Top 5 Tips on Availing a Lucrative Machinery Loan for MSME

June 17, 2022

By Team Kinara

< 1 mins read

MSME Loan

What is a Machinery Loan?

Most of the business sector requires machines for their production to run smoothly. A business loan helps MSMEs to acquire loans for machinery purchase for their respective business ventures, not only is the loan used to buy new equipment but can be used to upgrade the old ones or to repair the existing machinery.

As technology changes, businesses have to improvise their methods and adapt to changes so that the productivity increases as well as the profits. It is expensive to buy machinery and not all can afford it. With machinery loans it helps businesses to achieve success by removing any roadblocks. In this blog MSMEs learn how to avail a machinery loan and its impact on overall business development.

Top 5 Tips on Availing a Lucrative Machinery Loan for MSME

1. Credit Score to be Maintained

The repayment ability is visible based on the credit score. To sanction a MSME machinery loan NBFCs or banks often look at a company's credit score, therefore maintaining a good credit score by completing the payments on time and credit limit to be kept in mind while spending. This can also be maintained by checking a business's eligibility before applying for loans and by monitoring their ratio of utilization. Utilization ratio shows the usage of an organisation's credit against their credit limit.

2. Plan and Usage According to Cash Flow

Sanction of loan is based on an MSME’s cash flow thereby having a clear plan on how to utilise funds is important. Prioritising needs and having a systematic approach helps small business owners to access the current production and operational needs and which equipment is needed to achieve that. This boosts a company's balance sheet as investors evaluate a business’s growth and profitability.

3. Advantages of Being a Pre-Approved Customer

In case there is a pre-approved customer, the process of applying for a loan is easier as the basic details of the customer are known. It cuts down the time required to apply for machine loans for new small businesses. Only the additional details would be required to fill.

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4. Bolsters Productivity and Quality

By availing loan on machinery, an MSME can upgrade their equipment to the latest technology which reduces the turnaround time and helps them grow their business. Followed by offering better quality products to customers and thereby increasing the reputation of the enterprise.

5. Organise on Repayment of Loan

Planning the repayment method which helps MSME entrepreneurs as well as the lending organisation. Calculate additional expenses which can give a clear picture of other financial obligations that a small business owner might have. Before applying for a loan, understand the EMI’s and interest rate by using an EMI calculator available online, that gives an accurate result avoiding the errors if computed by hand.

Collateral-Free Business Loans for an Asset Purchase

Kinara Capital offers asset purchase loans to grow MSME businesses. Small business owners can use these funds to invest in new or second-hand machinery which improves their productivity and quality of the product increasing the business profitability. This also helps the MSME entrepreneurs in reducing the turnaround time along with delivering more services and increasing sales.

How to Apply for an Asset Purchase Loan with Kinara?

With myKinara app available on google play store and on the website, MSME entrepreneurs can apply for fast and flexible loans. Small business owners check their loan eligibility in just a minute. Or call on the toll-free number 1800-103-2683 to avail doorstep services with field officers assisting potential customers complete the requirements.

Main Documents Required for Asset Purchase Loan

In order to apply for an asset purchase loan, the following documents are required:

Applicant KYC (PAN required)
Co-applicant KYC (PAN optional)
Business KYC (PAN, Udyam etc.)
Special Licence (e.g. Pollution NOC)
Last 12 months of Bank Statements
GST Return Filings (optional)

Conclusion

In order to have a profitable business, one must have the right foundation which starts by purchasing the perfect assets for smooth business operations and profitability. With the help of unsecured business loans MSMEs need not settle for less and can purchase the best equipment for their business. Acquiring a machinery loan is an added advantage for SME businesses to run smoothly. With the myKinara application, small businesses can complete the process and receive disbursement of machinery loan for up to Rs. 30 lakhs within 24 hours.