The essential guide to equipment lists
As a business owner, understanding the importance of an equipment list is vital, not just for your day-to-day operations, but for when you seek financing. With the number of small and medium-sized businesses (SMBs) growing across Canada and the US, the competition for loans is high. One key document that can set you apart is a detailed and updated equipment list. Let’s dive deeper into what it entails and why it’s critical.
What exactly is an equipment list
At its core, an equipment list is a comprehensive document that outlines every piece of equipment your organization utilizes or intends to use. It serves as a snapshot of the tangible assets of a business. Think of it like an inventory list, but specifically for machinery, tools, and equipment.
Key information included:
- Make, model, and serial number.
- Purchase price and current market value.
- Estimated useful lifespan.
- Relevant details like warranties, maintenance histories, and insurance information.
The undeniable importance to lenders
To understand why lenders give so much importance to this document, we must delve into the lender's perspective.
When you apply for a loan, lenders want assurance. An equipment list provides them with insights into your business’s worth and reliability. If a business maintains its equipment well and invests in assets with long-term utility, it often indicates responsible management and financial stability.
Here’s what lenders deduce:
- Collateral value: Lenders can gauge the worth of your equipment should there be a need to recover the loan amount.
- Creditworthiness: The state and type of your equipment can often indicate how financially robust and responsible a business is.
- Risk evaluation: Lenders assess the age, maintenance, and insurability of the equipment to determine how much of a risk they’re undertaking by giving the loan.
Crafting the perfect equipment list
Ensuring your equipment list stands out in the right ways can streamline your loan application process.
Steps to prepare your equipment list:
- Gather comprehensive information: Begin by listing out every piece of equipment, regardless of how insignificant it may seem.
- Opt for digital organization: Utilize spreadsheet software or specialized inventory applications to categorize and manage data.
- Delve into details: The devil is in the details. Make sure to capture aspects like warranties, service histories, and any associated insurance policies.
- Annual updates are key: A once-prepared list can quickly become obsolete. Schedule regular reviews to keep it current.
- Documentary support: Lenders often appreciate tangible proofs. Keep handy related documents like purchase receipts, maintenance logs, and insurance certifications.
Beyond lending: The multifaceted utility of equipment lists
While the immediate association of an equipment list might be for financing purposes, its utility is multifaceted:
- Insurance claims: Having a detailed list can expedite claim processes.
- Taxation and accounting: Equipment lists can simplify depreciation calculations and asset evaluations.
- Business sales: Prospective buyers or mergers will appreciate a transparent view of the assets they're acquiring.
In conclusion, for SMBs, the equipment list is not just a document—it’s a reflection of the business's operational capability and financial health. Whether you're seeking financing now or in the future, having a detailed equipment list ready is a mark of a well-prepared and organized business.