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Features of SBI Machinery Loan

  • Purpose:
    - Financing the purchase of new machinery, tools, or equipment for business purposes, including manufacturing, processing, or construction activities.
    - Can be used for modernization, capacity expansion, or upgrading technology to enhance productivity.
  • Loan Amount:
    - Minimum: Typically starts at ₹5 lakh for SME loans, though specific machinery loans may have different thresholds (e.g., ₹10 lakh for certain schemes like the Asset Backed Loan).
    - Maximum: Up to ₹500 crore for SME loans, depending on the business's eligibility, project cost, and repayment capacity. For specific schemes like the Asset Backed Loan, the maximum is ₹20 crore.
  • Interest Rates:
    - Competitive rates starting from 8.25% p.a. for SME loans, linked to the External Benchmark Lending Rate (EBLR) for MSMEs or Marginal Cost of Funds Based Lending Rate (MCLR) for non-MSMEs.
    - Rates vary based on the borrower's creditworthiness, external rating, and scheme-specific guidelines. For example, the Asset Backed Loan has an effective rate of around 9.30% (MCLR + 2.30%).
    - Concessions may apply for digitally sourced loans (e.g., via YONO) or specific borrower categories.
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    • Collateral/Security:
      - Collateral Required: Most machinery loans require collateral, such as immovable property (land, building) or liquid securities. For instance:
      • A minimum of 40% collateral for schemes like the Simplified Small Business Loan.
      • 25% margin money (borrower's contribution) for certain loans like the Asset Backed Loan.
      - Hypothecation: Machinery or equipment purchased with the loan is typically hypothecated to the bank.
      - Collateral-Free Options: Some schemes, like the Pradhan Mantri Mudra Yojana (PMMY) for loans up to ₹10 lakh, are collateral-free, but these are not exclusively for machinery.
    • Repayment Tenure:
      - Up to 7 years, including a moratorium period (e.g., 6-18 months), depending on the loan scheme and cash flow of the business.
      - Flexible repayment options, such as monthly installments or variable repayments based on business cash flows for specific loans like the Construction Equipment Loan.
    • Eligibility:
      - Business Type: Registered MSMEs (sole proprietorships, partnerships, private limited companies) engaged in manufacturing, trading, or services.
      - Experience: Businesses should typically have:
      • At least 3-5 years of operation with stable sales and profits for the last 3 years.
      • A minimum turnover (e.g., ₹500 crore for industry majors in certain schemes).
      - Credit History: A credit score above 700 and a satisfactory repayment track record (e.g., CRA rating of SB-8 or better).
      - Existing SBI Customers: Some schemes prioritize existing customers with prior credit facilities from SBI.
    • Documentation:
      - KYC Documents: PAN Card, Aadhaar, Voter's ID, Passport, etc.
      - Business Documents: GST returns, last 3 years' ITR, audited financials, balance sheets, and CMA data.
      - Loan-Specific Documents: Quotations for machinery, project report, plant and machinery valuation report, and property documents for collateral.
      - Banking Proof: Last 6-12 months' bank statements and loan statements for running loans.
    • Processing and Other Charges:
      - Processing Fees: Applicable as per bank guidelines, though specific schemes (e.g., festive offers) may waive fees until a certain date (e.g., 31st March 2025 for some loans).
      - Other Charges: Documentation, inspection, and commitment charges may apply. Borrowers are informed of these before loan sanction.
    • Special Schemes:
      - SBI Construction Equipment Loan:
      • Specifically for purchasing construction equipment (e.g., backhoe loaders, excavators, cranes).
      • Minimum loan amount: ₹25 lakh, with no upper limit.
      • Collateral: Minimum 25% collateral security.
      • Interest rate: 10.30%-11.30% p.a. (base rate + 1-2%).
      • Premium for equipment insurance can be financed.
      - SBI Asset Backed Loan:
      • For working capital and capital expenditure, including machinery purchase.
      • Minimum: ₹10 lakh; Maximum: ₹20 crore.
      • Requires immovable property as collateral.
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Benefits of SBI Machinery Loans

  • Business Growth and Expansion: Enables businesses to purchase advanced machinery, increasing production capacity and supporting expansion into new markets or product lines. Facilitates modernization by replacing outdated equipment, improving efficiency and competitiveness.
  • Affordable Financing: Competitive interest rates starting from 8.25% p.a. (linked to EBLR or MCLR), making loans cost-effective compared to high-cost private financing. Flexible repayment tenures (up to 7 years, including moratorium periods of 6-18 months) align with business cash flows, reducing financial strain.
  • Collateral-Free Options for Small Businesses: Loans up to ₹10 lakh under schemes like the Pradhan Mantri Mudra Yojana (PMMY) may be collateral-free, reducing barriers for micro and small enterprises. MSMEs benefit from relaxed security requirements under certain government-backed schemes.
    • Access to Government Subsidies: Eligible MSMEs can avail a 15% capital subsidy under the Credit Linked Capital Subsidy Scheme for upgrading to state-of-the-art machinery, lowering the overall cost of investment.
    • Quick and Convenient Processing: Digital Application: Apply via SBI's website, YONO platform, or the 59-minute PSB loan portal for fast processing, with some loans sanctioned in 45 minutes for amounts up to ₹50 lakh.
      Pre-Approved Credit: Certain schemes offer pre-approved credit lines for 12 months, allowing phased machinery purchases based on project needs.
    • Flexible Loan Amounts: Loans range from ₹5 lakh to ₹500 crore (specific schemes like Asset Backed Loan cap at ₹20 crore), catering to businesses of varying sizes and needs.
    • Tailored Solutions for Specific Needs: Specialized schemes like the SBI Construction Equipment Loan cater to businesses needing heavy equipment, with customized terms like financing equipment insurance premiums.
    • Improved Cash Flow Management: Financing machinery through loans preserves working capital, allowing businesses to allocate funds to other critical areas like inventory, marketing, or hiring.
    • Enhanced Productivity and Profitability: New machinery improves operational efficiency, reduces downtime, and lowers maintenance costs, leading to higher productivity and profitability.
    • Tax Benefits: Interest paid on machinery loans is tax-deductible as a business expense under the Income Tax Act, reducing the overall tax liability.
    • Support for MSME and Export-Oriented Units: MSMEs benefit from priority sector lending, lower interest rates, and relaxed eligibility criteria under RBI guidelines.
    • Minimal Documentation for Digital Loans: For loans up to ₹50 lakh under SME Digital Business Loans, SBI uses GST returns and bank transaction history instead of extensive financial statements, simplifying the application process.
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How to Apply for SBI Machinery Loans

  • 1. Online Application Process
    • Step 1: Visit the SBI Website or YONO Platform
      Go to sbi.co.in and navigate to "Business" > "SME Loans" or "Loans for MSMEs." Alternatively, download the YONO SBI app (available on iOS and Android) and log in or register.
    • Step 2: Select the Machinery Loan Scheme
      Choose the relevant loan product, such as SBI Asset Backed Loan (for machinery and working capital), SBI Construction Equipment Loan (for heavy equipment), or SME Digital Business Loan (for quick loans up to ₹50 lakh).
    • Step 3: Fill Out the Application Form
      Complete the online application form with details like business name, type (proprietorship, partnership, etc.), and registration details, loan amount required and purpose (e.g., machinery purchase), contact information and PAN/GST details.
    • Step 4: Upload Required Documents
      KYC Documents: PAN Card, Aadhaar, Voter's ID, or Passport of the business owner/partners. Business Documents: GST registration and recent GST returns, last 3 years' Income Tax Returns (ITR) and audited financials (balance sheet, profit & loss statement), CMA data for loans above ₹25 lakh. Loan-Specific Documents: Quotation or proforma invoice for the machinery, project report outlining the purpose and expected returns, property documents for collateral (if applicable).
    • Step 5: Submit the Application
      Review the application and submit it online. You'll receive an acknowledgment with an application reference number for tracking.
    • Step 6: Bank Verification and Disbursal
      SBI will verify documents, conduct a credit appraisal, and may schedule a site visit. Upon approval, sign the loan agreement, and the loan amount will be disbursed (typically within 7-15 days for standard loans or faster for digital loans).
  • 2. Offline Application Process
    • Step 1: Locate an SME-Intensive Branch
      Visit the nearest SBI branch or an SME-specialized branch. Use the branch locator on sbi.co.in or call SBI's toll-free number (1800-11-2211).
    • Step 2: Meet a Loan Officer
      Discuss your machinery loan requirements with a bank representative and choose the appropriate loan scheme (e.g., Asset Backed Loan, Construction Equipment Loan).
    • Step 3: Collect and Submit Documents
      Provide physical copies of the required documents (same as listed in the online process): KYC, business registration, financials, machinery quotations, and collateral documents. The bank may provide a checklist specific to the loan scheme.
    • Step 4: Complete the Application Form
      Fill out the loan application form provided by the branch with assistance from the loan officer.
    • Step 5: Verification and Processing
      The branch will verify documents, assess creditworthiness, and may conduct a site inspection. Processing may take 7-30 days, depending on the loan amount and complexity.
    • Step 6: Loan Approval and Disbursal
      Upon approval, sign the loan agreement and provide any additional documents (e.g., hypothecation agreement for machinery). The loan amount is disbursed to your account or directly to the machinery supplier.
  • 3. Special Application Channels
    • SME Digital Business Loans (up to ₹50 lakh): Apply via YONO or the 59-minute portal for a fully digital process. Minimal documentation (GST returns, bank statements) and sanction within 45 minutes for eligible applicants.
    • Credit Linked Capital Subsidy Scheme (CLCSS): Apply through SBI for machinery loans eligible for a 15% subsidy (up to ₹15 lakh). Submit additional documents to the Ministry of MSME via SBI for subsidy approval post-loan disbursal.

Eligibility Criteria for SBI Machinery Loans

  • 1. Business Type
    • Registered Micro, Small, and Medium Enterprises (MSMEs) as per the MSME Development Act.
    • Sole proprietorships, partnerships, private limited companies, or limited liability partnerships (LLPs) engaged in manufacturing, trading, or services.
    • Large corporates may also qualify for certain schemes (e.g., loans up to ₹500 crore for industry majors).
    • Businesses in sectors like manufacturing, construction, processing, or export-oriented units are prioritized.
    • Startups with innovative business models and high growth potential may be considered under certain schemes.
  • 2. Business Vintage and Experience
    • Typically, 3-5 years of business operations with a proven track record.
    • Some schemes, like the SME Digital Business Loan (up to ₹50 lakh), may accept shorter vintages (e.g., 2 years) for MSMEs with strong financials.
    • Consistent sales and profits for the last 3 years, supported by audited financial statements.
    • For large businesses, a minimum turnover (e.g., ₹500 crore for certain high-value loans) may be required.
    • Businesses with well-documented business plans or projects showing strong potential for growth or modernization may be eligible.
  • 3. Creditworthiness
    • A minimum credit score of 700 (CIBIL or equivalent) for the business owner or entity.
    • No history of loan defaults or adverse credit events in the last 3-5 years.
    • For loans above ₹25 lakh, an external credit rating (e.g., CRA rating of SB-8 or better) may be required.
    • MSMEs may qualify with internal bank ratings for smaller loans.
    • Businesses with a strong debt-service coverage ratio (DSCR) are more likely to get approval.
    • Applicants with a history of timely repayments on previous loans (if applicable) will have an added advantage.
  • 4. Existing Relationship with SBI
    • Existing SBI customers with a satisfactory banking relationship (e.g., current account, prior credit facilities) are prioritized.
    • For schemes like the Asset Backed Loan, applicants should have availed credit facilities from SBI or other banks for at least 3 years.
    • Non-SBI customers can apply but must provide detailed banking history (e.g., 6-12 months' bank statements).
    • Having an active business account with SBI or another leading bank can enhance the chances of loan approval.
    • Applicants who have been regular with tax filings and compliance with legal requirements may be preferred.
  • 5. Collateral and Security
    • Collaterals like immovable property (land, building) are typically required for most machinery loans.
    • The machinery purchased may be hypothecated as primary security for the loan.
    • In some cases, liquid assets or guarantees from third parties may also be acceptable as collateral.
    • For loans under ₹10 lakh (e.g., PMMY), collateral may not be necessary.
  • 6. Loan Repayment and Cash Flow
    • Businesses should demonstrate adequate cash flow to ensure repayment capacity.
    • Repayment tenure typically ranges up to 7 years, with a moratorium period of 6-18 months.
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Documents Required for SBI Machinery Loans

  • Basic Documents (All Applicants):
    - Identity Proof: Passport, Voter ID, Driving License, PAN Card.
    - Address Proof: Utility bills, ration card, lease agreement, passport, trade license.
    - Business Proof: License/NOC from local authorities.
    - Recent passport-size photographs.
    - PAN card of the business entity (if applicable).
  • Financial Documents:
    - Income Tax Returns (ITRs) for last 3 years.
    - Bank statements for last 6-12 months.
    - GST returns (for digital loans).
    - Financial statements (balance sheet, profit & loss) for larger loans.
    - Audited financials (if turnover exceeds certain limits).
    - CA-certified net worth statement (in case of higher-value loans).
  • Loan-Specific Documents:
    - Machinery Quotations: Proforma invoice from supplier with details of machinery/equipment.
    - Project Report: Detailed report outlining purpose, cost, and expected returns from machinery purchase.
    - Property Documents: For collateral (if applicable), including title deed, valuation report.
    - Construction Equipment Loan: Additional documents like equipment specifications, warranty details.
  • Additional Documents (If Applicable):
    - Partnership/Company Documents: Partnership deed, board resolution for companies.
    - Existing Loan Statements: For loan balance transfer cases.
    - CLCSS Documents: For subsidy claims, additional forms from Ministry of MSME.

Factors Affecting SBI Machinery Loans (Focus on Machinery)

  • Type of Machinery:
    - New vs. Used: SBI primarily finances new machinery or equipment to ensure reliability and compliance with modern standards. Used or second-hand machinery is rarely financed, except in specific schemes like the Construction Equipment Loan, where certified reconditioned equipment may be considered.
    - Purpose: The machinery must align with the business's operations (e.g., manufacturing, construction, processing). Examples include CNC machines, excavators, cranes, or packaging equipment.
  • Cost and Valuation of Machinery:
    - Quotation/Proforma Invoice: A detailed quotation from a reputable supplier is mandatory, specifying the machinery's cost, model, and specifications. This determines the loan amount (typically up to 75% of the cost, with the borrower contributing a 25% margin).
    - Valuation by SBI: The bank may conduct an independent valuation to verify the machinery's market value, especially for high-value equipment (e.g., above ₹25 lakh).
  • Supplier Credibility:
    - The machinery supplier must be reputable, registered, and preferably GST-compliant.
    - SBI may reject applications if the supplier lacks credibility or provides incomplete documentation (e.g., no warranty details or unclear pricing).
  • Hypothecation of Machinery:
    - The machinery purchased is hypothecated to SBI as primary security, meaning the bank holds a legal claim until the loan is repaid.
    - The borrower must ensure the machinery is insured (e.g., against damage, theft), with SBI as the beneficiary.
  • Technological Relevance and Compliance:
    - The machinery must meet industry standards and regulatory requirements (e.g., environmental norms, safety certifications).

Frequently Asked Questions (FAQs)

1. What is an SBI machinery loan?
An SBI machinery loan is a financing product under SBI’s SME loan portfolio, designed to help businesses (especially MSMEs) purchase new machinery or equipment for manufacturing, construction, processing, or other operations. It supports modernization, capacity expansion, or technology upgrades.
2. Who is eligible for an SBI machinery loan?
Eligible Entities: Registered MSMEs, sole proprietorships, partnerships, private limited companies, or LLPs engaged in manufacturing, trading, or services.
Business Vintage: Typically 3–5 years of operations with stable sales and profits.
Credit Score: Minimum 700 (CIBIL or equivalent) with no defaults.
Credit Rating: CRA rating of SB-8 or better for loans above ₹25 lakh.
Collateral: Required for most loans, except for collateral-free loans up to ₹10 lakh under schemes like PMMY.
3. What types of machinery can be financed?
New Machinery: CNC machines, lathes, packaging equipment, textile machinery, etc., for manufacturing or processing.
Construction Equipment: Excavators, cranes, backhoe loaders (under Construction Equipment Loan).
Technology-Upgraded Equipment: Machinery eligible under the Credit Linked Capital Subsidy Scheme (CLCSS).
Note: Used or second-hand machinery is generally not financed, except certified reconditioned equipment.
4. What is the loan amount for machinery loans?
Minimum: ₹5 lakh (₹10 lakh for Asset Backed Loan, ₹25 lakh for Construction Equipment Loan).
Maximum: Up to ₹500 crore for SME loans, or ₹20 crore for Asset Backed Loan based on eligibility.
SBI finances up to 75–80% of the machinery cost; the borrower contributes a 25% margin.
5. What are the interest rates for machinery loans?
Rates start at 8.25% p.a. (linked to EBLR for MSMEs or MCLR for non-MSMEs).
Example: ~9.30% for Asset Backed Loan, 10.30%–11.30% for Construction Equipment Loan.
Concessions: Available for digital applications or women entrepreneurs.
6. What is the repayment tenure?
Up to 7 years, including a moratorium period of 6–18 months based on scheme and business cash flow.
Flexible repayment options (monthly/variable EMIs) are available.
7. Is collateral required for machinery loans?
Yes, for most loans:
- Immovable property or liquid securities covering 40–50% of the loan amount.
- Machinery purchased is hypothecated to SBI.
Collateral-Free: Available for loans up to ₹10 lakh (PMMY) or ₹2 crore (CGTMSE for MSMEs).
8. Can I get a subsidy on machinery loans?
Yes, under the Credit Linked Capital Subsidy Scheme (CLCSS):
- MSMEs can avail a 15% subsidy (up to ₹15 lakh) on machinery investments up to ₹1 crore.
- Apply through SBI; subsidy processed by the Ministry of MSME after loan disbursal.
9. How do I apply for an SBI machinery loan?
Online:
- Visit sbi.co.in or the YONO SBI app.
- Go to “Business” > “SME Loans” and choose the scheme.
- Fill the form and upload documents. Track via reference number.

Offline:
- Visit an SBI SME branch and apply with assistance.

59-Minute Portal:
- Use psbloansin59minutes.com for quick approval (up to ₹50 lakh).
10. What documents are required?
KYC: PAN, Aadhaar, Voter ID, or Passport of business owner.
Business: GST certificate, 3 years ITR, audited financials, CMA (if above ₹25 lakh).
Machinery: Quotation, project report, warranty details.
Collateral: Property documents (if applicable).
Banking: 6–12 months’ statements, existing loan history.
Note: For SME Digital Loans, only GST returns and bank statements may suffice.
11. How long does loan processing take?
Digital Loans: 45 minutes via YONO or 59-minute portal.
Standard Loans: 7–30 days depending on amount, documents, and site/machinery verification.
12. Are there any processing fees?
Yes, processing fees apply per SBI’s policy.
Waivers: Possible during promotional offers (e.g., until 31st March 2025).
Other charges like inspection or documentation fees are communicated before sanction.

List of SBI Machinery Loans

  • SBI Asset Backed Loan
  • SBI Construction Equipment Loan
  • SBI Simplified Small Business Loan (Dropline Overdraft)
  • SBI PM Mudra Yojana Loan
  • SBI Dall Mill Plus Business Loan
  • SBI Corporate Loan
  • SBI Business Loan under Contactless Lending Platform (PSB Loans in 59 Minutes)
  • SBI E-Vendor Finance Scheme
  • SBI Farm Mechanization Loan
  • SBI Agricultural Loan
  • SBI Machinery Upgrade Loan
  • SBI MSME Machinery Financing