Last Updated on June 7, 2023 by Admin
The infrastructure sector is the driving force of the Indian economy and plays a vital role in the country’s GDP. This sector is bound to build world-class infrastructure, thus laying a pathway for the nation’s development. Every business or construction company wants to acquire the latest machinery to increase productivity and improve profits. Read more about construction equipment financing in India.
Table of Contents
What is Construction Equipment Financing
Construction Equipment Financing Companies provide loans to buy new machinery to earn profits. The equipment finance is done only for the new machines. The machine to be purchased can act as collateral security for such finance if you feel that you need a certain kind of machinery and its presence can increase your sales and ROI, you can approach any financing company for this purpose.
Construction Equipment Financing Market
The worldwide construction equipment finance market will expand at a CAGR of 7.5% from 2023 to 2030. This market is segmented based on application, type, and geography.
In terms of application, the market is divided into enterprise, municipal, and others. By type, the market is classified into online financing and offline financing.
Geographically, the market encompasses North America, South America, Europe, Asia Pacific, and the Middle East and Africa.
Current Market Scenario of Construction Equipment Finance in India
As the Infrastructure sector in booming, the Equipment finance business is also growing rapidly across India. Before purchasing any equipment, you must decide whether you want to purchase goods from available cash flow or finance them. The government of India is working hard towards enhancing India’s attractiveness as a new investment hub in the world. Huge investments are diverted in the Infrastructure sector to sustain the growth momentum and create employment.
The India Construction Equipment Market is expected to grow at a 23.3% CAGR during 2021-27, driven by rising infrastructure investments, FDI reforms, and a growing economy. Government projects such as Smart City, Golden Corridor, and Housing for All contribute to this growth.
In 2020, earthmoving equipment held an 85% volume share, while the construction sector accounted for over 60% of the revenue share. The market is experiencing a trend toward multifunctional equipment for various construction and mining applications.
With the introduction of GST, inter-state mobility of the machinery has been elementary. Thus, this is the ideal time to promote cost-effective methods of utilization of these assets like renting and leasing.
In 2023 and beyond, the demand will continue for the earthmoving equipment industry, which will have a share between 68-70 % of the overall CME finance market. Banks and NBFCs are expected to have an equal share in the CME finance industry.
Construction and Material Equipment for which finance is available
Following are some of the construction equipment and material handling equipment/devices for which various financial institutions provide loan facilities in India
| Excavators | Backhoe Loaders | Crane |
| Articulated Wheel Loaders | Asphalt Pavers | Bulldozers |
| Compactors   | Crushers | Concrete Equipment |
| Compressors | DG sets | Drills |
| Dump Trucks | Forklifts | Hot Mix Plants |
| Mobile Cranes           | Motor Graders | Hydraulic Excavators |
 Top Construction Equipment/Commercial Vehicle Financier In India
Below is the list of the best construction equipment financial institutions. They offer various loan facilities for purchasing new construction equipment, vehicles, and devices used in the construction, real estate, infrastructure, and project industry.
- SREI Equipment Finance Private Limited (SEFL)
- Yes Bank
- Sundaram Finance Limited.
- Essel Finance
- L & T Finance
- HDB Financial Services
- GE CapitalIndiaÂ
- Cholamandalam Investment and Finance Company Limited
- Shriram Equipment Finance Company Ltd.
- Poonawalla Fincorp Limited, formerly known as Magma Fincorp Limited
- HDFC Bank
- Reliance Commercial Finance
- Tata Capital Financial Services Limited
- Aditya Birla Finance Limited
- Volvo Financial Services (India) Private Limited
- Hinduja Leyland Finance Ltd
- Yes Bank
- Mahindra Finance
- Citicorp Finance(India)Limited
- Frontier Capital Limited
- Balaji Credit Services Pvt Ltd.
Requirements from the Financial Institutions
Eligibility Criteria to Apply for the Loan
- Business Profits:- 3 to 5 years of experience in the business
- Age: – 1-year minimum repayment track of commercial vehicles; any other construction equipment loan; or – up to 50% of a pending new loan request.
- Credit History: – Two years of the compulsory audit report of the company.
Documents Required for Loan Proposal
- Age proof of the Promoters
- ID proof
- Application form
- Photograph
- Residence proof
- Income proof
- Current repayment track
- Work in hand/Contract copies
- Signature verification proof
- Existing vehicle ownership proof
- Pro forma invoice
- Business projections for the period for which the loan is required.
Pros and Cons of Construction Equipment Financing
There are a few good reasons to look into business equipment financing – and a few reasons it may not be the best choice.
Pros
- Fast funding. You can quickly obtain the capital you need to make an important business equipment purchase, which may result in faster business and revenue growth.
- Flexible terms. The requirements for an equipment-specific loan is often more flexible than conventional, all-purpose business loans.
- Improved credit. Making on-time payments can have a positive impact on your business credit score.
Cons
- Potential for added liabilities. If you have a lower credit score, a lender may require a blanket lien, which gives it the right to seize other business assets in the event of nonpayment, or for a personal guarantee, which holds you personally liable for loan payments if your business is unable to make them.
- The length of the term surpasses equipment life. You may still make loan payments beyond the extent of use of the equipment you purchased.
- Default risk. As with any loan, you are taking on business debt and may wind up in financial trouble if you suddenly cannot make payments.
Conclusion
construction equipment financing plays a crucial role in the growth and development of the construction industry. Offering businesses flexible and tailored financial solutions, it enables them to acquire the necessary equipment and machinery without bearing the upfront costs.
As a result, companies can stay competitive, maintain a healthy cash flow, and invest in other critical areas of their operations. With a thorough understanding of the various financing options, eligibility criteria, and interest rates, construction businesses can make informed decisions and secure the right financing solution to suit their needs. Ultimately, construction equipment financing is an indispensable tool for businesses aiming to thrive and succeed in the ever-evolving construction landscape.
Reference
- https://www.infrabazaar.com/blog/Construction-Equipment-Finance-in-India/100
- https://www.jaldipaisa.com/equipment-finance/
- https://www.constructionopportunities.in/IssueDetailPage?IssueMenuMasterId=20309&ParentMenuId=20308&ContentType=SubParent
- https://www.uschamber.com/co/run/business-financing/financing-business-equipment
- https://realty.economictimes.indiatimes.com/realty-check/construction-equipment-industry-challenges-trends-future-roadmap/1157
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