Get loans to purchase business equipment under Equipment Financing with purchased equipment as collateral for the loan. Get the required loan easily with Filecrat.
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Equipment Financing gets you funds to purchase business equipment. This loan has a simple and hassle-free procedure as the purchased equipment acts as security/ collateral for the loan. In case of default of loan for any reason, the equipment will indemnify outstanding loan amount with all other necessary charges left to be recovered by the bank/ financial institution.
Equipment Financing is a boon for small and medium enterprises to establish, expand and grow their business. The interest rate, loan amount and loan tenure vary from Bank to Bank.
Any organization or individuals such as contractors (from the construction site or mining activity) requires the following eligibility to avail the loan for equipment financing:
- The minimum age of the applicant should be 21 years at the time of application for the loan and a maximum of 65 years at the time of maturity of the loan
- The company must be engaged in a stable (on the basis of geographical location) and profit-making business for the last 2 years.
- No default record with any financial institution.
- The CIBIL Score of the applicant should be satisfactory.
Benefits of Equipment Financing
- The procedure for this loan is simple and hassle-free as many financial institutions pre-approve equipment financing.
- This method helps in enhancing the business with new equipment without draining the liquidity of the business.
- No collateral requirements as the financed equipment becomes the security for the loan.
- Flexible options to repay the loan as it depends upon the repaying capacity and convenience of the borrower.
- Interest rates mostly depend upon the repayment history and creditworthiness of the borrower.
- It helps in the growth of the business as this financial method enables businesses to direct their cash towards other areas of the business such as developing new customers or working with current customers
Note: The tenure of the loan mostly ranges between 5 to 7 years depending upon the bank that avails the loan and the nature of your business.
Types of Equipment Loans
There are different types of equipment loans that are offered by banks and NBFCs based on the requirements of the business owners and enterprises. They are as follows:
Manufacturing equipment loan: This loan is for those enterprises/people who want to purchase equipment for manufacturing goods for their business.
IT and office equipment loan: This loan is exclusively for purchasing office and IT equipment like computers, laptops, projectors, servers and other office supplies and electronics, etc.
Construction equipment loan: This loan is for people who are into construction business & want to purchase equipment used in the construction business such as drills, road rollers, compressors, cranes, and much other equipment.
Corporate Aviation equipment loan: This loan is for the aviation industry and for purchasing equipment that can be used at airports and in-flight.
Medical equipment loans: This loan is for the medical industry and for purchasing equipment related to hospitals and clinical purposes.
Electronic and appliances loan: This loan is for purchasing electronics and appliances for a company.
Procedure for Availing the Loan
STEP 1: We check the features and procedure of loan of banks/ other financial institutions and visit/ directly consult the bank for any queries before selecting the Bank/ other financial institution as per your requirement.
STEP 2: After selecting the bank, we fill the loan application form & attach the required documents.
STEP 3: The bank will evaluate the submitted documents along with equipment quotations, or other equivalent documentation of the equipment cost.
STEP 4: After all the evaluations bank will send a sanction/approval letter and initiate the processing of the offer letter.
STEP 5: Legality of the documents will be checked by the bank.
STEP 6: A technical inspection and the site estimation will be done by the bank.
STEP 7: Signing of the loan agreement and disbursal of the amount.
- Consultation with our Loan Advisor
- Complete Assistance in Paperwork
- Quick disbursal of loan
- Copy of PAN (Permanent Account Number)
- KYC of the Applicant
- Bank Statement of the Account Associated with the Business for a specified duration (past six months)
- Financial Statements for last 2 years
- Income Tax/ GST Return Documents for recent years
- Name of the concerned machinery and the details of the suppliers
- Collateral Documents (if any)
- Trade License & other proof of running of the business
- Two recent passport size photos of applicant or co-applicant
- Any other required documents
The tenure of the loan mostly ranges between 5 to 7 years depending upon the bank from whom the loan is availed and the nature of your business but it cannot exceed the functioning life of the financed equipment.
The equipment used by manufacturing units, IT offices, medical industry, contractors, and many other companies may include equipment such as computers, compactors, forklifts, road rollers, compressors, wheel loaders, cranes, DG sets, nebulizer, stretchers, etc.
In Equipment Financing after the repayment of the loan, the ownership lies with the borrower whereas in Equipment Leasing your business will be able to use that equipment only through a time-period for which you are paying to use it.
Generally, the interest rate ranges between 9% - 18% depending upon an applicant’s qualifications and current market conditions.
The quantum of loan varies from 60 to 100% of the cost of the equipment.