For many growing MSMEs, purchasing new equipment feels like the next logical step toward expansion. But here’s the catch, most businesses go about machinery funding the wrong way. Whether it’s using the wrong loan type, delaying the decision, or tying up cash reserves, these missteps can hurt working capital and stall business growth.
If you’re planning to upgrade your operations, make sure you’re not falling for these common misconceptions. Before exploring the different types of working capital, here are five myths MSMEs need to bust:
Myth 1: Bridge Funding Can’t Be Used for Equipment Purchases
One of the biggest mistakes is assuming that bridge funding is only for emergencies. In reality, bridge finance, short-term funding sourced through dependable lender networks, can be ideal when MSMEs need to act quickly on new opportunities.
When sudden demand or expansion plans require immediate investment in equipment, bridge funding gives businesses the speed and flexibility they need. It also works well as a precursor to longer-term machinery funding, giving you room to breathe and plan your next steps.
Myth 2: Unsecured Loans Are Not for Equipment Financing
Traditionally, equipment purchases were tied to collateral-heavy loans. But times have changed. Today, MSMEs can access unsecured business loan for MSME options like invoice financing, corporate loans, and trade finance without pledging assets.
These unsecured loans evaluate your business based on revenue patterns, order pipelines, and GST records. That means even small businesses without fixed collateral can confidently apply for machinery loans tailored to their operational health.
Myth 3: Equipment Should Be Bought Using Working Capital
Many businesses still dip into their types of working capital to fund long-term assets. This is a costly mistake. Working capital, via instruments like overdrafts, cash credit, or bill discounting, is intended for everyday expenses such as payroll, vendor payments, and inventory.
Using these funds for buying equipment drains liquidity and disrupts day-to-day operations. Instead, opt for a dedicated machinery funding solution that aligns with your asset-building goals, keeping your operational flow intact.
Myth 4: Machinery Loans Always Take Too Long to Process
Another outdated belief is that equipment finance takes months to finalise. While that may be true for traditional banks, many modern lending partners now process machinery funding in as little as two weeks, provided your documents are in order.
With efficient lenders and proper financial guidance, MSMEs can fund equipment purchases swiftly without pausing growth plans. Quick disbursals mean businesses can respond to market demand faster than ever.
Myth 5: Low Interest Rates Are All That Matter
It’s tempting to chase the lowest rate, but that’s not the smartest strategy. The best funding is not always the cheapest, it’s the one that aligns with your timelines, business needs, and future scalability.
Whether you’re considering bridge finance, equipment loans, or an unsecured business loan for MSME, choosing the right partner and funding structure matters more than squeezing out a fraction of a percent.
Final Word:
With tailored machinery funding and a clear understanding of the different types of working capital, MSMEs can make confident financial decisions without risking stability. If you’re ready to grow, don’t let these myths hold you back. Partner with experts who help you fund smarter and faster, just like Capstone, which offers machinery loans in as little as two weeks.
