For many startups and small businesses, getting an accurate equipment appraisal can make a huge difference in securing financing and planning for growth. We recently spoke with representatives from the Small Business Administration (SBA) and a local lender to learn why equipment appraisal is so valuable for startups and small businesses.
Here’s what they had to say about the role appraisals play in financing, asset management, and even strategic planning.
Talking with the SBA: Why Appraisal Matters for Startup Financing
Q: How does equipment appraisal factor into SBA loans?
SBA Rep: Equipment appraisals are pretty important in our world. They give lenders confidence in the value of what they’re loaning against. Especially for startups, having an appraisal means we know exactly what the equipment is worth today, not just what was paid for it. It’s about painting a clear picture of your financial standing, which gives you a better shot at securing financing.
Q: What mistakes do you often see small businesses make when it comes to appraisal?
SBA Rep: One big one is relying on the purchase price as the equipment’s current value. Most equipment depreciates, sometimes faster than you’d expect. Another thing is overlooking smaller assets. Even if it’s just a cash register or a few computers, those items add up, and they’re worth including in the appraisal. An accurate valuation really sets you up for better budgeting and financial planning.
Q: Any advice on how startups can prepare for appraisals?
SBA Rep: Absolutely—keep thorough records. If you’ve got maintenance records, upgrades, or anything that adds value to the equipment, those details can all contribute to a higher appraisal. And it helps to work with an appraiser who knows your industry. They’ll understand the equipment’s value beyond just its physical condition, factoring in what the market actually looks like for similar assets.
Chatting with a Local Lender: How Appraisal Impacts Financing for Small Businesses
Q: From a lender’s perspective, what’s the role of equipment appraisal?
Local Lender: For us, appraisals bring peace of mind. They help us see the real value of the equipment and, in turn, give us confidence that the business can make good on the loan. Plus, when there’s a solid appraisal in place, we’re often able to offer better loan terms. Without it, we’re guessing—and usually, that means higher interest or lower funding.
Q: Are there certain types of equipment you tend to see appraised for small businesses?
Local Lender: It’s pretty varied, depending on the business. In restaurants, it’s all the kitchen gear, seating, and point-of-sale systems. In retail, it might be display fixtures and inventory systems. In construction, it could be power tools and heavy machinery. Whatever it is, having these items valued accurately means we’re on the same page about collateral.
Q: Besides financing, are there other reasons for getting equipment appraised?
Local Lender: Definitely. Appraisals are useful for a lot more than just loan applications. They help business owners decide when it’s time to upgrade, repair, or replace equipment. There’s a lot of value in knowing what you’ve got and what it’s worth, even if you’re not looking for a loan. Plus, if you ever need to sell or even insure the business, having that documented value makes things much easier.
Takeaways for Startups and Small Businesses
- Boosting Loan Approval Chances
Both the SBA and lenders see appraisals as a game-changer for getting loans approved. They help present a clear picture of your financial footing, which lenders love. - Better Planning and Budgeting
Knowing the worth of your equipment means better budgeting for repairs, replacements, or upgrades. You’ll have a better handle on when to reinvest and keep things running smoothly. - Supporting Asset Management
Accurate appraisals are also useful for insurance purposes, tax planning, and even exit strategies. They’re a solid step toward building a well-managed, resilient business.
Equipment appraisals aren’t just for the big players. For startups and small businesses, they’re a tool that supports growth, better financing, and smarter decision-making. Investing in an accurate appraisal can set you up for success in more ways than one!
Contact Us Today for a Free Consultation. 888-494-3433