Funding specifically for acquiring machines or equipment for your business. Such loans are secured by hypothecation of the machinery being financed. Cash flow from machinery acquired will be used to repay the loans. Duration of these loans is usually shorter than LAP. Repayments are made in equal instalments.
- Lenders usually don’t fund the entire cost of the equipment. Part of the cost (sometimes up to 20-25%) has to be borne by the borrower. This is the margin cost and its quantum is stipulated by the lenders
- Payment is made directly to the dealer or the manufacturer of the equipment
- Borrower needs to produce the original invoice
- The asset should be able to generate cash flows sufficient to repay the loan repayment obligations
- Loan Amount: Up to Rs 10 Cr (above 2 Crs will have property as additional collateral)
- Tenure: Upto 7 years