info@logintoloans.com +91 8885545255

Logintoloans Assistant

Enter Pincode

Personal Details

Features of Federal Bank's Machinery Loan

  • Purpose of the Loan:
    - The loan is provided for the acquisition of fixed assets, such as machinery, equipment, and tools, to enhance business operations, productivity, and efficiency.
    - It supports purposes like purchasing new or used machinery, upgrading existing equipment, or setting up additional manufacturing facilities.
  • Loan Types:
    - Term Loans: Offered for mid-to-large corporates or projects with significant financial exposure. These are long-term credit facilities for capital expenditure, including machinery acquisition.
    - SME Business Loans: Cater to smaller businesses engaged in manufacturing, services, or trading, with schemes like Federal Insta Loans for quick access to funds.
  • Eligibility:
    - For Term Loans: Aimed at mid/large corporates with a turnover exceeding ₹500 crores, project outlays of ₹500 crores, or minimum exposure (funded + non-funded) of ₹25 crores.
Credit Card Promotion
    • Eligibility:
      For Term Loans: Aimed at mid/large corporates with a turnover exceeding ₹500 crores, project outlays of ₹500 crores, or minimum exposure (funded + non-funded) of ₹25 crores.
      For SME Loans: Available to legal entities (e.g., proprietorships, partnerships, companies) engaged in manufacturing, service, or trading, excluding NBFCs, chit companies, real estate, or export credit sectors.
      Applicants must provide proof of identity (e.g., Passport, Voter’s ID, PAN Card) and address proof (e.g., utility bills, lease agreement).
    • Loan Amount and Tenure: The loan amount varies based on the business’s financial profile, project requirements, and the cost of machinery. Specific amounts for machinery loans are not explicitly detailed, but term loans can cover significant capital expenditures. Tenure for term loans extends up to 60 months, with flexible repayment options (monthly, quarterly, half-yearly installments, or bullet repayments).
    • Repayment Options: Repayment can be structured as Equal Monthly Installments (EMI), graded payments, or customized schedules based on the borrower’s cash flow. Methods include Electronic Clearing Service (ECS), National Automated Clearing House (NACH), post-dated cheques (PDCs), or auto-debit for Federal Bank account holders.
    • Security/Collateral:
      Hypothecation: The machinery purchased is typically hypothecated to Federal Bank, meaning the bank holds a charge on the equipment until the loan is fully repaid.
      Additional Security: For larger loans, tangible securities like immovable properties or bank deposits may be required.
      Personal Guarantee: Proprietors, partners, or promoters may need to provide a personal guarantee.
    • Interest Rates: Federal Bank offers competitive interest rates, though specific rates for machinery loans are not publicly disclosed in the provided data. Rates depend on the borrower’s credit profile, loan tenure, and market conditions. SME loans are noted for low interest rates, making them attractive for small businesses.
    • Processing and Documentation:
      Minimal Documentation: Requires KYC documents (identity and address proof), business registration documents, financial statements (e.g., bank statements, GST returns), and a quotation/proforma invoice for the machinery.
      Application Process: Can be initiated by visiting a Federal Bank branch. Online application details for machinery loans are not explicitly mentioned, but SME loans may involve digital processes for faster processing.
      Processing Fees: A non-refundable processing fee may apply, as is standard for business loans.
    • Flexibility and Customization: Loans are tailored to meet specific business needs, such as technology upgrades, energy conservation schemes, or productivity enhancements. Federal Bank supports schemes like the Technology Upgradation Fund Scheme (TUFS) for specific industries.
    • Tax Benefits: Businesses may avail tax deductions on the interest paid on machinery loans, reducing the overall cost of borrowing. Depreciation benefits on the purchased machinery may also apply, as per Indian tax regulations.
    • Quick Disbursal: Federal Insta Loans and other SME loan schemes emphasize fast and convenient disbursal, often within a few working days, subject to document verification and approval.
    • Additional Features:
      Comprehensive Support: Federal Bank provides guidance through its tutorial video hub and banking innovations to help borrowers make informed financial decisions.
      Wide Applicability: Loans can also cover related expenses like factory setup, interior decoration, or acquisition of software/hardware, making them versatile for business growth.
Who We Are

Benefits of Federal Bank Machinery Loans

  • Enhanced Productivity and Efficiency: Enables businesses to purchase modern machinery, upgrade outdated equipment, or expand production capacity, leading to improved operational efficiency and output.
  • Financial Flexibility: Offers customized repayment schedules (EMI, quarterly, or bullet payments) aligned with the business’s cash flow, reducing financial strain. Loan tenure up to 60 months provides manageable repayment periods.
  • Competitive Interest Rates: Provides affordable financing with low interest rates (specific rates vary based on credit profile), making borrowing cost-effective for SMEs and corporates.
    • Tax Benefits: Interest paid on the loan is tax-deductible, lowering the overall cost of borrowing. Depreciation benefits on purchased machinery can further reduce tax liabilities, as per Indian tax laws.
    • Quick and Convenient Disbursal: Fast loan processing, especially under schemes like Federal Insta Loans, ensures timely access to funds for machinery purchases, often within days of approval.
    • Minimal Documentation: Requires straightforward documentation (KYC, business proof, financials, machinery quotation), simplifying the application process for businesses.
    • Versatile Usage: Funds can be used for new or used machinery, technology upgrades, or related expenses like factory setup, offering flexibility to meet diverse business needs.
    • Collateral Options: The machinery itself is hypothecated as primary security, reducing the need for additional collateral in some cases, though larger loans may require tangible securities like property.
    • Support for Business Growth: Facilitates capital investment in assets critical for scaling operations, entering new markets, or adopting advanced technologies, fostering long-term growth.
    • Access to Government Schemes: Federal Bank supports schemes like the Technology Upgradation Fund Scheme (TUFS), enabling businesses to access subsidized financing for specific industries.
    • Tailored Solutions: Loans are customized to suit the borrower’s financial profile and machinery requirements, ensuring alignment with business goals.
    • Improved Cash Flow Management: Spreading the cost of machinery over the loan tenure preserves working capital, allowing businesses to allocate funds to other operational needs.
Check Best Gold Loan Offers

Steps to Apply for Federal Bank Machinery Loan

  • 1. Determine Eligibility:
    • For SME Loans: Suitable for proprietorships, partnerships, or companies in manufacturing, services, or trading (excluding NBFCs, real estate, or export credit). Ensure your business has necessary financial records and a quotation for the machinery.
    • For Term Loans: Aimed at mid/large corporates with turnover above ₹500 crores, project outlays of ₹500 crores, or minimum exposure of ₹25 crores.
    • Confirm you meet these criteria before applying.
  • 2. Gather Required Documents:
    • KYC Documents: Identity proof (e.g., Passport, Voter’s ID, PAN Card, Aadhaar Card); Address proof (e.g., utility bills, lease agreement, Aadhaar Card).
    • Business Documents: Business registration proof (e.g., GST certificate, Shop Act license, partnership deed, or company incorporation certificate). Financial statements (e.g., last 6 months’ bank statements, GST returns, audited balance sheets for larger businesses).
    • Loan-Specific Documents: Quotation or proforma invoice for the machinery/equipment to be purchased. Business plan or project report (for term loans or larger machinery purchases). Optional: Property documents or other collateral details if additional security is required.
  • 3. Choose Application Method:
    • Offline (Branch Visit): Locate the nearest Federal Bank branch using the branch locator on www.federalbank.co.in. Visit the branch and meet with a loan officer to discuss your machinery loan requirements.
    • Online (Limited Availability): Federal Bank’s website or mobile apps (e.g., Sanchar Saathi, Saa₹thi) may allow initial inquiries or applications for SME loans. Check www.federalbank.co.in for any online loan application portals.
      Note: Specific online application processes for machinery loans are not explicitly detailed, so you may need to confirm with the bank.
  • 4. Fill Out the Application Form:
    • Obtain the loan application form from the branch or online (if available).
    • Provide details about your business, loan amount, purpose (machinery purchase), repayment preferences, and financial history.
    • Specify that the loan is for acquiring machinery and include the machinery quotation.
  • 5. Submit Documents and Application:
    • Submit the completed application form along with all required documents to the branch loan officer or upload them online if applying digitally.
    • Ensure all documents are accurate and up-to-date to avoid delays.
  • 6. Loan Processing and Verification:
    • The bank will verify your documents, assess your creditworthiness, and evaluate the machinery purchase proposal.
    • A site visit or business inspection may be conducted for SME loans or larger term loans.
    • Federal Bank may request additional documents or clarifications during this stage.
  • 7. Loan Approval and Agreement:
    • Upon approval, the bank will issue a sanction letter outlining the loan amount, interest rate, tenure, repayment schedule, and terms (e.g., hypothecation of machinery, additional collateral).
    • Review and sign the loan agreement, ensuring you understand all conditions.
  • 8. Loan Disbursal:
    • After signing the agreement and completing formalities (e.g., hypothecation of machinery, submission of collateral documents), the loan amount will be disbursed.
    • Funds are typically transferred directly to the machinery supplier’s account or your business account, depending on the agreement.
    • Disbursal for SME loans (e.g., Federal Insta Loans) can be quick, often within a few working days.

Documents Required for Federal Bank Machinery Loans

  • 1. KYC Documents (For Applicant/Business Owners):
    - Identity Proof (any one):
    PAN Card, Aadhaar Card, Passport, Voter’s ID, or Driving License.
    - Address Proof (any one):
    Aadhaar Card, utility bills (electricity, telephone, or gas not older than 3 months), lease agreement, ration card, or passport.
    - Photograph:
    Recent passport-sized photographs of the applicant (proprietor, partners, or directors).
    - Signature Proof:
    Signed declaration or banker’s verification of signature (if requested by the bank).
  • 2. Business Documents:
    - Business Registration Proof:
    Proprietorship: GST certificate, Shop Act license, or Udyam registration.
    Partnership: Partnership deed and firm registration certificate.
    Company: Certificate of Incorporation, MOA, and AOA.
    - GST Registration Certificate (if applicable).
    - PAN Card of the business entity.
    - Trade License or other relevant statutory licenses (if required).
    - Udyam/MSME Registration: For MSME classification benefits.
  • 3. Financial Documents:
    - Bank Statements: Last 6 months for SME loans or 12 months for larger term loans.
    - Income Tax Returns (ITR): 1–2 years for SMEs or 2–3 years for term loans with computation of income.
    - GST Returns: Last 6–12 months (if applicable).
    - Audited Financials (for larger loans): Balance sheet, P&L statement, and cash flow for the last 2–3 years.
    - Provisional Financials: For the current year (if applicable).
    - Projected Financials: Business plan or project report showing revenue projections and repayment capacity.
    - CA Certification: Net worth or turnover certificate certified by a Chartered Accountant (for higher loan amounts).
  • 4. Loan-Specific Documents:
    - Machinery Quotation/Proforma Invoice: Detailed supplier invoice with cost, model, and specifications.
    - Purpose Statement: Application stating the loan purpose (e.g., machinery purchase or upgrade).
    - Project Report (for term loans): Detailed document outlining machinery’s business impact and implementation plan.
    - Implementation Schedule: Timeline for machinery acquisition and expected impact on operations.
  • 5. Collateral/Security Documents (if applicable):
    - Hypothecation Details: Documentation related to machinery hypothecation (via invoice or loan agreement).
    - Additional Collateral (for larger loans):
    Property documents (title deed, sale/lease deed, tax receipts, encumbrance certificate), FD receipts, or approved securities.
    - Valuation Report: For immovable properties from a bank-approved valuer.
    - Personal Guarantee: Guarantee letter or undertaking from proprietors, partners, or directors.
    - Insurance Documents: Insurance policy of the machinery or asset offered as security.
  • 6. Additional Documents (if required):
    - Existing Loan Details: Sanction letters or repayment schedules of ongoing loans.
    - Board Resolution: For companies, authorizing loan application and nominating signatories.
    - Government Scheme Documents: For schemes like TUFS, include eligibility certificates or scheme-specific forms.
    - Credit Information: Consent form allowing the bank to access credit reports (e.g., CIBIL).
Check Best Gold Loan Offers

Documents Required for Federal Bank Machinery Loans

  • 1. KYC Documents (For Applicant/Business Owners):
    - Identity Proof (any one):
    PAN Card, Aadhaar Card, Passport, Voter’s ID, or Driving License.
    - Address Proof (any one):
    Aadhaar Card, utility bills (electricity, telephone, or gas not older than 3 months), lease agreement, ration card, or passport.
    - Photograph:
    Recent passport-sized photographs of the applicant (proprietor, partners, or directors).
  • 2. Business Documents:
    - Business Registration Proof:
    Proprietorship: GST certificate, Shop Act license, or Udyam registration.
    Partnership: Partnership deed and firm registration certificate.
    Company: Certificate of Incorporation, MOA, and AOA.
    - GST Registration Certificate (if applicable).
    - PAN Card of the business entity.
    - Trade License or other relevant statutory licenses (if required).
  • 3. Financial Documents:
    - Bank Statements: Last 6 months for SME loans or 12 months for larger term loans.
    - Income Tax Returns (ITR): 1–2 years for SMEs or 2–3 years for term loans with computation of income.
    - GST Returns: Last 6–12 months (if applicable).
    - Audited Financials (for larger loans): Balance sheet, P&L statement, and cash flow for the last 2–3 years.
    - Provisional Financials: For the current year (if applicable).
    - Projected Financials: Business plan or project report showing revenue projections and repayment capacity.
  • 4. Loan-Specific Documents:
    - Machinery Quotation/Proforma Invoice: Detailed supplier invoice with cost, model, and specifications.
    - Purpose Statement: Application stating the loan purpose (e.g., machinery purchase or upgrade).
    - Project Report (for term loans): Detailed document outlining machinery’s business impact and implementation plan.
  • 5. Collateral/Security Documents (if applicable):
    - Hypothecation Details: Documentation related to machinery hypothecation (via invoice or loan agreement).
    - Additional Collateral (for larger loans):
    Property documents (title deed, sale/lease deed, tax receipts, encumbrance certificate), FD receipts, or approved securities.
    - Valuation Report: For immovable properties from a bank-approved valuer.
    - Personal Guarantee: Guarantee letter or undertaking from proprietors, partners, or directors.
  • 6. Additional Documents (if required):
    - Existing Loan Details: Sanction letters or repayment schedules of ongoing loans.
    - Board Resolution: For companies, authorizing loan application and nominating signatories.
    - Government Scheme Documents: For schemes like TUFS, include eligibility certificates or scheme-specific forms.
    - Credit Information: Consent form allowing the bank to access credit reports (e.g., CIBIL).

Factors Considered for Machinery in Federal Bank Machinery Loans

  • Type and Purpose of Machinery:
    - The machinery must be directly related to the business’s operations, such as manufacturing equipment, industrial tools, or technology upgrades.
    Examples: Production machinery, CNC machines, packaging equipment, or energy-efficient tools.
    It should enhance productivity, efficiency, or support business expansion, aligning with the loan’s purpose (e.g., modernization, capacity increase).
    Machinery may be supported under schemes like TUFS for specific industries.
  • New vs. Used Machinery:
    - Federal Bank primarily finances new machinery to ensure reliability and resale value.
    Used machinery may be considered if in good condition, certified by a reputable supplier, and accompanied by a valuation report.
  • Machinery Cost and Loan Amount:
    - A detailed quotation or proforma invoice determines the cost of machinery and eligible loan amount.
    The bank typically finances up to 75–90% of the machinery cost; the borrower must provide the remaining margin.
    The business's financial capacity and repayment ability are also evaluated.
  • Hypothecation of Machinery:
    - The machinery is hypothecated to Federal Bank as the primary security.
    Ownership must transfer to the borrower, and the charge should be registered with relevant authorities.
    Insurance is mandatory with the bank listed as the beneficiary.
  • Supplier Credibility:
    - The supplier must be reputable and capable of providing after-sales support.
    The bank may verify credentials and review invoices for authenticity to avoid overvaluation.
    A detailed invoice with make, model, and specifications is mandatory.
  • Depreciation and Resale Value:
    - The bank assesses depreciation and potential resale value to mitigate risk.
    High-quality and durable machinery with good resale value is preferred.
    Used machinery must have a current valuation report from an approved valuer.
  • Compliance with Regulations:
    - Machinery must meet industry and regulatory standards (e.g., safety, environment).
    For imports, necessary licenses, customs clearance, and forex approvals may be required.
  • Installation and Operational Feasibility:
    - The bank ensures the borrower has infrastructure and utilities for machinery installation.
    Availability of space, power, and operational expertise is assessed.
    Project reports or business plans may be needed to explain integration into operations.
  • Impact on Business Growth:
    - The machinery should improve production, reduce costs, or enhance product quality.
    Evidence like project reports may be required to justify loan repayment feasibility.
  • Maintenance and Insurance:
    - The borrower must maintain the machinery during the loan tenure.

Frequently Asked Questions (FAQs)

1. What is a machinery loan, and what can it be used for?
A machinery loan from Federal Bank is a financing option to purchase or upgrade machinery, equipment, or tools for business operations. It can be used to:
- Acquire new or used machinery for manufacturing, processing, or services.
- Upgrade existing equipment for improved productivity or efficiency.
- Support technology adoption or energy conservation (e.g., under schemes like TUFS).
- Cover related expenses like factory setup or installation (subject to bank approval).
2. Who is eligible for a Federal Bank machinery loan?
For SME Business Loans:
- Proprietorships, partnerships, or companies in manufacturing, services, or trading (excluding NBFCs, real estate, or export credit).
- Stable business with financial records (e.g., GST returns, bank statements).
- Good credit history and repayment capacity.

For Term Loans:
- Mid/large corporates with turnover above ₹500 crores, project outlay of ₹500 crores, or minimum exposure of ₹25 crores.
- Strong financial profile and credit rating.
- Applicants must be 21–65 years old (at loan maturity) and operate in India.
3. What types of machinery can be financed?
New or used machinery, including:
- Industrial equipment (e.g., CNC machines, lathes, or packaging units).
- Manufacturing tools or production lines.
- Technology-driven or energy-efficient equipment.
Used machinery may require a valuation report and is subject to stricter scrutiny. Machinery must comply with regulatory standards and be sourced from reputable suppliers.
4. What is the loan amount and tenure for a machinery loan?
Loan Amount: Depends on the machinery cost (per quotation). Typically, 75–90% of the machinery’s value is financed, with the borrower paying the margin.
- SME loans: Smaller amounts for MSMEs.
- Term loans: Larger amounts (e.g., ₹25 crores or more) for corporates.

Tenure: Up to 60 months, with flexible repayment options (monthly, quarterly, or bullet payments).
5. What are the interest rates for machinery loans?
Federal Bank offers competitive interest rates, but specific rates are not publicly disclosed.
Rates depend on:
- Borrower’s credit profile
- Loan type (SME or term loan)
- Market conditions
Contact the bank at 1800-425-1199 or visit www.federalbank.co.in for current rates.
6. What documents are required to apply for a machinery loan?
- KYC Documents: PAN Card, Aadhaar, Passport, Voter’s ID, utility bills, or lease agreement
- Business Documents: GST certificate, Shop Act license, partnership deed, or certificate of incorporation
- Financial Documents: 6–12 months’ bank statements, 1–3 years’ ITR, GST returns, or audited financials
- Loan-Specific Documents: Machinery quotation/proforma invoice, business plan, or project report
- Collateral Documents: Property papers or fixed deposit receipts (if required)
- Additional: Insurance details, supplier credentials, or government scheme certificates (e.g., TUFS)
7. How do I apply for a machinery loan?
Offline:
- Visit a Federal Bank branch with documents and a filled application form.
- Discuss with a loan officer and submit the machinery quotation.

Online:
- Visit www.federalbank.co.in or use mobile apps like Sanchar Saathi for digital application options (availability may vary).
- Upload documents and track status online, if supported.
- Disbursal is typically quick for SME loans (e.g., Federal Insta Loans) after approval.
8. Is collateral required for a machinery loan?
- The machinery purchased is hypothecated to Federal Bank as primary security.
- Additional collateral (e.g., property, fixed deposits) may be required for larger term loans or borrowers with weaker credit profiles.
- Personal guarantees from proprietors, partners, or directors may also be needed.
9. Can I finance used machinery with this loan?
Yes, but subject to stricter conditions:
- A valuation report from a bank-approved valuer is required.
- The machinery must be in good condition and sourced from a reputable supplier.
- Loan-to-value ratio may be lower due to depreciation risks.
10. What are the benefits of a Federal Bank machinery loan?
- Competitive interest rates and flexible repayment (up to 60 months)
- Tax benefits on interest paid and machinery depreciation
- Quick disbursal for SME loans (often within days)
- Supports business growth through modern equipment or technology upgrades
- Minimal documentation for smaller loans
11. Is insurance mandatory for the machinery?
Yes, comprehensive insurance covering damage, theft, or breakdown is required.
Federal Bank must be listed as the beneficiary/loss payee in the insurance policy.
Proof of insurance is part of the loan agreement.
12. Can I avail of government schemes with this loan?
Yes, Federal Bank supports schemes like the Technology Upgradation Fund Scheme (TUFS) for industries like textiles, which may offer subsidized rates or relaxed terms.
Provide scheme-specific documents during the application to confirm eligibility.

List of Machinery Loans Offered by Federal Bank

  • Federal Insta Loans (SME)
  • Federal Bank SME Term Loans
  • Federal Bank SME Demand Loans
  • Federal Bank Corporate Term Loans
  • Federal Bank TUFS Loans
  • Federal Bank Project Loans
  • Federal Bank Equipment Financing Loans
  • Federal Bank Working Capital Term Loans