Tangible and Intangible Assets

Many businesses need to take out loans or obtain lines of credit to meet routine cash flow demands. Small and mid-sized companies that are stable and have physical assets or digital assets [IP] of value often obtain a line of credit to make sure it can cover its operational costs, including payroll expenses, manufacturing costs, new equipment purchases, etc.

If the company seeking the loan cannot show enough cash flow or cash assets to cover a loan, the lender may offer to approve the loan with its physical assets or digital assets as collateral. 

The terms and conditions of an asset-based loan depend on the type and value of the assets offered as security. Lenders prefer highly liquid collateral such as securities that can readily be converted to cash if the borrower defaults on the payments. Loans using physical assets are considered riskier, so the maximum loan will be considerably less than the book value of the assets. Interest rates charged vary widely, depending on the applicant’s credit history, cash flow, and length of time doing business.

Retail Management Partners (RMP) has an asset valuation division with the experience to place the proper value on all forms of inventory, plant, equipment, IP, real estate, and recurring revenue streams. RMP can provide defendable, well-documented opinions of value to support lending and foreclosure decisions. We also developed valuations to support the bidding process among lenders for asset-backed loans and can provide enterprise valuations across a wide variety of industries.  Deliverables can be tailored specifically for each engagement to provide different levels of value based on a bank, or company’s lending standards, including fair market value, net orderly liquidation value (NOLV) or net liquidation value (NLV).

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