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written by | March 23, 2022

How to Apply for a Factory Loan

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India has slowly started to move forward to become a major manufacturing hub. Most of us know about the Make in India scheme launched by the Central Government of India. The investments in the production and manufacturing industries are expanding at a rapid pace, the role of these industries in the nation's GDP is also increasing day by day. Trading economics shows some stats claiming that the production and manufacturing sectors form 18% of the GDP, providing a booming 75.5% contribution. 

There's no workforce shortage in India, and now, there's a lot of support from the governments and banks. So, don't you think it's the golden time to start your manufacturing venture? You'll need expenses to start and expand, but easy and flexible loans don't let you bother much. Let's understand what types of manufacturing businesses can avail of loans and the demands of the loan lending banks. Before discussing in detail, check the interesting information about the manufacturing business loans.

Did you know?

The Indian government has given the slogan "Make in India" and stands firm in supporting this slogan. As a manufacturer, you can get an MSME Loan in 59 minutes with the help of a bank/non-banking financial company (NBFCs). There are also specific schemes launched for this purpose.

Factory Loan: Eligibilities, Requirements, Benefits and Features

There are numerous possible funding options available today in business loans for small to large-scale manufacturers in India. If you're a manufacturer of the future and want to avail of loan-related benefits, you should know everything about repayment and eligibility requirements. Besides that, you should have a sharp idea of interest rates. These commercial loans are available for manufacturers to consolidate a perfect decision.

How to Apply?

Step 1: Apply Online

 Every reputed website has an official website and app, where it shares every bit of information related to various types of loans it offers. Find the business loan application on their website, fill it out, and submit it. 

Step 2: Submit Vital Documents

No bank will process your loan without asking for a set of vital documents. You can push forth the process by submitting the soft copies of your documents (photos, IDs, etc.) on the website.

Step 3: Business Loan Approval

The next job is of the bank's representative. They will contact you for further inquiry of your loan application, and you won't have to wait much for this. The representative will explain various eligibility criteria (which aren't that tough to meet in case of availing a manufacturer business loan).

Step 4: Disbursement

After your business loan's approval, the bank disburses the loan amount (nothing is dedicated except the processing fee) in 3-10 days. You can withdraw the fund and start using it at your convenience. 

Also Read: Different Types of Industries- Primary, Secondary & Tertiary

Why Would You Need a Factory Loan?

  • Purchase the equipment
  • You can invest in new business technology.
  • Upgrade your machines
  • Large expansion plans
  • Increasing the staff
  • Research development
  • Paying taxes
  • Buying new premises for manufacturing
  • Helps to expand the warehouse

Documents Required

  • PAN card (Company/Firms/Individual)
  • Proof of Business Continuity (any one) - Establishment/Sales Tax Certificate/ ITR/ Business licence
  • Identity Proof (any one) – Adhaar card, voter ID, Pan card, driving license, passport, or any other govt-issued document 
  • Passport size photograph
  • Address Proof (any one) – Adhaar card, lease agreement, telephone bill electricity bill, voter ID, ration card, passport 
  • Partnership deed if you've got a partnership
  • Profit & Loss Statement
  • Income Tax Return 
  • Memorandum and Article of Association
  • GST Return
  • Balance Sheet

Types of Loans Considering Terms

  • Long-term and certain
  • Long-term and uncertain
  • Mid-term and certain
  • Mid-term and uncertain
  • Short-term and certain
  • Short-term and uncertain

Considerations Before Applying for a Factory Loan

There's no shortage of banks and financial bodies who will willingly give you a loan (if you pass the eligibility criteria), but you don't need to show any haste. Check the following considerations before availing one:

  • Flexible loan repayment: Businessmen can opt for any particular loan tenure but won't be penalised if they want to change the tenure in the future. Alternatively, you should also be able to apply for a loan tenure extension without any extra processing fees.
  • Flexible tenure options: A few banks offer loans under several tenure options to suit the specific funding needs of all kinds of manufacturing businesses.
  • Fair interest rates: When you source factory loan products through a bank to infuse your manufacturing business, you must be assured of fair interest rates.
  • Fast processing: Manufacturing businesses move on fast decision making, and so should your loan process.
  • No surprise charges: You shouldn't be asked to pay anything over an initial processing fee of 2-4% for sourcing your loan. Also, you can know about credit, debit and their value formats for better calculation outcomes while managing your expenses.

Which Banks to Approach?

Bajaj Finserv

Manufacturing always demands capital investment, and Bajaj Finserv understands the requirement very well. They offer very attractive interest rates on business loans for manufacturers. You can avail of this loan in no time and begin using funds for buying equipment, hiring staff, etc.

Features and Benefits

  • Enjoy a loan as big as ₹30 lacs to enlarge your ongoing business.
  • No need for any security, collateral, or guarantor to avail loan.
  • Flexible loan facilities for loan withdrawals and repayment.
  • Minimum documents are needed to avail of a manufacturer business loan.
  • Loan approval takes just 24 hours, while the disbursement consumes less than 48 hours. So immediate funding is a luxury with Bajaj Finserv.
  • The Relationship Officer will give you doorstep services.
  • 100% online process ensures fast procedure.
  • No charge on part prepayment.
  • 24 hours approval and 48 hours disbursement period for quick funding.
  • You're free to manage your account online anytime and from anywhere.

Eligibility Criteria

  • 25 to 55 years is the age channel for the borrower to avail of a factory loan.
  • You must have filed an Income tax return for the 1-year minimum.
  • Bank account statement for the previous six months.
  • The borrower's business should have been running successfully for three years.

Also Read: Guide for starting a Plastic Manufacturing Business

Lendingkart

Are you planning for your company's productivity boost-up? Are you losing time? Just apply for the Lendingkart business credit loan without any hassle. You can choose anyone among short-term, medium-term and long-term loan plans. 

Features and Benefits

  • No extra charges on finishing the repayments before time.
  • You enjoy a highly flexible repayment option.
  • Unsecured loans are available without needing guarantors or collateral.
  • No hidden costs at all.
  • You can choose the tenure options as per your needs.

Eligibility Criteria

  • 21 is the minimum entry age.
  • 65 years is the maximum age limit.
  • Your company should be in profit for the previous two financial years.
  • A certified bank statement from a recognised institution has been needed for six months.

Fullerton India

If you're a manufacturer and need funds to run your daily business operations, you will need to buy raw material stock or increase costs for overhead. There's no reason to delay. You can take an advance loan through Fullerton India at an attractive interest rate.

Features and Benefits

  • Business loan with no guarantors and collateral.
  • Select the repayment option that you want between 12-60 months.
  • The process of loaning will require some vital documents.
  • You can get a loan of up to ₹50 lacs by effort-free documentation and a straightforward procedure.

Eligibility Criteria

  •  Must be active in your current business for a minimum of 3 years. 
  • An annually filed income tax report (ITR) that is ₹2 lacs/year is required.
  • A minimum business turnover at ₹10 lacs per month.  
  • The age channel to apply for the manufacturer or factory loan is 22-65 years old.
  • Your company should be in profit for the previous two financial years.
  • Your work experience must last over five years.

Conclusion

Manufacturing companies of different types have distinct business cycles that affect the cash cycle. Today, you can get business loans that fit every type of manufacturing company and its cash flow process. Take advantage of loan offerings and proceed with the palling further. Find a flexible business loan for manufacturing companies based on cash flow cycles and the business's characteristics. 

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What are the best types of manufacturing business options in India?

Ans:

You can start manufacturing the following:

  • Coconut oil
  • Soaps and detergent
  • Handmade biscuits
  • Candle & wax
  • Homemade chocolates
  • Fertiliser production
  • Papad making

Q: How to increase my manufacturing business loan eligibility?

Ans:

Regular cash flow stream, credit scores, past business performance history, ability to use credit and credit history determine loan eligibility. Maintain all these before applying for the loan.

Q: Do business loans need support from collateral?

Ans:

You won't need collateral or any other loan security backup if you're eligible for unsecured loans.

Q: What is the tenure of manufacturing-related business loans in India?

Ans:

Generally, this tenure falls between 30 days to 36 months.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.