Business requires different types of equipment and machines. When the business is in the manufacturing sector, the need for machines as well as other equipment becomes mandatory.
Similarly, the service sector is service-providing, so the business of this sector requires various types of equipment including computers, electronic gadgets as well as vehicles.
Be it any equipment, electronic gadget, vehicle or machinery, all of them attract huge amount to buy. If a businessman delay buying these essential items, it directly affects the profitability of the business.
In such a situation, if the business does not have immediate funds available, then it becomes difficult to run the business and the possibility of business falling behind cannot be ruled out, and hence to protect the business from falling, equipment is necessary to be purchased.
Let us say that even if the business does not have a lump sum of its own, the necessary equipment, machinery, and vehicles can be purchased, so what would you say?
You may be surprised and ask how this is possible? So the answer is – through the equipment loan you can buy the necessary equipment, machines, and vehicles in your business. In this blog, we will get to know what is an equipment loan and how do I get it?
What is An Equipment Loan?
An equipment loan is a type of business loan which is given for the purchase of equipment in the business. Equipment loans are funded by government banks and NBFC companies.
Those who are looking for equipment loans and are unfamiliar to NBFC companies, we should tell them that NBFC’s full name is Non-Banking Financial Company. These institutions are registered with the Reserve Bank of India i.e. RBI. The work of NBFC institutions is slightly different from that of banks. These institutions only focus on providing different types of loan simply and quickly.
Equipment loan provides up to 100% loan for purchase or repair of necessary equipment, machinery, and vehicles in any micro, small, and medium scale industry ie MSME business.
For the information, we should let you know that the business loan of up to Rs 7.5 lakh from the country’s leading NBFC ZipLoan is available in just 3 days* to purchase equipment and machines. The special thing about the business loan for equipment from ZipLoan is that this business loan is available without any mortgage.
An equipment loan is also provided under business loans only. Equipment loan comes under the short term loan. The repayment time of the loan is from 12 months to 36 months. A business loan from ZipLoan is pre-payment charges free after 6 months.
Let us tell you that prepayment free means that if a businessman gets a loan for 36 months but if the businessman has enough funds with himself and want to close the loan then he could do that after 6 months where he can return his equipment loan in the seventh month for the left 30 months tenure.
It is also worth mentioning here that there are only a few banks and companies from where the option of pre-payment charges is available. ZipLoan Company is the premier NBFC offering pre-payment free after 6 months. ZipLoan offers business loans at very low-interest rates without pledging.
Also Read: Easy Steps To Get Machinery Loan Without Security In India
Why Do You Need an Equipment Loan?
When and where you may need funds, it cannot be said. No matter how big a businessman is, he needs a business loan and all the big industrialists of the world have accepted that they have grown only by taking a business loan.
Small and medium businesses have to install advanced equipment and machines in their business from time to time. Older machines have to be upgraded and there are few instances when a vehicle may have to be purchased to supply goods.
In such a situation, the businessman might not have immediate money available to meet all these needs, it may also happen that the businessman’s money is invested in the market, and payment is delayed so in that case a business loan comes in handy.
The decision of buying a new machine, equipment, and goods supply vehicle in the industry through an equipment loan can be proven to be the best. This will also help the businessman to get the equipment needed in his business on time as the businessman will not have to wait for the money and have to delay the decision for the future.
What is The Eligibility for An Equipment Loan?
Examining eligibility means seeing who can get an equipment loan and who cannot. This is a very important step in the loan application process.
The industry is divided into two sectors. One is manufacturing and the other is the service sector. The manufacturing sector includes businesses like automobile parts manufacturer, food processing, printing and packaging, food and beverage production, medicine production, agriculture, etc. These sectors require machinery, equipment, and vehicles like trucks, tractors, etc.
In the service sector, all the businesses like hotels, restaurants, tourism, couriers, etc. are included in which money is taken in exchange for service. Most of the equipment and vehicles are required in this sector. Some businesses also require a machine to assist the service process for the workforce.
The eligibility for equipment loans for both sectors is mostly the same. The annual turnover in business is a demand for the two sectors separately.
Also Read: Your Basic Guide For Understanding Machinery Loans
Equipment Loan Eligibility
- Applicant must be over 21 years of age and under 65 years.
- The business entity should be at least 2 years old.
- ITR filed in the last year. It is to be noted that the amount of ITR demanded by all banks and companies varies.
- Either the house premises or place of business should be in the name of the applicant or the name of one of the blood relatives.
This eligibility is primary while applying for the equipment loan. Almost all companies demand this eligibility. Whenever you apply for a business loan from a company, first check the eligibility requirement.
Eligibility for A Business Loan from ZipLoan
- The business entity must be more than 2 years old.
- The annual turnover of the business should be more than Rs 10 lakh.
- ITR should be more than Rs 1.5 lakh per annum.
- Either the house or business premise should be in its name or the name of a blood relative.
Documents Required for An Equipment Loan
- Latest passport size photograph
- Voting cards like identity cards
- Pan Card
- KYC documents of the company
- Financial Report for the last three years
- Copy of ITR filed during the last two years
- Description of machine purchased in a business
The list of required documents is also very important as the majority of banks and NBFC companies offer equipment loans based on these documents. It is worth noting that whenever you apply for a business loan, you must find out the list of necessary documents from their website or you can call the customer care and ask them
Documents Required For A Business Loan from ZipLoan
- Aadhar Card
- Pan Card
- Bank statement of the last 9 months
- Proof of ownership of one of the houses or places of business. This proof is valid even if it is in the name of a blood relative.