Equipment Loan/Machine loans are availed by businesses to improve the productivity and efficiency of business.Most common types of equipment loans are availed to buy Earth Moving equipment, Packaging Equipment, CNC machines, Industrial equipment, Precision tool cutting equipment besides Medical and Dental equipment.
Machinery equipment loans are normally used by small and medium enterprises for enhancing their existing production capacity or replacing old machinery with new machinery. Machinery equipment are the most important assets as it determines the amount of goods that can be produced and determines production cost of the goods. Timely upgrade & maintenance of equipmentensures that the business stays competitive and profitable. Machinery loan can also be used by manufacturing firms for expanding business in new business verticals.
Three Years of Business Existence: To ascertain the business continuity and the performance of business, financial institutions usually insist on a track record of at least three years of a successful business.
Good credit history:Lenders check the credit history of the borrower. Anexcellent credit history is a must when applying for a loan.
Excellent Business Plan:End use of funds will be sought for and so will be the projected business from the funded amount. In most cases, the loan amount is directly disbursed directly to the seller than into company account, unless it is a reimbursement of equipment already purchased. A well-articulated business plan with clearly defined financial milestones (revenues and profits) is a must when applying for a loan.
Directors Profile/ Company Profile:The company background information including the major lines of businesses, client profile and business plan is a key parameter that is assessed. Educational background and experience of promoters would also be assessed to ascertain the expertise and capability to run the business.
Cash Flows: Financial records confirming the money coming in and money spent is asked, before equipment loan is sanctioned. This is predominantly done to validate if the money is invested in business and ensure that there is no diversion of funds. Ethical financial reporting is what lenders consider while funding small business loan requirement.
- Last 3 yrs financials with IT return, Computation, audit report
- Last 12 months bank statement (Business Account)
- Current loan details like sanction letters and statements
- Registration of business, address proof, PAN, pattern of shareholding
- KYC (individual Id) of promoters
- Proforma invoice / Quotation for machinery to be purchased