How to acquire a Loan for a Machinery in India?

Loan for Machinery in India

When it comes to setting up an enterprise, there are a lot of prerequisites that you need to consider. Depending on the type of business, one of the most essential requirements after capital is machinery. At times, the machinery can be quite expensive. It may not fit in the budget. It has been set for the establishment of the project. So, in such cases, a machinery loan is an exemplary solution. Getting a machinery loan in India has to meet several criteria. There are different kinds as per requirements.

What is Machinery Loan?

A Machinery loan is a loan to purchase industrial machinery. It is generally granted to SMEs. The loan requirements will also differ from borrower to borrower. The range varies from about 2 lakhs to any amount you need. And tenure can also vary accordingly. It can be from 5 years to 7 or 8 years. It differs as per the customer. Machinery loan interest rate in India is generally moderate as well. Since it is the private institutions that render these loans.

How to get a loan for machinery in India?

Before moving on to the application process, you need to make sure that you are eligible. There are certain criteria that you need to match.

These criteria will differ from case to case. So shall the process and document requirements. Thus to understand the process, there are a few pointers given below.

1. Know your requirement

The process to follow depends on the requirement of the firm. This includes, what kind of machinery is purchased. Whether the machine is to be repaired or replaced or any other requirement. Thus, the loan amount and the tenure period will depend on these requisites.

2. Understand the eligibility criteria

After knowing the requirements, the next thing that matters is the eligibility for acquiring a loan for machinery. So, as mentioned earlier, it is extremely important to meet these criteria. So, to know the eligibility, a professional can be consulted to know what is a suitable loan as per the requirement.

3. Put forth a proposal

We understand the eligibility criteria and other prerequisites. We draft a proposal for the loan. It must contain the details about the machinery, the firm, the applicant, and the required amount. There is other information that has to mention as well. It can be better known from a professional consultant.

4. Fulfil the document requirements

Once the proposal has been accepted by the lender, the document has to submit. The list of documents may differ from case to case. So, this can be known only after the approval of the proposal.

Learn the process to get a loan for machinery from the case study.

Documents required:

The documents are bound to differ as per the case. Although, there are certain common requirements. These are as follows:

General requirements

KYC Documents of borrower and co-applicants.
1. Aadhar Card
2. PAN Card

Statutory documents

In the case of Proprietary Firm:
1. Shop Act
2. GST Registration Certificate
3. Udyog Aadhaar Memorandum
4. VAT Registration
5. GST certificate
6. Other applicable Registration documents.

In the case of Private / Public Limited Company or One Person Company:

1. MOA & AOA
2. Certificate of Incorporation
3. Certificate of commencement of business
4. GST Registration Certificate
5. Shop Act
6. Udyog Aadhaar Memorandum
7. VAT Registration
8. Other applicable Registration documents

In the case of Partnership Firm:
- Registered Partnership Deed

In Case of LLP:
1. LLP Agreement
2. Shop Act
3. Udyog Aadhaar Memorandum
4. GST Registration Certificate
5. VAT Registration
6. Other applicable Registration documents.

Income Documents

Last 3 years Financials
1. IT Returns
2. Computation Sheet & Balance-sheet
3. Proof of turnover vide latest sales/service tax returns and Purchase Order Copy (for Loan against receivables)
Last 1-year bank statement of an operative bank account.
Details of all existing Loans:
1. Sanction Letter
2. Loan Account Statement for last 1 year.

Machinery documents

Tax Invoice Copy of the Equipment / Machinery Purchased.
Proforma Invoice / Quotation of the Machinery to be purchased.

The process to avail of Machinery Loan

Learn more about Machinery Loan from FAQs.

Machinery Loan at Terkar Capital

Acquiring a loan for machinery is a lengthy process. It requires patience and understanding of complicated procedures. It comprises the loan sanctioning process. However, this can make simpler with some assistance.

At Terkar Capital, we have the best customer support. The client is of priority to us. We do more than just sanction of benefitting machinery loans. We make sure that the client understands the loan process and provide all other kinds of assistance.