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Collateral Appraisal Can Help Small Businesses During Loan Application Processes

February 24, 2011

A recent Wall Street Journal article, “Firms with Collateral Gain an Edge,” suggests that even in the current economic environment, banks are lending; however, they are more likely to lend to businesses that have tangible collateral.

According to the article, companies with tangible assets such as machinery and equipment or property are “getting a first look by banks, even when their cash flow and creditworthiness aren’t as strong as businesses with less collateral.”

BoeFly.com asserts that businesses that are asset heavy, such as restaurants, hotels, manufacturers, retailers, and real estate companies, are finding more luck with loan applications than those that are not.

Banks are conducting more careful due diligence, which includes their own certified collateral appraisals to help ensure that they can get some of their investment back if a loan defaults. Having an impartial appraisal of your tangible assets when you approach lenders can help increase the chances that your small business loan application gets more than a passing glance from lending institutions.

For more information, you can also check out our blog post from last week, “The Role an Appraisal Plays in the Eyes of Lenders.”

The NEBB Institute endorses and strives to observe the highest standards of professional ethics to preserve the public trust inherent in the professional appraisal practice. The Institute provides initial and monthly comprehensive education, ongoing support, and a dynamic international network, and certifies professionals in the art of machinery/equipment appraisal and brokerage.

By: NEBB Institute

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