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Factors Affecting Eligibility of Machinery Loan

Factors Affecting Eligibility of Machinery Loan

For businesses in the manufacturing sector, having the latest machinery and equipment in place is the key to profitability, improved product quality, faster turnaround time, and higher productivity. Therefore, many businesses avail of machinery loans to buy, upgrade and maintain such assets. Let’s understand how machinery loans work and the eligibility criteria underlying them.   

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1. What is a machinery loan?

Machinery loans are unsecured business loans availed for machinery purchase, upgrade, refurbishing, etc. The idea behind taking out such a loan is to grow one’s business without putting undue pressure on the company’s finances.

Machinery Loan

2. Eligibility factors for machinery loans

Some essential eligibility criteria include the age of the applicant, number of years in business, minimum turnover, etc. To get a machinery loan, you must meet all such eligibility factors. Some important ones that affect eligibility for a business loan for machinery are –

  • Business stability

Every lender looks for business stability before approving a machineryloan application. If the business is stable, it can comfortably repay the loan. On the other hand, if it faces weak profits, repayment ability will be compromised.

  • Credit rating

Lenders also evaluate the creditworthiness of the applicant. The higher your credit rating, the better your chances of securing a machinery loan. Some factors that affect credit rating are default payments, fraudulent activities, outstanding loans, etc.

  • Criminal background

It is likely that if the business owner has a criminal background, their machinery loan application will be rejected. A lender will always check this parameter along with repayment capacity to offer a loan.

Business Loan for Machinery

3. Required documents

The documentation required for business loans for machinery is minimal. The following are the documents you need to present –

  • ID proof
  • Address proof
  • Income tax returns
  • Bank statements
  • Business ownership proof

Before you apply for a machinery loan keep these primary documents ready with you.

Additional Read:- When You Need to Opt for Business Loan

Required Documents for Machinery Loan

4. Improving business loan eligibility

If your machinery loan eligibility is low, there are some ways to fix it. First, identify the factors affecting your credit rating – outstanding bills, late credit card bill payment, etc. While late payments cannot be changed, you must ensure to make all payments on time for a good credit score. Do note that if one lender rejects your loan application, it will further cause a dip in credit rating.

To improve your chances of securing a business loan for machinery, go for a lender with relaxed eligibility criteria and minimal documentation requirements.

Improve Business Eligibility

Want to help your business grow with a machinery loan? Choose India’s leading lending institution – Tata Capital. We offer machinery loans without any collateral requirements, helping you get access to quick and hassle-free funds. Our loans come with a structured EMI option with flexible repayment terms. Use our online business loan EMI calculator to understand your monthly payments.

To be eligible for a business loan at Tata Capital, an individual must be between 25-65 years of age and should have a business that is profitable for at least 3 three consecutive years. Moreover, a registered Chartered Accountant must audit the balance sheet.

Additional Read:- Types of Business Loan Agreements You Should Know

For more details on machinery loans for business expansion, get in touch with us today!

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