Certified Equipment Appraisals

This report is designed specifically for SBA and conventional lenders looking for a Certified Equipment Appraisal.

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WHY USE A CERTIFIED REPORT?

By utilizing a certified machinery and equipment appraisal report for your needs, you can rest assured that the value you receive will withstand the scrutiny of the SBA, bank examiners, IRS, and courts. A certified report means the appraiser producing the report has earned their accreditation by passing rigorous education requirements, has gone through a peer review process, and is advancing their knowledge through continued education. With a report prepared by a Certified Machinery and Equipment Appraiser (CMEA), you have additional assurances that the report was created with the ethical principles and guidelines set forth by the NEBB Institute and USPAP.

Using an appraisal report that is USPAP compliant is not only good practice, but is also required by many organizations, including the federal government. One of the most important requirements USPAP outlines is in their Scope of Work Rule. It states that before starting an appraisal, the appraiser must identify the problem to be solved. This includes identifying the client and other intended users, the intended use of the appraisal, the type and definition of value(s) given, the effective date of the appraisal, the subject of the assignment and its characteristics, and the assignment conditions. Without identifying the problem to be solved, the results of the appraisal would not be credible.

WE OFFER BOTH A SUMMARY AND A DESKTOP APPRAISAL REPORT TO OUR CLIENTS

Summary Appraisal Report

A Summary M&E Appraisal Report offers an estimate of value for machinery and equipment compliant with USPAP guidelines for a Restricted Use Appraisal Report. Values are reported for each individual asset and the aggregate as a single number. An on-site inspection will be performed to verify the assets are at the location indicated, identify the assets (age, make, model, serial number, etc), ensure assets are in good working order and/or being properly maintained, and assets are being used in accordance with their original design.

Desktop Appraisal Report

A Desktop M&E Appraisal Report also a Restricted Use Appraisal Report as defined by USPAP. A Desktop Report is often ordered to reduce the cost of the appraisal when a visual identification of the equipment is not required. A description of the equipment and pictures are sent to us to determine its value. Desktop reports should only be considered when the equipment is fairly standard, easily identifiable, access to personal who can answer additional questions is viable, and when verification as to the existence of the assets has already been performed and verified.

COMMONLY REQUESTED LEVELS OF ANALYSIS

Fair Market Value

The estimated amount, expressed in terms of money that may reasonably be expected for a property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, as of a specific date.

Orderly Liquidation Value

The estimated gross amount, expressed in terms of money, that could be typically realized from a liquidation sale, given a reasonable period of time to find a purchaser (or purchasers), with the seller being compelled to sell on an “as is,” “where is” basis, as of a specific date.

SBA considers a loan as “fully-secured” if the Lender has taken security interests in all available fixed assets of the Applicant with a combined “net book value” as adjusted below, up to the loan amount. For 7(a) loans, the term “fixed assets” means real estate, including land and structures, machinery and equipment owned by the business or an EPC. “Net book value” is defined as an asset’s original price minus depreciation and amortization.

  1. New machinery and equipment (excluding furniture and fixtures) may be valued at 75% of price minus any prior liens for the calculation of “fully secured”
  2. Used or existing machinery and equipment (excluding furniture & fixtures) may be valued at 50% of Net Book Value or 80% with an Orderly Liquidation Appraisal minus any prior liens for the calculation of “fully secured”
  3. Improved real estate can be valued at 85% and unimproved real estate can be valued at 50% of the market value for the calculation of “fully-secured” and the value must be determined in accordance with the requirements set forth in Paragraph IV (Real Estate Appraisals) below; and
  4. Furniture and Fixtures may be valued at 10% of Net Book Value or appraised value [SBA clarified that this means Orderly Liquidation Value]

Above excerpt from: Small Business Administration SBA SOP 50 10 7
Page 114
Effective Date: August 1, 2023

Summary Appraisal Report

A Summary Machinery & Equipment Appraisal Report offers an estimate of value for machinery and equipment compliant with USPAP guidelines for a Restricted Use Appraisal Report. A Summary Report includes a site visit to the location(s) where the equipment is located. Values are reported for each asset and the aggregate as a single number.

The onsite visit includes:

  • Affirmation that the assets are at the location indicated
  • Classification of the assets (age, make, model, serial number, etc)
  • Verification that the assets are in good working order and/or being properly maintained
  • Confirmation that the assets are being used in accordance with their original design

Desktop Appraisal Report

A Desktop Machinery & Equipment Appraisal Report is also a Restricted Use Appraisal Report as defined by USPAP. A Desktop Report is often ordered to reduce the cost of the appraisal when a visual identification of the equipment is not required. A description of the equipment and pictures (if available) are sent to us to determine its value.

Desktop reports should only be considered when:

  • The equipment is fairly standard and easily identifiable
  • Access to personnel who can answer additional questions is viable
  • Verification as to the existence of the assets has already been performed and verified
  • Equipment is spread throughout many geographical locations and a physical inspection would be cost prohibitive

Industries

Construction and Heavy Equipment

Commercial Transportation including Trucks and Trailers

Agricultural Equipment

Manufacturing Equipment

Telecommunication and Technology Equipment

Printing Equipment

Fitness and Gym Equipment

Restaurant and Food Service Equipment

Medical, Dental and Veterinary Equipment

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