Equipment Finance: All You Need To Know

Equipment Financing allows business owners to raise immediate capital & ensure the operations run smoothly to increase the business sales. Here's what you need to know!

13 Sep,2022 12:24 IST 23 views
Equipment Finance: All You Need To Know

Equipment Financing allows business owners to raise immediate capital to buy equipment to ensure the operations run smoothly and the business increases sales. Such equipment loans also provide funds to business owners to upgrade or repair existing company equipment.

Machine loans for new business work similarly to traditional ones where the business owner has to fulfill the set eligibility criteria. Business owners can take such loans from a bank or an NBFC and repay with interest within the loan tenure.

The Factors To Consider In Equipment Loans Include

1. Loan Amount

Lenders such as banks or NBFCs offer this amount to procure, lease, upgrade or repair machinery. The loan amount is based on various factors such as the type of machinery, business turnover, owner’s credit score etc. Additionally, the higher the loan amount, the higher the interest rate.

2. Collateral

A Machine loan for a new business requires pledging an asset as collateral to take loans. However, there is no need for business owners to pledge an external asset such as real estate. In such loans, the lenders automatically consider the machinery for which the loan is being taken as collateral. The lenders can seize the machinery if the borrower defaults on the loan.

3. Interest Rates:

Equipment loans come with nominal interest rates. However, as machinery prices vary, the interest rates on such loans entirely depend on the loan amount and the chosen tenure. The higher the loan amount, the higher the interest rate. However, the higher the loan tenure, the lower the interest rate.

Eligibility Criteria For Taking An Equipment Finance Loan

Here are the eligibility criteria for taking a loan to buy equipment:

1. Established businesses operating for more than six months at the time of application.
2. Minimum turnover of Rs 90,000 in the last three months from the time of application.
3. The business does not fall under any category or list of blacklisted/excluded businesses.
4. The office/business location is not on the negative location list.
5. Charitable organisations, NGOs, and trusts are not eligible for a business loan.

Documents Required For Equipment Finance Loans

Here are the documents required for equipment finance loans:

1. KYC documents – Identity proof and address proof of the borrower and all co-borrowers
2. PAN Card of the borrower and all co-borrowers
3. Last (6-12 Months) months bank statement of main operative business account
4. Signed copy of standard terms (term loan facility)
5. Additional document(s) for credit assessment and processing loan requests
6. GST Registration
7. Previous 12 months’ bank statements
8. Proof of business registration
9. PAN Card and Aadhar Card copy of the Proprietor(s)
10. Deed copy and company PAN Card copy in the case of partnerships

Avail Of An Ideal Equipment Finance Loan With IIFL Finance

IIFL Finance is India’s leading financial services company that provides comprehensive and customised loans for business equipment financing. The proprietary startup loan offers instant funds up to Rs 30 lakh with a quick disbursal process. You can apply for the loan online via the website or offline by visiting IIFL Finance nearest branch.

FAQs:

Q.1: What are the benefits of IIFL Finance machinery loan?
Ans: The benefits of an IIFL Finance machinery loan are:
• Instant loan amount up to Rs 30 lakh
• An easy and online application process
• Instant credit of loan amount to your bank account.
• Affordable EMI repayment options

Q.2: Can I buy startup equipment from IIFL Finance loan?
Ans: Yes, you can buy any startup equipment from the secured loan amount and repay the loan through flexible repayment options.

Q.3: How much time does it take to approve IIFL Finance machinery loan?
Ans: IIFL Finance machinery loan is approved within 30 minutes of application.

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