What are the eligibility criteria for a manufacturing loan?

The key eligibility criteria for availing a manufacturing business loan typically include:

• Business Vintage: The manufacturing company should have been operational for a reasonable number of years (typically at least 2 to 3 years) to demonstrate financial stability. However, loans can be availed by newer businesses if they have strong financial backing or promoter experience.
• Business Revenue: The company should typically  generate an annual revenue of a respectable amount to qualify for a manufacturing loan. Higher revenue levels  increase the chances of loan approval.
• Credit Score: Manufacturers require a good credit score and must have a strong credit repayment track record. Lending institutions typically look for scores above 700.
• Collateral: Certain loan providers may need collateral security in the form of assets to mitigate risks. The collateral requirements can vary based on the loan amount and the lending institution’s policies.
• Legal Compliance: The business must have all legal registrations and business licenses. Compliance with tax regulations for previous years is mandatory.
• Manufacturing Experience: Prior experience in the manufacturing sector is an advantage as it instills  confidence in lenders.
• Repayment Ability: Financial institutions will assess the company's finances, existing debt obligations, profitability, working capital cycle and growth potential to gauge repayment ability.
• Documentation: Business owners must submit the required documents, such as financial statements, Know Your Customer (KYC), a detailed business plan, and project reports with the loan application.