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Features of PNB Machinery Loan

  • Purpose:
    - Financing the purchase of fixed assets, including plant and machinery, equipment, vehicles, and other assets for MSMEs and agri-infrastructure businesses.
    - Supports business expansion, modernization, or setting up new units by funding machinery acquisition.
  • Loan Types:
    - Term Loan: For purchasing machinery or equipment, with a structured repayment schedule.
    - Working Capital: Can be combined with term loans for operational needs related to machinery usage.
    - Non-Fund Based Limits: For specific requirements like letters of credit for equipment procurement.
  • Loan Amount:
    - Varies based on the borrower's profile, business requirements, and repayment capacity.
    - Typically ranges from Rs. 50,000 to higher amounts (up to Rs. 15 lakhs for business loans, with larger amounts possible for MSMEs based on eligibility).
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      • Interest Rates: Linked to the Repo Linked Lending Rate (RLLR) + Business Strategy Premium (BSP).
        Rates vary based on collateral coverage:
        Collateral < 50%: RLLR + BSP + 0.50% to 1.50%
        Collateral 50% to <100%: RLLR + BSP + 0.35% to 1.35%
        Collateral > 100%: RLLR + BSP + 0.20% to 1.25%
        As of recent data, business loan interest rates start at 12.60% p.a. but are subject to change based on creditworthiness, CIBIL score, and RBI guidelines.
      • Repayment Tenure:
        Term Loan: Up to 12 years, including a moratorium period of up to 2 years (including construction/operation period up to 18 months, with interest capitalized during construction).
        Working Capital: 1 year, subject to annual renewal.
        Flexible repayment options tailored to business cash flows.
      • Margin:
        15% to 25% of the asset cost, depending on the type of asset financed. The borrower must contribute this portion upfront.
      • Security:
        Primary Security: Hypothecation of assets (e.g., machinery, equipment, or stock) created from the loan.
        Collateral Security: Ranges from 30% to 75% of the loan amount, depending on the MSME segment (manufacturing, services, contractors, or traders). Some schemes may offer collateral-free loans under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for smaller amounts.
      • Eligibility:
        Open to MSMEs, startups, entrepreneurs, and self-employed professionals.
        Minimum business continuity of 2 years (for self-employed, 2 years of experience in the field).
        Minimum turnover of Rs. 25 lakhs for business loans.
        Applicant age: 21 to 58 years at loan maturity.
        Credit score above 650 preferred; low scores may lead to higher interest rates or unfavorable terms.
      • Processing Fees:
        Varies by scheme; for MSME loans, a 20% discount on processing fees is offered for online applications.
        For loans up to Rs. 5 lakhs, processing fees are refunded if the loan is not sanctioned.
        Specific fees for machinery loans are not detailed but align with business loan processing charges (e.g., up to 1% for personal loans, likely similar for MSME loans).
      • Application Process:
        Online: Apply via PNB's official website or platforms like PNB WebLenS for a seamless process.
        Offline: Visit a PNB branch with required documents.
        Steps include filling out the application, submitting KYC documents (PAN, Aadhaar, etc.), business proofs (ITR, balance sheets), and asset details. Loan approval and disbursement typically take 3-4 days after document verification.
      • Additional Features:
        MSME Vishesh: Automatic increase in working capital limits for existing MSME Prime Plus borrowers.
        MSME Open Term Loan: Pre-approved term loan for existing PNB borrowers, offering flexibility for machinery purchases.
        Subsidies: Some schemes, like those for specific sectors (e.g., leather or food processing), may offer partial cost coverage or subsidies through government programs.
        Tax Benefits: Interest on machinery loans may reduce taxable income, providing tax incentives.
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Benefits of PNB Machinery Loans

  • Business Expansion and Modernization: Enables purchase of advanced machinery, boosting production capacity, efficiency, and competitiveness. Supports modernization by replacing outdated equipment, improving product quality and operational scalability.
  • Flexible Financing: Loan amounts tailored to business needs, ranging from small-scale equipment purchases to large machinery investments (e.g., Rs. 50,000 to crores for MSMEs). Combines term loans for machinery with working capital to ensure smooth operations.
  • Affordable Interest Rates: Competitive rates linked to Repo Linked Lending Rate (RLLR) + Business Strategy Premium (BSP), starting at ~12.60% p.a. (subject to credit profile and collateral). Lower rates for higher collateral coverage (e.g., >100% collateral reduces interest by 0.20%-1.25%).
    • Long Repayment Tenure: Machinery loans offer up to 12 years for term loans, including a moratorium period of up to 2 years, easing cash flow pressure during initial setup or operation.
    • Collateral Flexibility: PNB offers machinery loans with hypothecation of machinery as primary security reduces the need for additional assets. Collateral requirements range from 30% to 75% of loan value.
    • Tax Benefits: Interest paid on machinery loans is tax-deductible, reducing taxable income and overall tax liability. Depreciation on machinery can further lower tax burdens.
    • Quick and Convenient Processing: Fast approval and disbursement (typically 3-4 days) via online platforms like PNB WebLenS or branch applications. 20% discount on processing fees for online applications.
    • Support for Diverse Sectors: Available for MSMEs, startups, self-employed professionals, and specific sectors. Specialized schemes like PNB Mahila Udyami offer tailored benefits for women entrepreneurs, including lower fees.
    • Government Scheme Integration: Access to subsidies or partial cost coverage for specific industries through government programs. CGTMSE-backed loans reduce financial risk for borrowers and lenders.
    • Enhanced Business Credit Profile: Timely repayment improves CIBIL score, enhancing eligibility for future loans at better terms. Pre-approved loans for existing PNB customers simplify access to additional funding.
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How to Apply for PNB Machinery Loans

  • 1. Check Eligibility
    • Ensure you meet PNB's eligibility criteria:
      Business type: MSMEs, startups, self-employed professionals, or entrepreneurs.
      Minimum business continuity: 2 years (or 2 years of experience for self-employed).
      Minimum turnover: Rs. 25 lakhs (for business loans; varies for MSMEs).
      Age: 21 to 58 years at loan maturity.
      Credit score: Preferably above 650 (lower scores may affect terms).
    • Confirm the loan purpose (e.g., purchasing machinery, equipment, or vehicles) aligns with the scheme.
  • 2. Gather Required Documents:
    • KYC Documents: PAN card, Aadhaar card, Voter ID, passport, or driving license.
    • Business Proof: Last 3 years' Income Tax Returns (ITR) with computation of income, audited balance sheets and profit & loss statements (for businesses), GST returns (if applicable).
    • Banking Proof: Last 6-12 months' bank statements (from the primary business account).
    • Asset Details: Quotation or proforma invoice for the machinery/equipment to be purchased.
  • 3. Choose Application Method:
    • Online Application:
      - Visit PNB's official website (www.pnbindia.in) or the PNB WebLenS platform.
      - Navigate to the MSME/business loan section and select the relevant scheme (e.g., MSME Prime Plus).
      - Fill out the online application form with personal, business, and loan details.
      - Upload scanned copies of required documents.
      - Submit the application and note the application reference number for tracking.
      Benefit: 20% discount on processing fees for online applications.
    • Offline Application:
      - Visit the nearest PNB branch with all required documents.
      - Request the machinery loan application form from the loan officer.
      - Fill out the form, attach physical copies of documents, and submit them to the branch.
      - The bank may schedule a discussion or site visit to assess your business.
  • 4. Loan Processing and Verification
    • PNB will verify your application and documents.
    • The bank may conduct:
      Credit appraisal: Assessing your CIBIL score, repayment capacity, and business financials.
      Asset verification: Confirming the machinery/equipment details and valuation.
      Collateral evaluation (if applicable): Verifying property or other assets offered as security.
    • For MSME loans, a site visit to your business premises may be conducted.
    • Processing typically takes 3-4 days, depending on document completeness and loan complexity.
  • 5. Loan Approval and Sanction
    • Upon successful verification, PNB will issue a sanction letter detailing:
      Loan amount, interest rate, repayment tenure, and terms.
      Margin requirement (e.g., 15%-25% of asset cost to be paid by you).
      Collateral or CGTMSE coverage details.
    • If the loan is not sanctioned (for loans up to Rs. 5 lakhs), processing fees are refunded.

Eligibility Criteria for PNB Machinery Loans

  • 1. Applicant Type:
    • Micro, Small, and Medium Enterprises (MSMEs): As defined under the MSME Development Act, including manufacturing, services, trading, or contractor businesses.
    • Startups: New businesses with innovative ideas or viable projects.
    • Self-Employed Professionals: Individuals with professional qualifications or experience in their field (e.g., doctors, consultants).
    • Proprietorships, Partnerships, or Companies: Registered entities like private limited companies, LLPs, or trusts engaged in eligible activities.
    • Women Entrepreneurs: Eligible under schemes like PNB Mahila Udyami with relaxed terms.
    • Agri-Infrastructure Businesses: Entities involved in agriculture-related machinery or projects.
  • 2. Business Continuity:
    • Minimum 2 years of business operations for existing businesses.
    • For self-employed professionals, 2 years of experience in the relevant field.
    • Startups may be exempt from this requirement but must provide a viable business plan or project report.
  • 3. Turnover Requirements:
    • Minimum annual turnover of Rs. 25 lakhs for business loans (may vary for MSME-specific schemes).
    • For smaller MSMEs or startups, turnover criteria may be relaxed, subject to PNB's discretion and project viability.
  • 4. Age of Applicant:
    • Minimum age: 21 years at the time of application.
    • Maximum age: 58 years at the time of loan maturity (extendable up to 65 years for certain cases, based on repayment capacity).
  • 5. Credit Score:
    • A CIBIL score above 650 is preferred for favorable terms.
    • Applicants with lower scores may still qualify but could face higher interest rates or stricter collateral requirements.
    • No major defaults or bankruptcy history in the applicant's credit report.
  • 6. Purpose of Loan:
    • The loan must be used for purchasing fixed assets like plant and machinery, equipment, vehicles, or other productive assets.
    • Eligible for business expansion, modernization, or setting up new units.
    • Specific schemes may support niche sectors (e.g., leather, food processing, or medical equipment).
  • 7. Compliance & Licensing:
    • Business must have necessary statutory registrations (Udyam, GST, local trade licenses).
    • Applicable environmental, health, or sectoral clearances must be available if required by law.
  • 8. Co-applicants or Guarantors:
    • For partnerships and companies, co-applicants may include partners or directors.
    • In cases of weaker credit profile, personal guarantors may be required.
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Documents Required for PNB Machinery Loans

  • 1. KYC Documents (Identity and Address Proof)
    - Individual/Proprietor:
    PAN card (mandatory).
    Aadhaar card, Voter ID, passport, or driving license (any one).
    Recent passport-sized photographs (2-4, as specified by the branch).
    - Address Proof:
    Aadhaar card, utility bill (electricity/water, not older than 3 months), rent agreement, or municipal tax receipt.
    For Partners/Directors (in case of partnership or company):
    KYC documents for all partners/directors with significant ownership.
  • 2. Business Proof
    - Registration Documents:
    For proprietorship: GST registration, Udyam registration (for MSMEs), or shop/trade license.
    For partnership: Partnership deed and registration certificate.
    For companies/LLPs: Certificate of Incorporation, Memorandum of Association (MoA), Articles of Association (AoA), and PAN of the entity.
    For trusts/societies: Trust deed or registration certificate.
    - Business Continuity Proof:
    Last 3 years' Income Tax Returns (ITR) with computation of income.
    Audited balance sheets and profit & loss statements for the last 2-3 years (mandatory for loans above a certain threshold, typically Rs. 10 lakhs).
    GST returns (for the last 6-12 months, if applicable).
    Credit Monitoring Arrangement (CMA) data for larger loans (to assess financial projections).
  • 3. Banking Proof
    - Bank statements of the primary business account for the last 6-12 months (reflecting transactions and financial health).
    - For larger loans, statements from all major business accounts may be required.
    - Cancelled cheque or bank passbook copy (for loan disbursement and EMI setup).
  • 4. Machinery/Asset Details
    - Quotation or Proforma Invoice: From the supplier detailing the machinery/equipment to be purchased (including cost, specifications, and delivery terms).
    - Valuation Report: If required by PNB, especially for high-value or specialized machinery.
    - List of Assets: If multiple assets are being financed, provide a detailed list with costs.
    - Purpose Statement: Brief note or project report explaining how the machinery will enhance business operations (e.g., production capacity, modernization).
  • 5. Collateral Documents (If Applicable)
    - For loans requiring collateral (30%-75% of loan value, depending on the scheme):
    Property documents (title deed, sale agreement, or lease deed).
    Latest property valuation report from a PNB-approved valuer.

Factors Considered for Machinery in PNB Machinery Loans

  • Purpose and Relevance of Machinery:
    - The machinery must align with the business's operations (e.g., manufacturing equipment for a factory, medical equipment for a hospital, or agricultural machinery for farming).
    PNB evaluates whether the machinery will enhance productivity, efficiency, or revenue generation (e.g., through modernization, expansion, or replacing outdated equipment).
    A project report or statement explaining the machinery's role in business growth may be required.
  • Type and Specifications of Machinery:
    - Type: Includes plant and machinery, industrial equipment, vehicles, or specialized tools (e.g., CNC machines, tractors, or diagnostic equipment).
    Specifications: PNB reviews technical details (e.g., capacity, output, or technology) to ensure the machinery meets industry standards and business needs.
    The machinery should be new or, in some cases, certified refurbished equipment (used machinery may face stricter scrutiny).
  • Cost and Valuation:
    - Quotation/Proforma Invoice: A detailed invoice from the supplier, specifying the machinery's cost, model, and delivery terms, is mandatory.
    Market Value: PNB may require a valuation report (especially for high-value or specialized machinery) to confirm the cost is reasonable and aligns with market rates.
    Margin Contribution: The borrower must fund 15%-25% of the machinery's cost as a margin, with PNB financing the balance.
  • Supplier Credibility:
    - The supplier or manufacturer of the machinery must be reputable and authorized.
    PNB may verify the supplier's credentials or request additional documents (e.g., supplier's GST registration or authorization certificate).
    Preference is given to established brands or suppliers with a track record of delivering quality equipment.
  • Hypothecation as Security:
    - The machinery purchased is hypothecated to PNB as primary security for the loan.
    PNB assesses whether the machinery's value and resale potential are sufficient to cover the loan in case of default.
    Post-purchase, the machinery must be registered with relevant authorities (e.g., RTO for vehicles) with PNB noted as the hypothecation holder.
  • Durability and Lifespan:
    - The machinery's expected operational life must exceed the loan repayment tenure (up to 12 years, including a 2-year moratorium, if applicable).
    PNB evaluates whether the equipment is built for long-term use and resistant to rapid obsolescence (e.g., cutting-edge technology vs. outdated models).
    Warranty or maintenance agreements may be reviewed to ensure reliability.

Frequently Asked Questions (FAQs)

1. What is a machinery loan from Indian Bank?
A machinery loan is a term loan offered by Indian Bank to MSMEs, startups, and businesses for purchasing or upgrading machinery/equipment essential for operations. It supports sectors like manufacturing, agriculture, construction, and services, covering new or second-hand machinery.
2. What types of machinery are eligible for the loan?
Eligible machinery includes:
Manufacturing equipment: (e.g., CNC machines, looms).
Agricultural machinery: (e.g., tractors, harvesters).
Construction equipment: (e.g., cranes, excavators).
Service-oriented equipment: (e.g., medical devices, printing presses).
The machinery must be relevant to the business and enhance productivity or revenue.
3. Who can apply for a machinery loan?
Eligible applicants include:
Sole proprietorships,
Partnership firms,
LLPs,
Private/public limited companies,
MSMEs registered under Udyam,
Startups (under schemes like PMEGP or MUDRA).
Women entrepreneurs and SC/ST applicants may receive concessions.
4. What are the eligibility criteria for a machinery loan?
Key criteria include:
Age: 21–65 years at loan maturity.
Business vintage: Minimum 2–3 years (startups may qualify under PMEGP/MUDRA).
CIBIL score: Preferably 650–700+.
Business type: Manufacturing, agriculture, services, or other MSME activities.
Financial stability: Profitable financials with a Debt Service Coverage Ratio (DSCR) of 1.5+.
Indian citizenship and valid business registration (e.g., Udyam, GST).
5. Can startups or new businesses apply?
Yes, startups with less than 2–3 years of operations can apply under:
PMEGP: For new MSMEs with subsidies (15–35%).
MUDRA Yojana: For micro-enterprises with loans up to ₹10 lakh. A strong project report justifying the machinery’s impact is essential.
1. What is a PNB machinery loan?
A PNB machinery loan is a term loan provided to MSMEs, startups, self-employed professionals, or businesses to finance the purchase of fixed assets like plant and machinery, equipment, vehicles, or other productive assets. It supports business expansion, modernization, or setting up new units.
2. Who is eligible for a PNB machinery loan?
Eligible applicants include:
- Micro, Small, and Medium Enterprises (MSMEs)
- Startups with viable business plans
- Self-employed professionals (e.g., doctors, consultants)
- Proprietorships, partnerships, private limited companies, or trusts
- Women entrepreneurs (under schemes like PNB Mahila Udyami)
- Agri-businesses or sector-specific entities (e.g., medical or food processing)

Minimum Requirements:
- 2 years of business operations or professional experience
- Annual turnover of ₹25 lakhs (may vary for MSMEs)
- Age: 21–58 years at loan maturity
- CIBIL score preferably above 650
3. What types of machinery can be financed?
The loan can finance:
- Industrial machinery (e.g., CNC machines, lathes)
- Agricultural equipment (e.g., tractors, harvesters)
- Medical equipment (e.g., diagnostic machines)
- Vehicles for business use (e.g., delivery vans)
- Other productive assets like solar panels or food processing units

Machinery must be new or certified refurbished and relevant to the business.
4. What is the loan amount offered?
The loan amount depends on the applicant’s profile, business needs, and repayment capacity.
- Typically ranges from ₹50,000 to crores for MSMEs
- For smaller business loans, amounts up to ₹15 lakhs are common
- Higher limits are available for eligible MSMEs
5. What are the interest rates for machinery loans?
Interest rates are linked to the Repo Linked Lending Rate (RLLR) + Business Strategy Premium (BSP).

Rates based on collateral:
- Collateral < 50%: RLLR + BSP + 0.50%–1.50%
- Collateral 50%–<100%: RLLR + BSP + 0.35%–1.35%
- Collateral > 100%: RLLR + BSP + 0.20%–1.25%

As of recent data, rates start at approximately 12.60% p.a. but depend on credit score, loan amount, and scheme.
6. What is the repayment tenure?
- Term Loan: Up to 12 years, including a moratorium of up to 2 years
- Working Capital: 1 year, renewable annually
Repayment schedules are tailored to business cash flows.
7. Is collateral required for a machinery loan?
- Primary Security: Hypothecation of the machinery/equipment purchased
- Collateral Security: Required for most loans (30%–75% of loan value)
- Collateral-Free Option: Available under CGTMSE for loans up to ₹2 crores for MSMEs
8. What documents are required to apply?
KYC: PAN, Aadhaar, Voter ID, passport-size photos
Business Proof: 3 years’ ITR, audited balance sheets, GST returns, Udyam registration
Banking: 6–12 months’ bank statements, cancelled cheque
Machinery: Quotation/proforma invoice, valuation report (if required)
Collateral: Property deeds, valuation reports (if applicable)
Others: Business plan, loan application form, sector-specific licenses
9. How can I apply for a machinery loan?
Online:
- Visit www.pnbindia.in or the PNB WebLenS platform
- Fill out the application form, upload documents, and submit
- Benefit: 20% discount on processing fees

Offline:
- Visit a PNB branch, collect the form, submit documents, and follow up with the loan officer
- Processing typically takes 3–4 days after document verification
10. What are the processing fees?
- Varies by scheme; typically up to 1% of the loan amount
- 20% discount for online applications
- For loans up to ₹5 lakhs, fees are refunded if the loan is not sanctioned
- Check with PNB for exact details based on scheme
11. Can startups apply for machinery loans?
Yes, startups with viable business plans or DPIIT registration are eligible.
They may need to provide a project report and may qualify for CGTMSE-backed loans.
Relaxed turnover or business continuity requirements may apply.
12. Are there any tax benefits?
Yes, interest paid on the loan is tax-deductible, reducing taxable income.
Depreciation on the machinery can further lower tax liability as per the Income Tax Act.

List of Machinery Loans Offered by Punjab National Bank

  • MSME Prime Plus
  • MSME Open Term Loan
  • PNB Mahila Udyami
  • PNB Sanjeevani
  • PNB Compressed Bio Gas (CBG)
  • PNB Artisan Credit Card
  • PNB e-MUDRA (SHISHU)
  • PNB Kishore Loan
  • PNB Tarun Loan
  • PNB Weaver MUDRA
  • PNB Agriculture Loan Schemes (e.g., for tractors, harvesters)
  • Loan Against Future Lease Rentals
  • Project Finance and Infrastructure Finance
  • Working Capital Financing (with machinery component)
  • Term Loans for Capital Expenditure