Machinery Loan Eligibility
What is the eligibility required to take a machinery loan? Now, if you are going to start a new business where you need machinery. You also know that there are many government schemes where you can get a machinery loan. But what eligibility is required to take this loan? Either you already have an existing business setup, a manufacturing unit where machinery is already there and good production is happening. Still you want to buy more machines to increase production. You want to improve product quality and for that you need upgraded machinery, and you want to take a loan to purchase that machinery. So what eligibility is required to take a machinery loan?
Machinery Purchase Loan Eligibility
The eligibility for a machinery loan may vary across different banks and lending institutions, but the basic criteria are almost similar in every bank. Here, I will explain the basic criteria so that you get an idea. Can prepare all your documents on time when you apply for a bank loan. So that you can successfully get the loan and get it quickly.
Documents Required for Machinery Loan
To explain what documents are required for a machinery loan, I have divided the business into two parts one is a new business and the other is an existing business, because the documents required for a new business and an existing business are slightly different. KYC documents are required for every business, whether it is an old business or a new one. PAN card is mandatory here as an identity proof. Apart from this, some banks also accept Aadhaar card as an identity proof, and if your address is mentioned on Aadhaar, it can also be considered as address proof.
However, some banks may ask for an additional address proof, for which you can provide a voter ID card, passport, or driving license. But if your current address is not mentioned in these documents. Then you will have to provide a separate address proof for your current residence, such as an electricity bill, otherwise you will first have to update your address in any of these documents and only then apply for the loan. You will also need to provide one or two passport size photographs.
Machinery Loan Eligibility - Age of Applicant
To apply for the loan, the minimum age of the applicant should be 21 years. However, it is not necessary that every bank will provide a loan at the age of 21; some banks may require a minimum age of 25 years to offer a machinery loan. As per my observation, almost all banks do not provide loans beyond the age of 65 years. The loan tenure is structured in such a way that the EMI should be fully completed and the loan should be closed before the applicant reaches 65 years of age.
Documents for New Business
See, getting a machinery loan is much easier for an existing business compared to a new business. You might have seen that there are many government schemes where loans are given for new businesses, which is true. However, when you approach a bank manager, they may deny giving the loan by saying that you are starting a new business, so they may not approve it and can give some other reason. This happens because they lack confidence. Think that if the new business does not run successfully, then the machinery loan may turn into a loss.
But it is not true that loans are not given for new businesses. If your documentation is proper and you have already set up your business. Then the manager gains confidence that you are serious about the business and will be able to run it. In such cases, you can get a machinery loan under new business schemes.
For this, the first requirement is a Trade License, which is a mandatory document. You also need to provide an MSME Registration Certificate. If GST is applicable to your business, then you must provide a GST Registration Certificate. Along with this, if applicable, you also need to submit a Pollution Control No Objection Certificate (NOC).
If the Business is Existing
In the case of an existing business, it is easier to get a loan because your business setup is already established. There is already production happening in your manufacturing unit, or it could be a diagnostic center where equipment loans are also provided. In such cases, it becomes easier to justify the business.
For this, you will need to provide GST returns wherever GST is applicable. GST registration and returns are necessary in such cases. If you already have an ongoing loan, then you will need to provide the loan sanction letter and one year’s loan statement. If the loan has already been closed, some banks may also ask for a No Due Certificate.
Mandatory Documents
The original quotation of machinery is mandatory in both cases, whether it is a new business or an existing business. Apart from this, you also need to provide ownership proof of property. At least one property should be in your name. Whether it is your residence or the business place where you will run your business.
Credit Score Requirement
Before giving the loan, banks first check your CIBIL score or credit score. Some banks may also check CRIF score. Your credit report should be correct and your score should be good. If there is any error in your CIBIL report, you should correct it first and only then apply for the loan. Because if your credit report is not proper, you will not get a machinery loan.