Machinery is an invaluable tool for the effective functioning of every business, including Micro, Small and Medium Enterprises (MSMEs). Cutting-edge machinery can help businesses to streamline processes, speed up production, improve efficiency and reduce costs. By using machinery, small businesses can produce more products in less time and with fewer resources. This is especially true for businesses in the manufacturing sector, where the use of machines has become indispensable. Upgraded machinery also helps MSMEs to stay competitive and remain profitable in an ever-changing market.
However, most machines are costly, and it might be too expensive for MSMEs to buy all the machines with a number of other business costs to take care of. Fortunately, there is an option to seek a loan for machinery purchase to support the funding needs of a business. Deciding whether a loan for machinery purchase is right for a company would depend on many factors. However, machine financing may be a good choice if you depend on expensive machines to run your business.
What is Machinery Loan?
Machinery is essential for operating a business. Businesses need machinery to produce products, provide services, and complete other tasks. With the right machinery, businesses can increase efficiency, reduce costs, and improve their overall operations. Machinery can help businesses produce higher-quality products. For example, automated machines can be programmed to produce items with more accuracy and precision. This can help businesses meet customer demands more efficiently. However, small businesses may find it difficult to acquire cutting-edge equipment and machinery to remain competitive due to financial constraints. Hence, a loan for machinery purchase can come in handy.
Machinery loan is generally taken by businesses to purchase new or second-hand machinery and equipment that are used to facilitate production. It is essential to help businesses stay ahead of the competition by being able to purchase the latest technology, keep up with the changing trends, and being able to produce the best quality goods. Without machinery loans, businesses would not have enough funds to purchase and maintain the latest machinery, which could lead to a decrease in production and a decrease in profits. This is especially true for small businesses. For micro, small, and medium enterprises, machinery loan for MSME is an extremely important tool to stay competitive by bringing in the latest machinery to optimize output.
Types of Machinery Loans or Equipment Loan
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.
Construction Equipment
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.
Manufacturing Equipment
MSMEs that work manufacturing goods can use machinery loans to purchase tools and machines that boost their production capacity and quality of the products. Some of the manufacturing equipment are CNC machines, lather machines, metal cutting machinery, etc.
Corporate Aviation
MSMEs have a significant role to play in aerospace products manufacturing as they manufacture a huge portion 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 machinery.
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.
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.
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.
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.
Grow your MSME with collateral-free business loans
Benefits of Loan for Machinery Purchase
Raise the Potential Revenues of a Business
Machinery loans can be a great way to raise the potential revenues of a business. By investing in the latest and greatest machinery and equipment, businesses can increase their efficiency and productivity, leading to increased revenue. This is especially true in industries that rely heavily on machinery and technology, such as manufacturing and construction. Getting additional machinery could help MSME owners complete and deliver orders faster. They might also be able to take on more clients.
Investing in new machinery is not only beneficial for increasing potential revenues, but it can also help a business cut costs. By investing in more efficient machines, businesses are able to reduce their overhead costs and pass those savings on to customers. This can lead to increased sales and higher profits.
Increase in Productivity and Quality
Machinery Loans can help businesses stay competitive and increase efficiency by allowing them to purchase the necessary tools and equipment to keep up with industry trends. This includes machines, tools and software that can help automate processes and make them more efficient. For example, businesses can purchase automated machinery that can help speed up production and reduce errors. By investing in the latest technology, businesses can improve their quality standards and increase productivity.
With a machinery loan, businesses can also invest in training and education for their employees. This can help them stay updated with the latest equipment and techniques, which can help them produce higher-quality products and services. Additionally, businesses can use the loan to invest in new infrastructure and technologies, such as automation, that can help improve the production process and boost their efficiency.
Used for Machinery Repairs
A Machinery Loan can be used for repairs and upgrades to existing machinery. Businesses may need to repair machinery due to age, wear and tear, or other unforeseen circumstances like sudden damages. Hence, a machinery loan helps replace outdated or obsolete models with new or updated second-hand machinery, which reduces maintenance costs and increases productivity. Many businesses may not have the cash on hand to make a large machinery purchase.
Therefore, having access to a Machinery Loan to cover the cost of repairs can be a lifesaver when the business needs to keep its machinery running. It allows businesses to keep their machinery in optimal condition without having to bear the full cost upfront. This can help businesses save money in the long run while ensuring that their machinery remains reliable and productive.
Funds Get Available Quickly
The process of obtaining a machinery loan is simple and the approval and disbursal of machinery loans are not at all time-consuming. Businesses must first identify the machinery they need and then submit an application to their chosen lender. The lender will assess the application and decide whether or not to approve the loan. Once approved, the funds are typically available quickly, allowing businesses to purchase the necessary equipment and machinery right away. This helps businesses save time and money since they don’t need to wait days, weeks and months to submit extensive documents to secure financing or spend additional money to purchase expensive machinery.
Buying upgraded machinery at the right time can complete the orders quickly, which helps MSMEs to remain competitive and stay ahead of their competition. At Kinara, MSMEs can apply directly on the website or myKinara App to get the loan quickly by submitting minimal documents.
Tax Benefits
MSMEs can benefit from tax benefits when they obtain machinery loans to purchase equipment and machinery. Tax deductions can be claimed on the interest paid on a loan for a specific period of time. This can help MSMEs save on their tax bill and increase their profitability. The tax benefits are only available for machinery loans that are used for business purposes and not for any personal use. The loan should also be taken out from a recognised financial institution like Kinara Capital.
How to Get Machinery Loan – Online and Offline
While some traditional lenders still require you to apply for a machinery loan through an offline process, using a form and hard copies of documentation, new-age lenders like Kinara Capital, an RBI-registered fintech NBFC, have a seamless online process to apply for a machinery loan. Whether you are looking for a heavy machinery loan or just want to invest in some additional equipment, there is a simple 3-step application process, followed by approval and disbursement to get your loan. If you meet our MSME loan eligibility criteria, you can get your machinery loan without collateral in just 24 hours. Here’s a step-by-step explanation of Kinara’s loan process:
Step 1: Quick Eligibility Check
In less than a minute, you can find out if your business qualifies for the loan! You can access the eligibility check in seven different languages available on our website for a seamless experience.
Step 2: Screening
The business and the entrepreneur are screened following Kinara’s MSME loan criteria by validating the KYC and registration details.
Step 3: Document Upload
You need to submit your KYC, applicant, co-applicant, business KYC (ID and address proof), applicant PAN Card, business registration document, last 12 months’ bank statements, GST registration (if available), and business vintage proof.
Once you complete the process, your loan application will be reviewed, and if everything is in place, the Kinara officers will approve your MSME loan. Once your loan is approved, you will receive the loan amount directly in your account within 24 hours.
Why does Kinara Capital stand ahead of other financial institutions?
- Kinara Capital believes in transforming lives, livelihoods, and local economies by providing fast and flexible loans within 24-hours.
- MSMEs aren’t required to submit any property collateral to obtain myKinara Machinery Loans.
- Kinara offers Unsecured Business Loans to purchase new or second-hand machinery or other assets to help MSMEs expand their business.
- The loan is given for a period between 12-60 months.
- The rate of interest starts at 24% per annum on a reducing rate basis.
- Small businesses can apply for a loan amount from Rs. 1 lakh to 30 lakhs for working capital, Machinery and other business expansion needs.
- Kinara also provides multilingual support to all customers with doorstep customer services in their preferred vernacular language to make the loan application process easier.
How to Get the Loan for Machinery Purchase at Kinara Capital?
The myKinara loan application process begins with a 1-minute eligibility test. This ensures the basic loan eligibility of whether the customer passes the basic criteria for availing of the loan. If the MSME owner passes the test, he or she can continue with the loan application.
The second step consists of verifying the applicants & co-applicants information. There are multiple options if certain documents are unavailable. Below mentioned are the most requested documents:
- PAN Card
- Aadhaar Card
- Address proof
- Business KYC (registration type),
- Udyam registration.
- GST verification
- Bank account with 12 months statement (applicant, co-applicant and business)
- Machinery details (only for the manufacturing sector)
- Property (no documents required, only information)
After that, it is mostly about fulfilling loan formalities such as signatures on documents, and nominee and loan sanction details. Currently, business owners can check their eligibility on their own by filling in their details on the website in just 1 minute. Then a loan officer will contact them if they have passed the eligibility check. The loan officer will then follow up and process the rest of the application.
What is Machine Hypothecation?
Hypothecation is the process of pledging assets to secure a Machinery Loan. Kinara Capital doesn’t require any additional assets as collateral to issue the Machinery 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, MSMEs must submit a machine purchase invoice and relevant documents when acquiring the loan. As long as the MSME entrepreneurs keep making the EMI payments on time till the loan is repaid, their ownership of the machinery will be completely secure.
Conclusion
Machinery loans are an important source of capital for MSMEs as it can provide access to the capital needed to purchase expensive machinery. By taking out a loan, businesses can spread the cost of their investment over a period of time, making it more feasible for them to acquire the machinery they need. This loan can also be used to purchase new equipment or upgrade existing equipment and can help MSMEs to increase their production capacity, reduce operational costs, and improve their profitability. There are numerous NBFCs that can provide small business loans to MSMEs, but they should certainly choose one of the trusted fintech institutions like Kinara Capital.
Kinara Capital is an RBI Registered Systemically Important NBFC firm in India that can provide Collateral-free Business Loans within 24-hours. This socially responsible fintech company is dedicated to servicing the severely underserved MSME industry in India with easy access to formal credit. Kinara provides Unsecured Business Loans to small business entrepreneurs across 6 states and a union territory through its network of 133 branches. Till now, Kinara has disbursed MSME loans worth INR 6300+ crores to date. With its branches across 4500+ pin codes, Kinara provides doorstep services in the vernacular.
To get myKinara business loans for your small business, check your loan eligibility in 1-minute on Kinara’s official website or by downloading myKinara App from the Google Play Store. Clearing the eligibility criteria, you can upload the minimum required documents on the fully secured portal. Once the verification of the documents is completed, the loan amount gets disbursed to the applicant’s bank account. For further queries, get contacted by the customer support team for all the answers in your preferred vernacular language.
FAQs
1. What are the benefits of taking out a Machinery Loan from Kinara Capital?
myKinara Machinery Loans provide businesses with the necessary funds to purchase equipment and machinery that can help increase productivity and efficiency. They also often come with competitive interest rates and repayment terms.
2. How long does it take to get approved for a machinery loan?
The application process of Kinara Capital is easy and fast. MSMEs can apply online and get the money disbursed in their bank account within 24-hours.
3. What is the maximum amount I can borrow for a machinery loan?
The maximum amount you can borrow for a machinery loan is based on the applicant’s income. You can borrow myKinara Machinery Loans from Rs. 1 Lakh to 30 Lakh without submitting any property collateral.
4. What is the repayment period for a machinery loan?
The repayment period for a machinery loan typically ranges from 1 to 5 years.
5. 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.
6. How do I calculate the EMI amount on the machinery loan?
The easiest way to do it is by using an online EMI calculator. Just enter the loan amount, interest rate, and tenure and you can see the EMI amount you will have to pay.
7. Is a machinery loan secured or unsecured?
It depends on the lender. In Kinara Capital’s case, machinery loans are secured against the machinery purchased through hypothecation.
8. Can Business Loans be Used to Purchase Machinery?
Yes, business loans can be used to buy machinery, but only if they are categorized as machinery or equipment loans.
9. Can machinery purchase loans be tailored to my business’s specific needs?
Yes, machinery purchase loans can be customized for business needs. It depends on the type and valuation of the machinery you need. The basic regulations surrounding loan approval and repayment usually remain unchanged.
10. Are there tax benefits for using machinery purchase loans?
The interest payment you make towards your machinery purchase loan is eligible for tax deduction.
