Competitive industrial and manufacturing landscape, having the right machinery is essential for business success. Whether you're a small business upgrading your operations or a large enterprise scaling up production, modern equipment can boost efficiency, output, and profitability.
However, the high cost of machinery can be a major hurdle. This is where machinery finance from NBFCs or banks becomes a practical solution.
Both banks and Non-Banking Financial Companies (NBFCs) in India offer machinery loans tailored to businesses of all sizes. These loans provide quick access to funds required to purchase new or used equipment, without draining your working capital.
What is Machinery Finance?
Machinery finance is a type of business loan specifically offered for purchasing manufacturing or industrial equipment. This may include:
- CNC machines
- Packaging equipment
- Textile machinery
- Construction tools
- Printing machines
- Agricultural equipment
- Food processing machines
With this financing, businesses can either purchase, lease, or upgrade machinery by repaying the cost in affordable EMIs over a fixed tenure.
Why Choose NBFCs or Banks for Machinery Finance?
Both NBFCs and banks offer machinery loans, but each comes with its own set of advantages:
NBFCs (Non-Banking Financial Companies):
- Faster processing: NBFCs typically offer quicker loan approvals and disbursals.
- Flexible eligibility: Even businesses with low credit scores or limited documentation may qualify.
- Custom repayment plans: Tailored EMIs or seasonal repayment options based on business cycles.
Less rigid documentation: Ideal for small businesses and startups.
Banks:
- Lower interest rates: Public and private sector banks generally offer better rates for borrowers with good credit.
- Longer tenure options: Banks may offer longer repayment periods, reducing monthly burden.
- Credibility and trust: Banks are a preferred choice for businesses looking for secure, long-term financing.
Choosing between a bank and NBFC depends on your business profile, urgency, and creditworthiness.
Key Features of Machinery Finance
- Loan Amount: Ranges from ₹1 lakh to ₹5 crore depending on business turnover and machinery type.
- Loan Tenure: Typically 1 to 7 years.
- Interest Rates: Starts from 9% onwards for banks and may go up to 18–24% for NBFCs.
- Collateral: Secured (with machinery or assets as security) and unsecured options are available.
- Processing Time: Banks may take 7–10 working days; NBFCs can approve in 48–72 hours.
Eligibility Criteria
Though criteria may vary by lender, here are general requirements:
- Business must be operational for at least 1–2 years
- Valid business registration (GST, MSME, etc.)
- Minimum turnover as specified by the lender
- Satisfactory credit history (CIBIL score above 650 preferred)
- Quotation or invoice of the machinery to be purchased
Startups may also qualify through NBFCs or schemes like the CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises).
Documents Required
- PAN and Aadhaar (Business owner)
- Business registration proof
- Address and identity proof
- Bank statements (last 6–12 months)
- ITRs and balance sheets (past 1–2 years)
- Quotation/invoice of the machinery
- Existing loan details (if any)
Many NBFCs now offer digital document upload and e-KYC, making the process even smoother.
How to Apply
- Choose the right lender – Compare banks and NBFCs based on interest rates, tenure, and flexibility.
- Check eligibility – Use online eligibility calculators.
- Apply online or offline – Most NBFCs and banks offer digital applications.
- Submit documents – Upload or submit the required paperwork.
- Get funds – Upon approval, funds are transferred directly to the seller or into your business account.
Conclusion
Upgrading your equipment with the help of machinery finance from NBFCs or banks can transform your business operations and productivity. Whether you value fast approvals (NBFCs) or lower interest rates (banks), there’s a financing solution to meet your needs.
