How to Plan a Loan to Buy Equipment for Your Business

In order to plan a loan, a market awareness of the kinds of loan and which one serves which purpose should be known. The kind of loan that should...

In order to plan a loan, a market awareness of the kinds of loan and which one serves which purpose should be known. The kind of loan that should be availed of the purpose of purchase of equipment and machinery should be determined. Lenders provide a special kind of provision known as equipment financing that is predominantly useful for the manufacturing businesses. Most lenders have a specialized loan product for the need of purchase of equipment. These specialized loans tend to have upper limits of Rs. 25 crore.  Few lenders provide financing products for equipment as high as Rs. 100 crore. Such loans usually have fixed tenures normally spanning between 4 to 5 years. The interest rates are generally lower than the term deposits and along with the keeping of some security, the equipment are generally taken as collateral.  Lenders have separate categories for the various kinds of loans they offer, depending on whether the loan is taken for IT, office, and healthcare or construction equipment.

Machinery loans are availed for various purposes. Along with a determination of the range of loan required, the purpose also needs evaluation. Machinery loans may be availed to purchase a whole lot of machinery and equipment, upgrade to better versions of already existent machinery or fix broken parts. There are special provisions for availing equipment financing at low machinery loan interest rates for small businesses at certain financial institutions. An awareness and knowledge of such lenders and institutions can make the decision process easier for the applicant.

Certain institutions offer easy equipment financing with amounts going up to even Rs. 30 lakh. Such loans help in clearing financial roadblocks and help in smooth functioning of businesses. Availing of unsecured loans help as the putting of personal and business assets on the line is avoided. These types of loans save the hassle of arranging guarantors and collateral. There is the provision of flexi loans that also come in handy and allows management of cash flow faster. There are provisions of flexi equipment loan facilities for small businesses extending to amounts of Rs. 30 lakh. Some financial institutions provide the arrangement of pre-approved offers. These often offer discounts in interest rates or top up loans. Modern day provisions make for online access of loan options, statements and applications a lot more convenient and accessible for the customers.

In case of running businesses, there are several distress factors like excess inventory, raw material costs, gradually surmounting overhead expenses. For running a smooth business these financial burdens need to be encountered and taken care of. For this purpose, such loans should be looked up that provide uniquely designed financial products. It is important to take into account that such loans are availed of that do not let the business run out of working capital. Flexi loan facilities are an important mechanism in this regard. Here funds can be withdrawn as per the borrower’s needs with the advantage such that the interest on the borrowed amount can be paid back as EMI. This facility helps in stocking up materials such that production is enhanced. The principal amount of the loan can be paid back at the end of the loan tenor.

For applications of loans documentation hassles create major impediments. Such institutions or lenders should be selected where the application or loan process goes through minimal hassles regarding documentation works and also the time for loan approval. It would be best to find such an institution that allows quick approval of loans and appropriate tenors to suit the customer’s repayment capacities.

Several NBFCs provides exclusive offers on machinery finance based on the annual turnover of the business. There are provisions for top-up loans and reductions in rates from time to time. The benefit of unsecured business loans is also provided and once applied for relationship officers are provided to the customers who provide doorstep facilities as per the convenience of the customer.

No Comment

Leave a Reply



This site uses Akismet to reduce spam. Learn how your comment data is processed.