Machinery and equipment loan
Machinery loans are term loans secured on the machine itself. Banks generally fund up to 75% of the cost (NBFCs up to 85–90%) with a moratorium until the machine starts producing. Manufacturing MSMEs, including medium units, can get a 60% government guarantee under MCGS-MSME.
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| Lender | Type | Rate range | Up to | Min score |
|---|---|---|---|---|
| Bank of Baroda Machinery loan with 60% government guarantee | Public Sector Bank | 8.40% – 11.00% | ₹100 Cr | 700 |
| Canara Bank Machinery loan with 60% government guarantee | Public Sector Bank | 8.45% – 10.85% | ₹100 Cr | 700 |
| State Bank of India Machinery loan with 60% government guarantee | Public Sector Bank | 8.50% – 10.75% | ₹100 Cr | 700 |
| Punjab National Bank Machinery loan with 60% government guarantee | Public Sector Bank | 8.50% – 11.00% | ₹100 Cr | 700 |
| Union Bank of India Machinery loan with 60% government guarantee | Public Sector Bank | 8.50% – 11.00% | ₹100 Cr | 700 |
| HDFC Bank Machinery loan with 60% government guarantee | Private Bank | 9.00% – 11.75% | ₹100 Cr | 700 |
| ICICI Bank Machinery loan with 60% government guarantee | Private Bank | 9.00% – 11.75% | ₹100 Cr | 700 |
| SIDBI Machinery loan with 60% government guarantee | Development FI | 9.00% – 11.75% | ₹100 Cr | 700 |
| Axis Bank Machinery loan with 60% government guarantee | Private Bank | 9.25% – 11.75% | ₹100 Cr | 700 |
As on 26 Oct 2026, RBI repo rate 5.50%. Indicative ranges; your rate depends on your profile.
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Who is eligible
- Udyam registration; MCGS-MSME is for manufacturing units, with machinery at least 75% of project cost
- Two or more years of operations for most lenders; new units through term loans or PMEGP
- DSCR of 1.25–1.3 or more on projected figures
How much you can get
- Bank: up to about 75% of machine cost; NBFC: up to 85–90%
- Tenure 5–8 years with a 6–12 month moratorium
- MCGS-MSME: loans up to ₹100 crore with a 60% guarantee; 5% upfront contribution
Documents
- Proforma invoice or quotation of the machine
- Project report with projected DSCR
- Financials, ITR, GST and bank statements
- KYC and Udyam registration
Tips from our credit panel
- Claim GST input on the machine – it reduces the effective cost you fund
- Ask for the moratorium in writing until commercial production
- Compare all-in cost including processing fee and any guarantee fee
Common questions
What is MCGS-MSME?
The Mutual Credit Guarantee Scheme, run by NCGTC, gives lenders a 60% guarantee on loans up to ₹100 crore to MSMEs buying plant and machinery.
How much margin do I need?
Usually 25% of machine cost at banks and 10–15% at NBFCs; under MCGS-MSME a 5% upfront contribution is required.