Borrowing company creditworthiness valuation, valuation for obtaining a loan

Borrowing company creditworthiness valuation, valuation for obtaining a loan

Usually the creditworthiness of a commercial bank client is tied to his ability to fully and timely pay his debt obligations (both principal and interest). In international banking practices, this definition of the readiness of customers to pay back their debts is calculated. In other words, the valuation of the creditworthiness of a bank customer must involve not only the customer's capability to repay the subject debt in time, but also the presence of his intent and desire to do so.

There are many techniques for assessing the credit of an organization. Choosing the appropriate method in each case is determined by the historical practice of lending, regional and industrial characteristics and a combination of qualitative and quantitative methods of creditworthiness factor valuation. Creditworthiness valuation usually consists of two main steps: financial analysis, which determines the factors of liquidity, turnover, profitability and other indicators of a client's financial stability and quality (non-financial) analysis, based on the study of the business's reputation, experience, professional contacts and previous credit experience.

Determining the credit rating of a borrower is not a simple procedure for a bank. After all, even if there are appraisers present in the bank, their expertise may not be sufficient, especially if the borrower's activity has industry or regional specifics. So many banks rely on independent appraisers to value the creditworthiness of a borrower. This applies to the valuations of both the business property and the business project for which a credit is expected to be issued.

Most loans are secured by property. In such cases, the borrower is drawn into the valuatiion company requesting a loan valuation. An independent report on the valuation of the property of the borrower for the loan at the bank, which makes findings of the facility's liquidity, timing of its implementation, its market value and attractiveness, will undoubtedly contribute to the bank's positive decision regarding the loan.

Some businesses themselves order valuations for obtaining a credit or assets in order to make an informed decision about the possibility of additional funding. It is not uncommon for one business to value the credit rating of another company with which they intend to start working together in partnership.

Swiss Appraisal valuation reports are utilized by leading international banks. Even in the event of a dispute with credit institutions, Swiss Appraisal warrants bringing the project to the end, taking the cost of the completion of the valuation report in accordance with the individual requirements of a particular lending institution.
Cases when a valuation may be conducted:

  • Lending to mid-sized businesses
  • Loans for large enterprises

Swiss Appraisal offers the following:

For more information about property valuation for obtaining a loan, send a request via our website.