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Lenders Need Certified Machinery and Equipment Appraisals

This is our third post in a series discussing how a certified machinery and equipment appraisal can protect different parties from liability. We’ve discussed business owners and auctioneers; in this post, we’ll discuss lenders.

Businesses that struggled over the last couple of years sometimes were unable to repay loans. Bankers and lenders who were hurt by these situations sought ways to reduce their liability when lending money. If a business is seeking a loan to purchase a large piece of machinery or equipment, the lending institution will have to make a loan decision based on the equipment’s value. Guessing at the equipment’s value is a mistake, as is using a depreciation schedule, which would be worthless in the event of a sale due to a loan default. The best way a lending institution can protect itself from liability in this case is to use the services of a certified machinery and equipment appraiser. An appraisal professional can help the lending institution make its lending decisions based on the fair market, orderly liquidation, and forced liquidation values of the piece of equipment to be purchased, and make sure that the borrowing business has collateral of high enough value to secure loan repayment.    

If you are a lender in need of a certified machinery and equipment appraiser, EquipNet can help. Take a look at The Asset Accuracy Resource Center to learn more about our services.

 


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