Present Value LLC » lenders

Alternatives for Small Businesses Seeking Funding in a Tight Credit Market

admin — Fri, 15 Jul 2011 18:32:10 +0000

As any small business owner knows, access to credit is still tight; however, there is capital available if you know how to go about seeking it out and take appropriate steps. A recent article in Inc., “New Rules of Getting a Small Business Loan,” provides some alternative ideas for businesses that still are having difficulty getting loans in the current economic environment. The article also provides a light of hope for many small businesses: “In Capital One Bank’s 2011 survey, 85% of U.S. small business owners said they were able to get the financing they needed.” The “new rules” put forth by article, include:

Factoring – In this scenario, you sell your invoices at a discounted rate to a third party or factor. “The business gets immediate cash flow and the factor assumes all liability of the debtor.”
Private Lenders – Think about going through a private moneylender.
Small Business Administration (SBA) – Look into the 7(a) loan program. “The Small Business Jobs Act upped the guaranty against default to 90% and also raised the maximum loan amount to $5 million.”
Small Banks – Check out small, local banks. They are often “entrepreneur friendly.”

Lastly, the article recommends asking yourself: Do you really need a loan? One expert cited in the article argues that looking for loans too early is a mistake that small business owners often make. They recommend figuring if you can you bootstrap or cut corners for a little while to make ends meet.

The article discusses some of the pros and cons of each of these potential alternative funding ideas, which you can read more about here.

No matter which avenue you choose to take when seeking credit, having a defensible, impartial asset appraisal in hand – prior to seeking a loan – can help increase the chances of being approved. Understanding what lenders are looking for and how a certified appraisal fits into lending criteria can help business owners find the funds they need to grow.

Present Value LLC is a worldwide international appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!

By: Present Value

Additional Reading

5 Cs of Lending (How Appraisal Fits in Even Though It Doesn’t Start with C)

Case Study: Pre-Loan Asset Verification

The Importance of Inventory Appraisals and Asset Verification Services for Businesses and Lenders

Business Loan in Default? Your Best Bet May Be an SBA Loan Workout

admin — Tue, 14 Jun 2011 22:09:53 +0000

Despite some hints at an improving economy, it’s still tough out there for many small business owners, and many owners are finding themselves in a loan default situation. In addition to being at risk for losing their businesses, these owners could potentially lose their homes and other personal assets. While there may seem to be no way out, there may be a light at the end of the tunnel: a Small Business Administration (SBA) loan workout.

The SBA has an Offer in Settlement procedure, which means you may be able to renegotiate your loan with your bank, based on the value of your business assets, including real estate and your machinery and equipment. There are many banks out there that are now working with business owners to keep them on track rather than forcing them to shut their doors. With numerous businesses in or facing loan default, it’s in the best interest of the banks to recoup what they can.

Here are a few things to keep in mind if you are facing default:

Ask your bank if a workout might be possible – It beats closing down and facing liquidation of the business you have worked so hard to build.
Be prepared – Do your homework and find someone you trust who has experience with workouts, SBA policy, and the FDIC rules that banks must abide by.
Know what it’s worth – In a workout situation, the bank will definitely get an appraisal of your business and assets to determine if the business is worth more to them dead or alive. It may be in your interest to get your own third-party appraisal so that you have something to negotiate with.

Check the SBA site for more information.

By: Present Value

Additional Reading

Lenders Turn to Present Value LLC for Pre-Loan Due Diligence

Common Definitions of Value for Machinery and Technical Assets

Good News for Small Business Owners: Small Business Administration’s (SBA’s) Budget Safe for Now

admin — Wed, 13 Apr 2011 01:14:11 +0000

Over the last few weeks, there is has been little news coming out of Washington that didn’t have to do with the battle over the 2011 federal budget. While many federal agencies will see significant reductions in their budgets, the large proposed funding cuts for the Small Business Administration (SBA) and loan guarantee programs did not get included in the final budget.

“In February, the House voted to cut $25 million, or about 6%, from the agency’s 2011 salaries and expenses budget.” However, “House and Senate negotiators restored the appropriation to $433 million. The business loan guarantee programs are financed through a separate account, which also retained its 2010 funding of $236 million,” reports the New York Times.

Now is the time for small business owners to take advantage of the SBA’s programs and loan guarantee programs, if possible, because the outlook for the 2012 budget isn’t looking as bright. “The House Small Business Committee suggested cutting $100 million from what the SBA will receive this year. The Obama administration, by contrast, proposes to strip $28 million from the agency in 2012.” (New York Times)

While it’s still difficult for small businesses to obtain financing in this market, small businesses with collateral, including machinery and equipment, are finding it somewhat easier to get their foot in the door with potential lenders. Having a defensible, impartial appraisal of your collateral in hand can help increase the chances of getting much-needed money for a small business.

By: Present Value

Additional Reading

The Key to Small Business Lending is Collateral

Collateral Proves Valuable for Businesses Seeking Loans

Small Business Jobs Act of 2010 Could Be Boon for Small Businesses in 2011

Collateral Proves Valuable for Businesses Seeking Loans

admin — Fri, 28 Jan 2011 16:19:12 +0000

In the current climate of small business lending, companies that have tangible assets, such as property and/or equipment, have a leg up over companies that don’t, according to an article The Wall Street Journal, “Firms with Collateral Gain an Edge.”

“Companies that hold tangible assets like buildings or other types of property are getting a first look by banks, even when their cash flow and creditworthiness aren’t as strong as businesses with less collateral,” the article reports.

According to a company that connects lenders to borrowers, BoeFly.com, the types of businesses that are finding luck with loan applications are asset heavy, such as restaurants, hotels, manufacturers, retailers, and real estate companies. While they may not necessarily be getting loans, the companies with tangible assets are at least getting their foot in the door with banks. According to BoeFly.com, companies with little physical collateral, like information, technology, or professional services companies, are having a more difficult time.

As we have discussed in the previous posts, in today’s economic climate, there is lending going on, but banks are less likely to lend money without some security, which can be provided to some extent by tangible assets. They are conducting more careful due diligence, which includes their own certified appraisals of collateral to ensure that they will recoup their losses should a loan default. Having a defensible, impartial appraisal in hand can help increase the chances of getting much-needed money for a small business.

By: Present Value

Additional Reading

Top 5 Machinery and Equipment Appraisal Posts from Present Value in 2010

5 Cs of Lending (How Appraisal Fits in Even Though It Doesn’t Start with C)

The Importance of Inventory Appraisals and Asset Verification Services for Businesses and Lenders

Who Needs a Certified Machinery and Equipment Appraisal? Part 2

admin — Thu, 23 Sep 2010 15:00:05 +0000

We have discussed in numerous posts reasons why you should always rely on a certified machinery and equipment appraiser (CMEA). To reduce your risk of liability, you should be sure that the appraisal is conducted by a certified professional. CMEAs meet all government training requirements, and will provide appraisal reports that are USPAP compliant and will stand up to scrutiny in a court of law. In our last post, we covered two groups of business professionals that should always rely on CMEAs when it becomes necessary to know the value of any machinery and equipment. Here are two more.

Business Owners and CMEAs

Business owners might need to engage a CMEA for a number of reasons. If they’re selling equipment, they need to make sure they are not selling too low or pricing their machinery and equipment above the fair market value. And, if their equipment or machinery is to be used as part of their overall business valuation, their values need to be substantiated in order for the business valuation to be as accurate as possible.

Lenders and CMEAs

As a result of a shaky lending market, bankers and lenders are using new ways to reduce their liability when making loans. Lending decisions now often are based on the value of collateral a business has, including machinery or equipment. One of the best ways they can protect themselves is by relying on a CMEA. They need to know the fair market, orderly liquidation, and forced liquidation values of the equipment, which become important in the event of a loan default.

Present Value LLC is a nationwide appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!

By: Present Value

Additional Reading:

Who Needs a Certified Machinery and Equipment Appraisal? Part 1

Three Things to Think About When Engaging a Machinery and Equipment Appraiser

The 7-Step Scope of Work for a Typical Machinery and Equipment Appraisal

The Importance of an Unbiased Third-Party Opinion

Who Needs a Certified Machinery and Equipment Appraisal? Part 1

admin — Tue, 21 Sep 2010 20:31:06 +0000

We have discussed in numerous posts reasons why you should always rely on a certified machinery and equipment appraiser (CMEA). To reduce your risk of liability, you should be sure that the appraisal is conducted by a certified professional. CMEAs meet all government training requirements, and will provide appraisal reports that are USPAP compliant and will stand up to scrutiny in a court of law. Below are two groups of business professionals that should always rely on CMEAs when it becomes necessary to know the value of any machinery and equipment.

Accountants and CMEAs

Quality accountants should act in the best interest their clients, and the best thing they can do is to make sure that they are compliant with laws and best practices when dealing with the IRS. If an accountant does not rely on a certified machinery and equipment appraisal to determine the value of a piece of equipment, he or she is putting clients at a significant risk. Oftentimes, the IRS will not accept the value of a piece of equipment that is not substantiated.

Here are situations in which accountants should always secure a certified machinery or equipment appraisal to avoid penalties and help eliminate risk of liability for their clients:

Converting from C Corp to S Corp
1031 Exchanges
Gifting
Sarbanes-Oxley Compliance
Determining Property Taxes

Attorneys and CMEAs

For attorneys who work on cases that involve the value of a business’s physical assets, like machinery and equipment, it is risky to rely on the outdated client estimates, depreciation schedules, or guess at value rather than rely on a certified machinery and equipment appraisal. Attorneys need to make sure that appraisals will hold up to scrutiny with the IRS, courts, or lenders. This is also important in the following situations:

Loans / Leases • Property Taxes • Insurable Value
Divorce • Converting from C to S Corp • Cost Segregations
Taxes • 1031 Exchanges • Trust Agreements
Buy / Sell Agreements • Estate Planning • Bankruptcy
Retirement Planning • Partnership Dissolution • Strategic Planning
Litigation Support • GASB 34 • Sarbanes-Oxley
Collateral • Gifting

By: Present Value

Additional Reading:

Three Things to Think About When Engaging a Machinery and Equipment Appraiser

The 7-Step Scope of Work for a Typical Machinery and Equipment Appraisal

The Importance of an Unbiased Third-Party Opinion

Fannie Mae Plays Hardball

admin — Tue, 13 Jul 2010 22:44:16 +0000

As we all know, real estate appraisers are the men and women in the field, going from property to property and making evaluations based on years of training and experience, and then reporting these numbers to mortgage lenders to establish property values.

But after receiving appraisals they feel are too high, some lenders have taken to performing desk reviews – appraisals done from a computer. While qualified real estate appraisers are able to perform accurate desk reviews if need be, lenders’ desk review values can be wildly inaccurate. Since there is no on-site inspection, they don’t reflect the condition of a house, they don’t add value for remodels, they’re often lacking information even on room additions, and so forth. Nevertheless, lenders are using desk reviews as justification to reduce appraised values, and sales continue to fall apart.

Fannie Mae has announced that effective September 1, 2010, lenders will no longer be allowed to reduce appraised valuations. Instead, they will be required to contact the appraiser to resolve discrepancies between the appraiser’s value and the desk review value. If the disagreement can’t be resolved on that level, the lender will be required to order a second appraisal.

By: Present Value

Additional reading:

Uniform Residential Appraisal Report

From a Lender’s Perspective

Mortgage Players Look to Soften Bill

admin — Tue, 22 Jun 2010 18:31:12 +0000

This week, as Congress moves to finalize new financial regulations, mortgage lenders will be attempting to soften a series of provisions that could potentially reshape how most Americans obtain home loans. At stake are regulations regarding loan repayments, the ability to sue a lender for fraud or poorly underwritten mortgages, and changes to appraisal rules.

A key issue on the table is changes to rules of real estate appraisals. Ever since the advent of HVCC, virtually every type of player in the real estate game wants changes in the current rules for ordering appraisals; these rules were established after the collapse of the mortgage market. Real estate professionals say the rules have gone too far, and often inexperienced appraisers are assigned appraisals when they do not understand or are unfamiliar with the local real estate market.

We will know soon enough if lenders were successful in their bid to make adjustments to the new regulations, and how much it will affect the currently volatile real estate market.

By: Present Value

HVCC and Uncertainty

Pointing Fingers

HVCC: The Comp Check Killer

5 Cs of Lending (How Appraisal Fits in Even Though It Doesn’t Start with C)

admin — Tue, 27 Apr 2010 22:36:35 +0000

Although this title may sound a little strange since appraisal doesn’t start with the letter c, most would-be borrowers probably don’t realize the role an appraisal can play in the eyes of lenders. The well-known 5 Cs of Lending consist of:

Character – Evaluation of the business’ financial performance, credit report, management, and payment trends; trustworthiness
Capital/Capitalization – Financial position of the business, including resources, fixed assets, net worth, and the owner’s equity
Capacity/Cash Flow – Funds available to repay the loan, which takes into account whether or not the borrower can continue to pay for all other business expenses, personal needs, etc.; debt ration
Collateral – Assets that can be used as security should the loan default (For this post, we are going to go into a little more detail about Collateral.)
Conditions – External market factors, like competition and market trends

The good thing to note is that even in today’s tight economic environment, lenders backed by the SBA are lending money; however, because of this environment, lenders are increasingly more cautious. This means they are conducting more careful due diligence, which includes their own certified appraisals of collateral to ensure that they will recoup their losses should a loan default.

Having all the Cs in a row – including having a defensible, impartial asset appraisal in hand – prior to seeking a loan can help increase the chances of being approved. Or, if there are some areas where a business may be weak in the eyes of lenders, a business owner can use this information to make changes and improve potential borrowing success. Understanding what lenders are looking for and how a certified appraisal fits into lending criteria can help business owners find the funds they need to grow.

By: Present Value

Manufacturing Operators and Lenders Seek Alternatives to Remain Viable

admin — Tue, 06 Apr 2010 21:51:16 +0000

It may come as a surprise to many people that manufacturing is still the largest industry contributing to the United States gross domestic product. According to government numbers, manufacturing employs approximately 16.7 million workers, meaning that it is still an industry that needs attention. The size of industrial production and significance in the U.S. economy, coupled with the industry’s stagnancy and declining growth, presents a conundrum for companies in these industries and lenders in this sector.

It’s no secret that manufacturing has been in decline for many years due cheaper resource alternatives in foreign markets. The Federal Reserve reported that for February industrial production overall increased by 0.1% following a gain of 0.9% in January. Manufacturing output decreased by 0.2%. While markets other than manufacturing showed increases, they were slight.

Competitive pressures from outside the U.S. will force manufacturers either to develop greater production and financial efficiencies or shut down operations. As a result of the continual declines in manufacturing, investment and lending in this area will likely remain weak. As manufacturing companies downsize or close their doors, lenders operating in this area will need to determine other ways to recoup some of their existing investments, including selling off machinery and equipment.

Whether you need to know the fair market value, orderly liquidation value, and/or forced liquidation value of your equipment, the professionals at Present Value LLC can provide you with a certified equipment appraisal report in a timely manner at a competitive cost.

By: Present Value

Additional Reading:

What’s It Worth?

Know the Value of Your Machinery and Equipment Before an Auction

Certified Machinery and Equipment Appraisal