Equipment Appraisal Blog | Understanding Machinery Appraisals

Protect Your Investment with a CNC Machine Appraisal

Posted by Equipment Appraisal Services on Tue, Jan 10, 2017 @ 11:34 AM

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When precision tooling and machining is vital to your business' success, getting a quality CNC machine appraisal helps best protect that significant investment in your business' equity. But these machines are interfaced with a wide range of other tools and operate in a number of different environments, making it very difficult to determine exactly what your equipment values should be. Here are some of the considerations to keep in mind when getting your CNC equipment appraisals performed.

Protect Your Investment with a CNC Machine Appraisal

A Computer Numerical Control or CNC machine provides exact precision control of a wide range of machinery. It can operate mills, lathes, plasma cutters, wire erosion, water jet cutters, drills, routers, grinders and many other pieces of machinery to meet the exacting specifications of a wide range of projects. They can range in price from a few thousand dollars to well over $100,000 a piece, depending on the level of precision required and the size and specifications of the tools to be used. A certified appraiser should have experience in CNC machines due to their complex nature.

With this type of cost, it's easy to sink a significant amount of capital into these machines. When you have a certified equipment appraiser provide you with documentation of the equipment values, you can make better decisions about your investment. An appraisal might tell if your machinery is beginning to wear due to high hours. It might also tell whether the machinery has been well or poorly maintained, helping decide which used machinery to purchase for your business. If the market has been shifting, it may be able to tell whether you should invest in additional equipment or sell off excess CNC machines to ride out the storm of an industry downturn. 

If your business suffers a loss due to theft, vandalism or a disaster, having an appraisal on your machinery helps you get what your business needs from a reluctant insurance company. It helps you prove value if you're using your CNC machine as collateral for a financial institution if you're expanding your business or taking advantage of a new opportunity. A certified equipment appraiser can even provide a value for your CNC machinery after it's been damaged in a fire or donated to a charitable organization. But without having a proper machinery valuation in place, you may find that you're losing out on your business finances.

By getting a quality CNC machine appraisal, you can ensure that your business' investment is protected, whether you have an insurance loss while dealing with a difficult adjustor, need to document value when selling a business or the information you need to determine when it's time to replace aging machinery. But you need to make sure you're working with a certified equipment appraiser who has experience researching CNC machinery. A certified appraiser has the training and experience to prepare machinery valuation reports that are based on standardized methodologies and for that reason, will stand up to scrutiny in legal, financial and insurance circles.

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Tags: woodworking equipment appraisal, metalworking equipment appraisal, cnc machine appraisal

How does Bank Financing Collateral Really Work?

Posted by Equipment Appraisal Services on Tue, Jan 03, 2017 @ 03:02 PM

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When you're expanding or improving your business, it's important to understand the terms of your financing agreement. With changes in the banking industry since the 2008 recession and bailouts, many businesses are looking at bank financing collateral as a possible option to consider. But how does it really work and will it cause problems down the road for your company? In this post, we'll take a solid look at how equipment appraisals should be a part of your toolkit when approaching bank financing involving collateral.

How does Bank Financing Collateral Really Work?

Banks require collateral as an insurance policy, so that they can regain any losses from a loan default by selling the collateral to make up the balance due. Though immovable assets are typically thought of as assets such as real estate, large equipment that is difficult to remove may also be considered this type of asset. Smaller pieces of equipment or equipment that is more easily moved is considered a movable asset. The bank may require that you provide a high amount or all of these assets as collateral to secure a loan. But at the same time, you don't want to risk any more of your equipment, often the very source of your income, than is absolutely necessary. What can you do to both protect your interests in your business while providing the bank with the financing it needs? One possibility is through an equipment appraisal.

Equipment appraisals are reports prepared that calculate the value of a piece or a lot of machinery. If they're prepared by a certified equipment appraiser, the report will stand up to much higher levels of scrutiny than a report or general quote developed by a dealership or other party. Why? Because a certified appraiser is taught specific, standardized methodologies to calculate the machine's value, a report prepared by them is considered more accurate and reliable than other methods of determining equipment value. These methodologies have been scrutinized in legal proceedings, financial circles, insurance claims and tax agencies and have evolved into a nationally-recognized set of standards - the Uniform Standards of Professional Appraisal Practice (USPAP). 

When you have an accurate valuation performed, you have a solid figure you can take to the bank when negotiating the terms of your financing. Because the report has been provided by a certified appraiser, the bank officers know that it's an accurate representation of your equipment's worth. That means that you can choose which piece of equipment you're willing to put into the agreement as collateral and which ones to protect from risk.  An accredited appraiser through organizations like the American Society of Appraisers (ASA) with the Machinery & Technical Specialties (MTS) designation must provide unbiased appraisal reports that all parties can rely on.

As you can see, using machinery valuation as part of your process for agreeing to bank financing collateral requirements can help ensure that you're only putting as much of your business assets as are necessary. Using a certified equipment appraiser helps ensure that not only are you getting accurate equipment values, but that the valuation report with stand up to strict scrutiny by your financial institution.

 

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Tags: bank financing collateral, bank loan, used equipment, sba loan

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