploring 4 reasons why MSMEs opt for Machinery Loans.

    MSMEs

    4 Reasons why MSMEs opt for Machinery Loans

    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 Asset Purchase 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 in order 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

    6 Benefits of taking a Machinery Loan/Asset Purchase Loan from Kinara Capital

    MSMEs

    The primary benefit of asset financing 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:

    1. 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.

    2. Machinery Loan up to Rs 30 lakh – Kinara offers Asset Purchase Loans for MSMEs ranging from Rs. 1 to 30 lakhs.

    3. Purchase New or Second-hand MachineryKinara Capital does not limit MSMEs only to buy new machines. Kinara’s Asset Purchase Loan can also help buy second-hand machinery and repay the amount in easy instalments.

    4. Apply Online – Kinara has made the entire application process for Machinery Loan online so that you can do it quickly and conveniently.

    5. 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.

    6. 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.

    Main Documents Required for Asset Purchase Loan

    To apply for an Asset Purchase 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 Asset Purchase 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.

    Machinery Loan EMI Calculator

    MSMEs

    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 or give a missed call at 080-68264454 to talk to our in-house customer support team.

    FAQs

    1. How quickly can I get an Asset Purchase loan from Kinara Capital? What is the maximum amount possible?

    You can use myKinara App to start the application process and receive the Asset Purchase 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 or give a missed call at 080-68264454 to talk to our in-house customer support team.

    2. Can I use an Asset Purchase loan for any business expense?

    An Asset Purchase 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. Asset Purchase 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 an Asset Purchase loan via myKinara app?

    myKinara App can take you through the process of acquiring an Asset Purchase 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 an Asset Purchase 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 Asset Purchase Loan.

    Check your eligibility in just 1-minute!

    Apply Now
    Written by
    Team Kinara
    • Tags
    • Machinery Loan
    • asset purchase loan
    • business loan
    • equipment financing
    • business owner
    • loan amount
    • funding your future

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