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Manufacturing businesses, whether large or small, often require funding for business growth, buy raw material, meet working capital requirements and many other. Though there are several sources of business finance manufacturing companies can avail, a business loan for manufacturers is often the most preferred as it comes with features tailored for the manufacturing sector. There are banks and NBFCs that offer term loans for manufacturing business that enable them to meet diverse business needs.
Additionally, based on the type of loan, there are tax benefits of business loans that can be availed. On that note, let’s learn more about business loan for manufacturing in India.
What is a manufacturing business loan?
Manufacturing firms are capital intensive businesses. They have high headcounts, require large production spaces, need to buy or rent machinery and invest in technology, and more. Keeping the sector’s unique requirements in mind, many banks and NBFCs offer a manufacturing business loan to eligible companies.
These manufacturing business loans can be secured (collateral loans) or unsecured (collateral-free loans) depending on the loan amount, the credit score and creditworthiness of the borrower/firm, the financials of the business, and other factors. As a MSME or start-up requiring loans for manufacturing firm, also consider checking startup business loans and government loans for start-ups which often have lenient eligibility and documentation requirements.
Different banks loan for manufacturing business
Leading private and public sector banks offer loans to manufacturers. These are usually term loans, borrowed at a certain interest rate and for a tenure. Loan repayment is usually done through pre-defined EMIs.
HDFC Bank Manufacturer Loan – Business Loan for Manufacturers
The Business Growth Loan for Manufacturers is a unique business loan offering by HDFC Bank. These are collateral-free loans that make it convenient for small businesses to avail credit facility when required. These loans can be used to meet daily financial needs or business expansion, and can be applied for online or by visiting a bank branch.
|Loan amount||Up to ₹40 lakhs collateral-free loans
Up to ₹50 lakhs in selected locations
|Tenure||12 – 48 months, flexible repayment options through pre-determined EMIs|
|Overdraft||₹5 – ₹15 lakhs unsecured dropline OD facility (separate current account set as per limit; customers to pay interest only on funds utilised)|
|Eligibility & Documentation||Loan repayment history, banking transactions with the bank, creditworthiness and credit score, and other basic eligibility requirements|
|Disbursal||Quick loan disbursal time (first remember to check eligibility)|
*For more information on HDFC Business Loan for Manufacturers, visit their website: hdfcbank.com/personal/borrow/popular-loans/business-loan-to-manufacturers
We next take a look at the popular NBFCs offering business loan for manufacturers.
Bajaj Finserv Business Loan for Manufacturers
Bajaj Finserv offers business loans to companies in the manufacturing sector. These are unsecure business loans to manufacturers, with quick processing time and nominal documentation. To avail this loan, the borrower must be an Indian citizen.
|Loan amount||Up to ₹50 lakhs collateral-free loans to meet working capital needs|
|Tenure||Up to 96 months, flexible repayment options|
|Features||Online application and quick approval, doorstep facility for loan processing formalities, online customer portal to self-manage account, get funds with 48 hours of approval (T&C apply)|
|Eligibility & Documentation||Nominal documents such as 685+ credit score (i.e., your credit score report), 3+ years vintage, applicant age between 24 and 70 years at the time of loan maturity|
|Interest rate||9.75% – 30% per annum
Processing fees (up to 3.54% of loan amount) + stamp duty + documentation charges + more
*To learn more about Bajaj Finserv manufacturing loan, visit their website: bajajfinserv.in/business-loan-for-manufacturers
Bajaj Markets Business Loan for Manufacturers
Bajaj Finserv Markets is another trusted lender you can consider for loans for manufacturing business. These loans can be availed for business expansion, infrastructure and technology upgrade, new product development, production growth or any other. These are collateral-free loans for manufacturing business with easy repayment options.
|Loan amount||Up to ₹50 lakhs collateral free loans|
|Tenure||12 – 72 months, flexible loan repayment options|
|Features||Doorstep delivery for verification/consultation/query resolution, online loan application, quick disbursal of funds within 24 hours after approval (T&C apply), no collateral or guarantor required|
|Eligibility & Documentation||Age – 26 – 66 years (at the time of loan maturity)
3+ years of business operations
1+ years ITR + all other basic KYC, business and financial documents required for business loan application
|Interest rate||12% p.a. onwards
Processing fees (3.99% of the loan amount) + convenience fees and any other
Foreclosure charge (4%)
*Learn more about manufacturing loan by Bajaj Markets on their website: bajajfinservmarkets.in/loans/business-loan/business-loans-for-manufacturers.html
Lendingkart Business Loan for Manufacturers
Lendingkart loans for manufacturing business is designed on the premise that manufacturing firms have diverse requirements, with different business cash flow cycles. As such, they offer flexible business loans for manufacturers based on the nature of business and the cash flow cycles.
These loans can be long, mid and short term business loans for manufacturing, certain and uncertain. Some of purpose and features of related loans are listed below:
- Raw material purchase: Continuous, short term loans, interest based, and to be paid out of cash flow
- Purchase/rent of machinery: One-time, long term, EMI based (for purchase), continuous interest based payable out of cash flow (for rent)
- Purchase/rent of manufacturing setup: One-time, long term, EMI based (for purchase), ongoing interest based payable out of cash flow and profits (for rent)
*For more information on Lendingkart manufacturing loans please visit: lendingkart.com/business-loans/loan-for-manufacturers/
For purchase of machinery for business in general, also consider looking at machinery loans structured primary for the buying and renting of machinery for business.
IIFL Finance Manufacturer Loan
Apart IIFL Finance business loans, manufacturing firms can also avail funds for their business.
|Loan amount||Up to ₹30 lakhs no-collateral loans|
|Features||Minimum documentation, online application, quick disbursal|
|Eligibility||6+ months in operations at the time of loan application
₹90,000+ minimum turnover in the last 3 months at the time of application
Location of business cannot be in a negative location list
Business does not fall under restricted business
NGOs, charitable organisations, trusts – not eligible
6-12 months bank statements (or individual and company), PAN card, GST registration
Proof of business registration, deed copy or similar
|Disbursal||Within 48 hours after loan approval (T&C apply)|
*For more details, visit IIFL Finance website: iifl.com/business-loans/business-loan-for-manufacturers
Government loan for manufacturing business
Before closing our discussion, let’s take a look at some of the popular central govt loan scheme for manufacturing business. The key point to understand here is that most of these schemes are applicable to businesses from diverse sectors and not necessarily exclusive to the manufacturing industry. Some popular government loan scheme for manufacturers are:
|Name of loan scheme||Features|
|Pradhan Mantri MUDRA Yojana (PMMY)||Mudra loan eligibility is open to all businesses in manufacturing sector e.g., small manufacturing units, food processors, small industries etc.
Loan amount – ₹50, 000 to ₹10 lakhs
|Credit Guarantee Scheme (CGTMSE)||Eligibility – New and existing businesses in manufacturing
Loan amount – Up to ₹2 crores
CGTMSE scheme provides credit cover based on the loan amount and type of business, e.g., 50% for retail trade
|Stand-Up India||Eligibility – All manufacturing units, run by women entrepreneurs or SC/ST (at least 51% shareholding)
Loan amount – ₹10 lakhs – ₹1 crore
Stand-Up India scheme offers the lowest interest rate
As a small business owner, the first step to avail funds for your business is to understand the different types of business finance available to you. This will help you evaluate options better and select the best option for your business.