Pre-requisite for Equipment Loan

Three Years of Business Existence: To ascertain the business continuity and the performance of business, Banks/NBFCs usually don’t fund green field project unless backed by renowned investors.

Good CIBIL Rating:Credit information Bureau India Limited in a rating agency which maintains and rate your credit risk which lenders use to assess your credit history and determine your eligibility basis your current exposure and track record of the past re-payments on loan. Excellent credit history is the pre-requisite to determine your loan eligibility.

Excellent Business Plan:End use of funds will be sought for and so will be the projected business from the funded amount, most of the times the money is funded directly to seller than into company account, unless it’s a reimbursement of equipment already purchased. For all the above terms to be met, we need to have an excellent business plan. Your entire business plan should be finalized in few paragraphs, giving the crux of business

Directors Profile/ Company Profile: All lenders seek company’s profile to have insight about the company’s vision, products line and major clientele’s. Educational background and experience of promoters are sought to make sure about the person behind 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 check if the money is invested in business and there is no diversion of funds. Ethical financial reporting is what lenders consider while funding small business loan requirement.

Benefits of Equipment Loans

Quickest Loan Sanction: TAT for all equipment loans is shortest. Usually if all the desired documents are submitted by client, it doesn’t take more than a week’s time to receive the sanction letter.

Depreciation/Tax Benefits:Biggest advantage of Equipment Loan is calming the depreciation in Balance Sheet.

Funding up to 80% of Invoice Value: Another advantage is you can procure up to 80% of invoice value (Inclusive of GST) which gives you flexibility to use more money for business.

Flexible Re-Payment Option: Many flexible repayment options are available today with various lender which gives you flexibility to choose from deferred payment options, various structured solution to bring down the cost of project etc.

equipment. This is where a business loan can come in handy. A business loan gets you the money you need at a fast turnaround time so you can continue to run the day to day operations of your business.

Terms and Condition for Equipment Loan

• At least 20% of money to be infused by the company to buy the equipment.
• Minimum 2 years of ITR filed and profitability to be shown in Balance Sheet
• No bad remarks on company or promoter, Court cases, Legal hearing etc
• Basic CIBIL criteria to be met
• Machine purchased to be hypothecated to lender till the repayment of loan is done.
• Standard M/c’s are funded by any lender, since customized machines wont fetch any buyers in secondary markets in event of default.
• Typical ROI varies between 10.5% -13.5%
• Usually amount lent is inclusive of 80% of total Invoice value which is inclusive of GST.
• Flexible payment options are available with lenders, with moratorium, without moratorium etc.