Looking to upgrade your machines? A business loan can help
The first step of setting up any business is that you will need some kind of capital to start-up. In this day and age, the kind of money you need depends on the nature of the business. For instance, if you set up a production unit to manufacture products required by customers then you need equipment and machinery to manufacture the products.
Similarly, if you are running a service business such as DTP then too you would need certain equipment and machinery such as a DTP machine to help you to render such services. You need funds to buy equipment and machinery.
If your larger plan in life was always to set up a business and have been smart about your savings, then you may already be prepared with this. What if you are not? What if you realize that you need more than you have?An idea situation calls for borrowing. Borrowing money with little or no experience can be a harrowing experience. Banks are hesitant to lend loans to that they are unsure about. So who do you approach?
At times like these, NBFC’s like Tata Capital is a good bet. You can buy equipment and machinery with by approaching a lender such as Tata Capital to avail a machinery loan under their business loans umbrella.
Need for machinery loan
Whether you are setting up a new business or upgrading an existing business you need machinery that would help you to manufacture the products or offer the services. Thus, a machinery loan would help you to invest in the machinery required for your business.
When you are starting new, it is possible that you would choose machinery with latest technologies built into it so as to ensure you are able to manufacture the product of the highest quality at the lowest cost to give you a competitive advantage.
However, if you are running an existing business, you would be operating with machinery that is several years old. Old machinery has to contend with wear and tear impinging on the quality and productivity. You may be losing out on cost advantage. Further, since technologies keep on improving every year it is possible that newer machinery could give you an edge in the cost of production and quality if deployed into the production line in time. Thus, you would need to replace existing machinery or upgrade it to bring the production system up to date or even repair it if it has broken down.
Thus, a machinery loan can help you to stay competitive.Features of machinery loan
Just because it is a loan does not mean it is going to be a headache. What could you do with a business loan to buy machinery? A machinery loan has many features that you can use to your advantage in running your business. With a machinery loan, you can
- Buy new or old machinery
- Lease machinery
- Upgrade machinery
- Undertake repairs and maintenance of existing machinery
- Fund 100% of machinery value
- Take between 3 months and 5 years to repay the loan
- Get an affordable interest rate based on your business credentials
A machinery loan helps you to stay competitive in your industry by ensuring you produce high-quality products with lower costs.
How to obtain a machinery loan?
Typically, machinery loans come under the business loans category offered by various lenders. As such, you are really applying for a business loan and the standard eligibility conditions that apply for business loans apply here as well. They include age limit, profitability for 3 consecutive years, increasing turnover year-on-year, and audited financial statements, proof of business, ITRs and ownership and KYC documents.Assess the need and apply
It is advisable to carefully assess your need for buying, upgrading, replacing or repairing machinery. You need to do this to determine the optimal course of action. Once you decide the course of action, you can evaluate the costs of availing the machinery loan as there are terms and conditions attached to the granting of machinery loan by the lender. You can use the facilities available on the website including the business loan EMI calculator to find out how the loan would affect your future cash flow in terms of revenue and repayment. You can iterate by using different values of the loan amount, tenure and interest rate on the business loan EMI calculator to come to a decision on the most affordable EMI. Lenders like Tata Capital also offer you flexi EMI plans which help you to clear the loan at your convenience.
From the foregoing, it is clear that availing a machinery loan under business loans helps you in multiple ways. It can help you to upgrade your machine with the latest technologies, replace existing machinery, buy new machinery or repair old machinery. With a business loan, you will benefit by improving your productivity and quality.