One of the most important aspects of a manufacturing or production business is its machinery or equipment. Perfect operation of machinery is crucial for maximizing its production capacity. Then again, you will have to think of buying more machinery or equipment with every increase in demand.
Purchasing and upgrading of machinery and equipment is a continuous process for manufacturing businesses. You will have to find the necessary finance to fulfil this requirement. In this context it is better to understand the various factors a lender would consider before offering you a machinery or equipment loan. Here are a few you could consider:
Duration of Business
How long you have been in manufacturing or production business matters a lot when it comes to getting a machinery loan approved. Banks and other traditional lenders usually look for at least 3 years’ business track to approve machinery loans.
Your credit history is another thing that matters to your lenders while accepting loan applications. This will tell them how eligible you are to pay back the loan that they lend you. Make it a point to check your credit report and correct any discrepancies before applying for a machinery loan. You can also take the necessary steps to improve your credit score.
Any lender would want to know details about your company such as your vision, your main clients, and your products line before approving a loan. In addition some information about professional experience and educational background of the promotors might be helpful.
In addition to the above, a lender might need details about your monthly income and expenditure to assess your capacity of paying back the loan. Make sure you maintain proper cash flow statements that will give them all the details they are looking for.
While the above are the factors that lenders might consider to approve machinery loan, here are a few things you may want to consider before applying for one:
- Understand your business requirements
- Determine the space requirements for new machinery or equipment
- Decide whether you can settle for second-hand or used machinery
Make sure you select a finance partner whom you can trust. Buckingham leasing is a good option. See here for more information on your future finance partner. A few things you need to look for, while selecting a trusted finance partner, are best interest rates and flexible repayment options. Go with a partner who can make the entire process of disbursal, speedy and hassle-free.