The Benefits of Equipment Appraisals
There are many reasons to get an equipment appraisal. Some you may know and have thought about and some may be a surprise to you. No matter your situation, being a small or large business owner, you may be in need of an equipment appraisal and not even know it. I will discuss some of the more common and not so common benefits of equipment appraisals.
In today’s economic whirlwind, some companies are thriving and others are in dire straits. I’ve noticed many companies going through restructuring and downsizing in an effort to save finances and keep the company afloat. An equipment appraisal can help you buy or sell, at the right price, that piece of equipment considering today’s market conditions.
Business lenders will want an equipment appraisal for the purchase of equipment for collateral purposes. Lenders and bankers don’t have the time or resources to personally view business assets like they did in the past. Even banks have made cuts in their staffing to save money and are now relying on appraisers to verify the ownership and value of these assets.
Businesses get loans for different reasons and in today’s economy, it’s no different. Whether you’re looking to expand your business or consolidate your debts, a certified equipment appraisal, by a qualified appraiser, can get you that loan. Most often, the deciding factor whether a business is able to remain in operation or close it’s doors, expand or sell, is based on the ability to secure funding from it’s lenders and an equipment appraisal can make or break that decision.
Do You Have Proper Insurance Coverage
Another reason for an equipment appraisal is for insurance purposes. As a small business starts to grow over time and purchase more and more equipment, quite often the matter of insurance coverage is over looked. It’s not uncommon to become under insured from the purchase of new equipment and can happen quite innocently. The company wants the equipment to start earning revenue as soon as possible and sometimes forgets to update their policy. You may think that’s not a problem, until you file a claim against the equipment and find you don’t have coverage.
Lets say that your company’s assets are insured for $250,000 and you purchased some additional equipment that cost $175,000. All your equipment is on location and someone decides to vandalize and destroy it. You file a claim with your insurance company and everything seems to be going alright until they see that the damages that you are claiming is over and above your coverage. The insurance company notifies you that they will only compensate you for the amount of your coverage. By having an equipment appraisal up to date, you can prove ownership and the current market value of this equipment. This keeps your insurance coverage up to date in the event of unforeseen damages. This also speeds up the process of getting a settlement from an insurance claim.
Can You Prove What It’s Worth
If you ever decide to sell some equipment, an equipment appraisal can help seal the deal with a prospective buyer. By providing an updated appraisal to the prospective buyer, it will explain how you came up with your price for the equipment. Not to mention, this appraisal is preformed by a third party, without bias or any prospective interest in the property. It can prevent you from selling your company or equipment below fair market value. You’ve worked hard for your business and you deserve the most you can get!
It’s not uncommon for equipment to be given away for donation purposes. When this happens, an appraisal is necessary to claim the amount of the donation to the CRA. The CRA has very strict requirement regarding donations and having an appraisal can prevent confrontations at tax time.
These are some of the more common benefits to having an equipment appraisal preformed for your business. Make sure that when you arrange to get an appraisal that you are hiring a qualified appraiser with a certifiable designation. The last thing you want after spending good money for an appraisal, is to find out that the appraisal won’t stand up in a Court of Law or be recognized by lending or financial institutions. All appraisals preformed by DB Appraisals Ltd are recognized by the CRA, lending and financial institutions, and stand up in a Court of Law. And remember, having your equipment appraised by an experienced, credentialed professional is priceless.
Darryl Bilobrowka, CPPA
Owner/President/Appraiser at DB Appraisals Ltd