When seeking a commercial loan, offering collateral is often a requirement, ensuring favorable interest rates and repayment terms. Business equipment, if used as collateral, demands an accurate appraisal to avoid disagreements between business owners and lenders regarding its value. Sterling Commercial Credit recommends professional evaluations for assets like inventory, real estate, or business equipment, even if not explicitly requested.
The Federal Farm Credit Administration emphasizes the importance of an impartial, reputable, and professionally competent appraiser. Look for individuals with extensive experience evaluating the specific type of collateral you're offering. The American Society of Appraisers (ASA) provides a database of over 3,500 appraisers, ensuring you find the right professional for your business asset.
For personal real estate collateral valued between $250,000 and one million dollars, use a state licensed or certified real estate appraiser. Keep detailed records of the asset, including purchase details, payment status, maintenance records, and current value. Businesses offering equipment as collateral can enhance its value by showcasing regular maintenance and timely repairs.
Take the time to choose an accredited appraiser to ensure a reliable valuation. The American Society of Appraisers offers an accreditation program distinguishing quality appraisers. Certified appraisers undergo a rigorous process, demonstrating commitment, education, and professional experience. Before hiring an appraiser, ask about their education, certification, experience in evaluating similar equipment, and compliance with the Uniform Standards of Professional Appraisal Practice (USPAP).
Prepare interview questions to assess the appraiser's qualifications:
Before finalizing a contract, ensure that the appraisal report complies with USPAP standards, guaranteeing its acceptance by lenders. Taking the time to choose a qualified and accredited appraiser ensures an objective and accurate valuation of your business assets.
In the realm of equipment appraisal, three key valuation categories come into play: fair market value, orderly liquidation value, and forced liquidation value.
Machinery appraisal involves assessing the value of equipment owned by a company, aiding in budgeting for maintenance, repairs, and strategic decisions regarding equipment transactions. Three appraisal methods are commonly employed: cost method, income method, and sale comparison.
Contact Sterling Commercial Credit today to explore how you can leverage your equipment's value to unlock financial opportunities through asset-based loans. Our team is ready to assist you in navigating the intricacies of equipment appraisal, providing tailored solutions to meet your business's unique needs. Seize the moment to enhance your financial standing and propel your business forward with Sterling Commercial Credit.