Business

How Your CIBIL Score Will Help You Get A Machinery Loan Without Security?

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You are willing to work extra hours and travel extensively all around, to get more orders and earn more money. All this is very much possible but only if you have the financial resources to keep your business going through various ups and downs. You will be getting returns according to the hard work you put in, and there is no ceiling on your growth prospects.

During the initial period, you can use your own savings and borrowings to get the business venture going, but eventually, you will need access to additional funds as your business grows.

When you are running a manufacturing business, the major investment that you need to make is towards the machinery. You need to regularly invest towards purchase, upgradation or repair of machinery to make sure that your products conform to the quality required by customers.

But what if you do not have money for the same? What can you do in such a scenario? In such a situation the most suitable option for you would be to seek financing from any of the various financial institutions in India.

The most popular type of funding options offered by financial institutions to help small business owners purchase machinery is through machinery loan without security. These financial institutions offer a wide range of private business loans to help you meet unexpected or upcoming business expenses easily.

What is a Machinery Loan without Security and how to avail it?

Machinery loan without security is a special type of business loan offered by financial institutions in India. This type of loan is meant to help the small business owner to acquire the required machinery or repair or upgrade an existing machinery without using up a huge chunk of cash from their finances.

With this facility, you can easily upgrade your manufacturing facilities and improve your profit margins. Machinery loan without security is offered by many financial institutions like banks, NBFCs, and online lending companies but out of all these options, Online Lending Companies have emerged as the preferred option for business owners.

Online lending companies are specialized NBFCs who offer their services through online platforms only, i.e. website and mobile app. They offer a wide range of business loans to meet the requirements of small business owners. These companies follow a paper-less process, wherein you only need to provide scanned copies of your documents to submit your application.

With their highly efficient minimal documentation process, they are able to process your application within a few working days only. With their transparent working style, they provide you with regular updates regarding the status of your application.

You, therefore, need not go anywhere for the business loan application process, everything can be completed from the comfort of your home/office.

Online lending companies offer you machinery loan without the security of up to Rs. 5 lakhs, if your turnover in the previous year more than Rs. 10 lakhs. The maximum repayment tenor that you can opt for is 24 months with an option to foreclose the business loan account without incurring any additional charges.

The rate of interest that is charged varies between 23% to 28%, depending on the lender and your credit profile, which is much lower than what moneylenders charge for private business loans.

How your CIBIL Score can help you get a Machinery Loan without Security?

In the present times, your CIBIL score holds the key to you getting your business loan application being approved. Here are various points that will help you understand the importance of CIBIL score and how it can help you get a business loan:

  • Most lenders have specified threshold for desired CIBIL score, in most cases, it is required to be above 700. If your CIBIL score is more than 700, it reduces the risk factor for the lender and it is able to provide you’re the machinery loan without security.
  • A high CIBIL score indicates excellent fiscal discipline exercised by you, which every lender is looking for in a borrower. So, you must make sure that your CIBIL score always stays above the level of 700.
  • Due to lower risk factor lenders are able to process your application quickly and also offer you the lowest interest rates against your business loan application.
  • If CIBIL score is below 700, then it will reduce the chances of your business loan application being approved.

It is therefore very important for you to ensure that your CIBIL score stays above the threshold specified by the lenders in their eligibility criterion to get the best business loan offers.