Loan Value appraisals for machinery: FINANCING MACHINERY WITH A BANK LOAN
Financing new machinery or lending on machinery for more growth: Our loan value appraisals for machinery can pave the way for you to obtain machinery financing by bank loan.
OLDY OR GOLDY? FINANCING MACHINERY WITH A CLASSIC BANK LOAN
For many companies, it used to be a matter of course to finance machinery with a loan from their bank or to borrow against their entire machinery pool in order to finance investments, growth and new markets.
Not least because of increasing regulation, it has now become difficult to fall back on this once so reliable form of financing. It is true that interesting alternatives have become established in corporate financing, such as leasing or hire purchase. Nevertheless, there are still many good reasons in favour of a bank loan: be it the conditions, the reliability of a trusted contact person or the flexibility that arises when the bank knows the company and its machinery well.
Often, however, it no longer even occurs to companies to ask their bank for classic corporate financing.
Our clients tell us that uncertainty about the value and lendability of the machinery is often a reason for their reluctance. Well, this is exactly where we can help, because we have been valuing thousands of machines every year for many decades.
We prepare mortgage lending value appraisals that give your bank (or you as a bank!) a solid decision-making basis to finance and lend on machinery and meet the requirements of the regulatory authorities.
HOW DOES OUR LOAN VALUE APPRAISAL HELP TO FINANCE PLANT AND MACHINERY?
1. For a mortgage lending value appraisal, we first determine the market value of your machinery, plant and equipment.
2. Then we assess the so-called third-party usability. This means that we assess whether and how well third parties would be able to use the machine. The ability of third parties to use the machine depends on how quickly it could be realised as collateral. The bank uses this to determine the lending limits for the assets.
Therefore, a CNC-controlled lathe of the type CLX 450 is better (and higher) loanable, while a highly individual, custom-built machine might be rather difficult to accept as collateral.
For marketable machines with good third-party usability, a mortgage lending limit of 40% to 60% is usually applied.
Incidentally, the mortgage lending value is a term from the banking world. It is used to quantify the value of collateral from the lender’s point of view over the entire term of the loan. In our glossary (in German) you will find a compilation of the most important terms and definitions from the valuation practice.
3. Due to the provisions of the EU Regulation EU No. 575/2013 (CRR, Basel III), banks are obliged to require sufficient insurance cover for the assets serving as collateral.
This means that the machinery accepted as collateral must be sufficiently insured against damage and the insurance cover must be monitored regularly. Therefore, our mortgage lending value appraisals for machinery include not only the market value but also the replacement value (or insured value) of the machinery and equipment.
As a service, we offer to check the insurance sums annually with the help of the additions and disposals and to transmit these directly to your bank. This ensures continuous monitoring and the correct sum insured.
4. If you wish, we can provide you with an overall appraisal for your business real estate, machinery and equipment in cooperation with our partners at Wagner & Partner.
AT A GLANCE – FINANCING MACHINERY BY BANK LOAN ON THE BASIS OF COLLATERAL VALUES
- Determining the market values and insurance values of your machinery and equipment
- Monitoring of the insurance values and reporting to the bank
- Assessment of the third-party usability of the machinery
- Assessment of marketability
- Preparation of a mortgage lending value appraisal based on the market values, marketability and third-party usability of the machinery
- Overall appraisal of real estate, machinery & equipment on request
