Business Valuation Blog | Understanding Buying / Selling a Company

How to Use an SBA Loan Business Appraisal to Up Your Approval Odds

Posted by Business Valuation Specialists LLC on May 13, 2019 8:00:00 AM

sba loan business appraisal

If you're getting ready to apply for a loan through the Small Business Administration (SBA), have you had the opportunity to get all of your paperwork in order yet? If you haven't, you may want to consider SBA Loan Business Appraisal. Why? When you go into the loan process with solid documentation of your company's value, it becomes much easier to get through the entire process as seamlessly as possible. Here's a quick look at the reasons behind why having a business appraisal performed on your business can help improve your odds of approval for an SBA loan.


How Can an SBA Loan Business Appraisal Help Your Odds of Approval?

When you have a business appraisal performed for SBA loan purposes, you're essentially having an independent third party verify the value of your company. This provides the bank or financial institution that you're working with proof of your company's value, whether you're purchasing a new business, refinancing to improve your company's footing or securing a loan to expand your operations. Working with a certified business appraiser ensures that the methodologies that they use have been tested for a wide range of reasons, including financial decisions.

A certified business valuation specialist takes a solid look at your company's financial background, your position in the marketplace, your reputation for innovation in the industry, your competition, your reputation in the community and many other aspects. They consider how your business stacks up against the average, then use that information to determine the value of your company. This is handled through a series of complex calculations that have been tested in a wide range of circles, including financial institutions, purchasing or selling decisions, tax appeals, insurance claims and courts of law, among others.

Once the business valuation specialist has gathered all of this information, they're able to compose the entire body of information into a simplified, standardized report that conveys how these aspects impact your company's overall value. This information, when provided to your financial institution, delivers verifiable proof of your company's value. Because it has been prepared by someone with experience in the standardized methodologies used to calculate business value, the report stands up to strong scrutiny and therefore is usually accepted as proof of value above and beyond any documentation you can otherwise provide.

However, that's not the end of the usefulness of your business valuation report. Once the loan has been secured, you can use the report for any number of other purposes down the road. It can be used to verify your company's average income if you have to shut down due to a disaster and make an insurance claim. It stands as proof of value if you need to appeal a bad tax assessment. It documents your company's worth if you become embroiled in a court case. There are a wide range of purposes for a business appraisal that reach far beyond simple loan approval.

When you get an SBA Loan Business Appraisal, you're able to provide solid documentation to help prove the value of your business. Working with a certified business valuation specialist means that your overall value calculation will be performed using standardized methodologies that are recognized and respected in a wide range of circles, including financial institutions. This helps make your SBA loan approval process go much more smoothly than it may otherwise, reducing the need to provide additional documentation that may hold up the process.

Topics: SBA Loan Business Appraisal