Value encompasses marketability, serviceability, utility and raw material salvage. All four of these factors change based on the business and technology. The value of equipment can be viewed as a capital resource with which to run operations more efficiently, a savings account to be tapped when needed or excess capital to be sold for cash. In any case, asset valuations, whether for asset-based lending or sale, require the expertise of certified appraisers to assure fair pricing. In specialty applications such as Small Business Administration loans, certified valuations may be required documentation.
What is Asset-Based Lending?
Asset-based lending leverages business equipment values against loans as a financial tool to balance cash and equity needs. It means using asset values to expand business or become liquid in leaner times.
Why is it Important?
Tying proper financing to the business need anticipates the asset repaying the loan through production. Borrowing money to build an efficient plant anticipates greater efficiency and profits, which repay the financing. Expanding business operations through financing tied to equipment makes the same promise: The equipment will repay the loan through efficiency and greater productivity. Every business encounters these decisions. How long will these efficiencies last compared to the competition? Can the new equipment pay for itself in this time frame?
Lenders require certified valuations in order to meet their regulatory requirements. They must show the loan is safe and collateralized. Companies seeking loans can make the banker’s job easier by anticipating this need and making appraisals part of the loan request package. It helps to plan the financing program, too.
Specialists such as EquipNet offer appraisal services on a spectrum of business assets, including:
1. Machinery and equipment
2. Real estate
4. Price opinions
5. Business valuations
Each appraisal has a specific purpose:
• Financial Reporting
• Litigation & Legal Support
• Insurance & Risk Management
• Business Planning
EquipNet understands the subtle differences and assigns the correct expert to the valuation. Business finance can be complex, but understanding how money reflects future income or current asset value determines the smart management move. EquipNet guides this understanding by providing accurate market information with which to crunch the numbers.
EquipNet hires experts in diverse industries who know the state-of-the-art equipment in each target business. These experts anticipate the changes and directions within their expertise that will affect value. The benefit to using such experts is that the business owner can review the hard numbers and make a value decision before negotiating with a lender. If you want to use equipment financing as a tool for profit rather than wearing a loan like chains for the bank, proper planning and expert knowledge is the key.
Appraisals are offered for many industries through EquipNet, including but not limited to:
• Consumer Products
• Pharmaceutical & Biotech
• Medical Devices & Healthcare
• Industrial Equipment
• Technology & Electronics
• Finance & Insurance
• Government Services
• Real Estate
• Legal & Professional Services
EquipNet will help the business make realistic, solid decisions. EquipNet keeps an eye on balancing cash needs (liquidity) with production needs (hard assets), and income and expense outcomes when equipment or assets are financed. Let EquipNet help.