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.
