Equipment Loan for Small Business

How Equipment Loan Opens Up New Avenues for Small Businesses?

August 30, 2023 • 7094 views

The secret behind a successful business lies behind lots of factors that work in sync to make it possible. An integral part of the process is the machinery and/or equipment being used to make sure the business runs smoothly. Naturally, this also means significant investment is required in terms of equipment finance.
The latest technology and machinery have a direct impact on the productivity and profitability of any business. While every business owner understands this, buying and upgrading machinery involves heavy investments. For small business owners with limited capital, such investments may pose a major challenge.
If you are a small business owner and need good machinery to improve business operations, you can consider equipment financing. Along with helping remove unnecessary strain on finances, equipment finance can also help open up more avenues for small businesses.

What is Equipment Finance?

Equipment finance is a type of loan for business equipment that offers the necessary funds to purchase machinery and specialised equipment. It can be further divided into different loan types that cater to different industries. For example, there is an Industrial Equipment Loan, Machinery Loan, Medical Equipment Loan, and more. The benefits, maximum loan amount, and terms can be different for each of these depending on their purpose and industry. Equipment loan gives small businesses opportunities to scale up their operations and more.  Read on to find out how:

Benefits of Equipment Loan for Small Business

1.    Helps Diversify Your Offerings
The needs of customers keep evolving with time. To meet these changing demands, you can use the latest equipment to manufacture and launch new products. This can also boost profitability and keep you ahead of the competition. Equipment financing enables you to make sizable investments to create new products. The loan repayment can be spread over a tenure of up to 5 years.

2.    Enhances Productivity and Aids in Expansion
Powerful and capable machinery enables you to achieve a higher rate of production with shorter turnaround times. This translates into taking care of more tasks, orders, and projects, and being able to execute them more efficiently. It can provide you with multiple opportunities for expanding your business and exploring new services. When all of these advantages work in sync, you will see a noticeable increase in your profit margins.

3.    Helps You Take Advantage of Modern Technology
Buying machinery with advanced technology means you can manufacture higher-quality products and diversify your portfolio to target new potential customers. However, such powerful machines can have a hefty price tag, Thankfully, this will not be a problem with an Equipment Loan. It will help you purchase the machinery of your choice without straining your cash flow.

4.    Assists in Maintaining Your Operational Capital
Running a small business means trying to achieve the best results on a limited operational capital. Large expenses like the cost of a new machine can shrink this capital and affect the day-to-day functioning of your business. Hence, you need to have adequate funds to handle urgent expenses and unexpected growth opportunities. All this can be achieved with an Equipment Loan. Well-established lenders like Poonawalla Fincorp can provide you with a Machinery Loan of up to ?5 Crore. This amount can be diverted towards purchasing the machines which will preserve your operational or working capital.

5.    Helps Save on Tax
When machines are purchased for business purposes, they become eligible for tax benefits. More precisely, you can save tax on the interest paid on the Machinery Loan. Such benefits do not cover your loan’s principal amount, but you can still enjoy significant tax savings. This can mean a lot when you are running a small business as the amount you save can be used to cover other expenses.

6.    Shields You from Price Hikes
An Equipment Loan gives you the amount you require to purchase the machine at its current price. This means you will be safeguarded from inflation, shifts in economic conditions, and other factors that increase the price of the equipment.

7.    Improves Profitability
With an Equipment Loan, you save on expenses while also making profits thanks to lower cost of production and higher, better-quality output. What’s more, you can use these profits to reinvest in your small business to further promote its growth.

Conclusion

Whether small or large, all businesses have to be up-to-date with the latest technology and use modern machinery to stay competitive. You can make use of equipment financing to get access to this technology without using your cash reserves. 
So, if you are a small business owner and need funds for industrial equipment, apply for a Machinery Loan from leading NBFCs like Poonawalla Fincorp. Along with a high loan amount, you get other benefits like minimal documentation, flexible tenure, and an easy online application process.

Frequently Asked Questions About Equipment Finance

1.    What is the interest rate on Machinery Loan?
This can be different for every lender. However, some well-established financial institutions offer Machinery Loan at attractive interest rates starting from just 9.99% p.a.

2.    Who is eligible for Equipment Loan?
The eligibility criteria for machinery financing differs from lender to lender. You can apply for a Machinery Loan with Poonawalla Fincorp if you meet the below-mentioned criteria:

  • You should be an Indian citizen.
  • Your age must be between 25 years and 65 years.
  • The business vintage should be at least 3 years.

3.    What is the tenure for a Machinery Loan?
The tenure can vary among lenders, but Poonawalla Fincorp offers Machinery Loans with a tenure of up to 60 months.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Machinery Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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