What are the best loan options for manufacturing companies?

Manufacturing companies in India have access to a variety of loan options designed to accommodate their operational and capital needs. The most relevant loan products for manufacturing companies are:

Term Loans: Term loans are taken to purchase a plant or machinery, set up new units or to expand existing/brownfield units. Term loans are really longer period loans than typical loans; they are also related to the lifecycle of manufacturing assets

Working Capital Loans: Working capital loans are taken to finance the day to day operational costs of a manufacturing company. The main reasons a manufacturing company will take a working capital loan is the need for raw materials in production or to cover wage and utility bills.

Project Loans: Large scale new units and expansions will typically provide a substantial amount of money for your project or expansion based on viability and forecasted cash flows of the project.

Equipment Financing: Equipment financing is more tailored lending products you can obtain for the actual acquisition or upgrade of manufacturing assets. Each equipment financing product might have a flexible provision in terms of repayment of debt absorbed into criteria of useful life of equipment.

Government Schemes: Also available to manufacturing MSME's, are certain government schemes, that offer loans at the best available interest rates, government civil service subsidies, and credit guarantees. These schemes facilitate the government's overall industrial policy, and provide much needed support to small and medium manufacturers, who are critical for average industrial growth.

Udyam Registration will also help improve eligibility for government backed schemes for MSME subsidy and better incentive grants. A prepared business plan, credit profile, and managing to meet statutory compliance, will also help support a company's application for a loan and improve the chance of approval.