Asset-Backed Loans for Manufacturers Are Skyrocketing — But Only If Your Machinery and Equipment Valuations Hold Up

Manufacturers are increasingly turning to asset-backed loans to fuel growth, manage cash flow, and navigate uncertain markets. These loans can unlock significant capital, using your machinery and equipment as collateral. But there’s a catch: if your machinery and equipment valuations aren’t rock-solid, your loan approval — or the amount you can borrow — could be at risk.

Why Asset-Backed Loans Are Booming for Manufacturers

With rising production costs and fluctuating supply chains, manufacturers are leveraging their equipment to secure funding. Asset-backed loans offer flexible, fast capital, but lenders require reliable valuations to determine the loan amount. That’s where equipment appraisals become crucial.

The Role of Machinery Appraisals in Securing Financing

An equipment appraisal provides a detailed valuation of your assets, giving lenders confidence in their collateral. Without an accurate, well-documented appraisal, you risk:

• Undervaluation: Lower appraised values mean smaller loans.
• Loan Denials: Inconsistent or outdated appraisals can scare off lenders.
• Higher Interest Rates: Perceived risk from unreliable appraisals may drive up costs.

What Lenders Look for in Machinery and Equipment Valuations

For manufacturers, an appraisal isn’t just about listing assets — it’s about presenting a complete, lender-ready valuation. A robust appraisal should include:

• Fair Market Value (FMV): What your equipment would sell for under normal market conditions.
• Orderly Liquidation Value (OLV): The estimated price in a controlled, time-limited sale.
• Forced Liquidation Value (FLV): The value in a rapid, auction-like sale.

Lenders use these values to gauge risk and decide loan terms, so accuracy is non-negotiable.

How to Maximize Your Machinery and Equipment Valuations

Want to secure the highest possible loan amount? Optimize your appraisal process with these steps:

1. Maintain Equipment Regularly: Well-maintained assets retain higher value.
2. Keep Detailed Records: Service histories and upgrade logs support higher valuations.
3. Work with Certified Appraisers: Experts familiar with manufacturing equipment ensure accurate, defensible valuations.

Don’t Let a Faulty Appraisal Derail Your Funding

Asset-backed loans are a powerful tool for manufacturers — but only if your equipment appraisals can withstand lender scrutiny. By investing in a thorough, professional appraisal, you protect your borrowing potential and set your business up for financial success.