Not all appraisers have the qualifications to evaluate your equipment. Finding a good one is critical to securing an asset-based loan.
If you’re a small business owner looking to enhance liquidity or you need working capital, you’ve likely considered an asset-based loan. Obtaining an asset-based loan is a viable alternative to attempting to get financing from your business bank as traditional banks have drastically reduced their lending to small businesses due to tighter regulations. If you’ve been looking into using your business assets as collateral, you have probably begun to research the facets involved in getting your business equipment appraised to ensure you get the most working capital possible. With that in mind, this guide will provide an overview on how to get a fair appraisal for your business equipment.
Look for an Accredited Appraiser
If you need an appraisal for your business equipment, it’s highly recommended that you seek out an experienced and accredited appraiser. A great place to start is The American Society of Appraisers (ASA). It’s an organization that was established decades ago to ensure fair and reputable appraisals and gives business owners the opportunity to find the right appraiser amongst their membership base which consists of more than 3,000 professional appraisers.
The ASA created the industry standards when it comes to appraisal practices and ethics and offers accreditation to appraisers across the country and around the world. When you’re working with an ASA accredited appraiser, you’ll be ensured that she/he is not only experienced, but also has been through all the required steps of accreditation. This includes rigorous training, peer evaluations, and has demonstrated a commitment to fair and accurate appraisal practices.
Interview potential appraisers
Whether in person or over the phone, it is always a good idea to ask the appraiser a few standard questions, even if they are ASA accredited. The most important information you need to know is how much experience they have appraising the type of equipment you have. This only makes sense since there are many different types of appraisers, ranging from business equipment and real estate to jewelry, art, automotive and more. Some of the things you should ask ahead of time are:
- Referrals – a well-qualified appraiser will have clients that are willing to give a referral and would hire him/her again
- Resume of experience
- Level of education – the ASA requires continuing education amongst its members & most qualified appraisers will have certain educational credentials
- List of specific experience appraising business equipment like yours
- Inquire about how you will receive the report and ensure that it will be compliant with the Uniform Standards of Professional Appraisal Practice (USPAP)
- Receiving a report that is compliant with the USPAP is key because this is essentially the quality control of the entire appraisal industry and reports that don’t comply can be rejected and invalid. An accredited appraiser understands the importance of this and should not have any issue with adhering to the USPAP standards.
Create a list of your equipment
Before you begin the appraisal, make a complete list of all the equipment you are planning to use as collateral for your asset-based loan. Doing this ahead of time will ensure that you don’t leave anything out and that you are ready if and when the appraiser has any questions. Using a spreadsheet is a good idea and will allow you to organize all the specs and details of each piece of equipment. You should include when you purchased the equipment, the make and model of each piece and the serial numbers. You’ll save yourself tons of time if you prepare this list even before you reach out to an appraiser.
When you are looking to get financing through an asset-based lender, always make sure you have your details in order. Finding the right appraiser is key to ensuring you can get the working capital you need for your business. For help with financing, talk to us about our variety of solutions including equipment financing, accounts receivables, inventory financing, and owner occupied financing. We would be happy to discuss your options and customize an asset-based loan for you.