As a business owner, it is not always possible to expand the business due to lack of proper machinery which cannot be purchased or installed due to limited funds available. It is generally a problem of small and medium industry units, managing the finances for the daily business and after that thinking to purchase new machines is often a wild dream. Trade owners in India once faced lots of hassles securing loans for their business, and they had to run from pillar to post for the same. However, the traditional methods of giving loans by the age-old institutions have changed as more and more banks and financial institutions have come up due to the effect of rapid globalization and improved technology. They are welcoming the business units to take a loan on soft terms and even without any security.
Getting
Loans For Equipment Without Security:
Equipment and machinery are an
integral part of any manufacturing business to start the unit. The production
is directly dependent on the machineries, and they impact the revenue earning
of the company. Machinery in the ordinary course can be bought taking loans
keeping collateral security or keeping the new equipment as security.
However, many financial
institutions and banks in India are offering machinery loan without security provided the eligibility criteria
for getting the same is fulfilled. One needs to look into the eligibility
criteria like the type of industry, the annual turnover, the orders in hand or
the age of the business unit and the amount of loan required and the mode of
repayment.
Based on the details furnished by
the manufacturer, the financial institution or the banks give a quote, and
after one accepts the quote, the verification process is completed. Usually,
all the procedures are done online except the verification and the agreement.
Although the "Machinery Loan Interest Rate" is a bit higher than the usual loan
where one has collateral security still it benefits the industrial unit to
channelize the funds in hand for increased production, maintaining the quality
of the product or narrow the turnaround time.
The interest rates for machinery
loan vary somewhat between 16% and 35 %. It depends upon the nature of the
machines intended to be purchased and the nature of the business.
If the supporting documents for
seeking the loan are clear without any bottlenecks, then it is straightforward
to get these types of loans, and it usually is granted within a week after
verification. Many financial institutes and banks have the provision in their
portal to apply for unsecured loans for machinery purchase and the task of
getting the loans have become hassle-free.
Overview:
It is always better to take
unsecured loans for purchasing machinery when there is an option as it helps
the business unit to utilize the cash in hand in product development and market
expansion. The market is very competitive these days and manufacturers must
keep them updated with the latest technology to reap the early benefits and
purchasing modern machinery with the loan without any security puts them in an
advantageous position.
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