Guide to Business Valuations and Surveys

Independent Business Valuation: Several companies offer independent business valuations, with reports typically addressed to the lending source. These include both national firms and local specialists. However, not all valuers are approved by all lenders, so it is crucial that you do not arrange a valuation independently—doing so risks the report being deemed unacceptable by the lender.

Independent business valuations are commissioned either by us or the lending institution, but the cost will be your responsibility. These valuations are a key aspect of the proposal, offering impartial and independent assessments. They ensure you are paying a fair price and that the business generates sufficient profitability to support the borrowing. While you may receive a copy of the report, please note that its primary purpose is to facilitate the financing process, not to provide a comprehensive warranty.

Bricks and Mortar Valuation: This type of valuation is often required, though not always, and is typically commissioned by the lending institution after agreeing in principle to the proposed advance. Note that independent business valuations generally include a bricks and mortar valuation.

The lender focuses on determining the property’s value without accounting for the business it houses. This figure reflects the property's "fall-back" value - its worth should the lender need to enforce security due to loan repayment default.

In some cases, a valuation commissioned by you may be acceptable, but it must be conducted by a Fellow or Associate of the Royal Institute of Chartered Surveyors (FRICS or ARICS). However, many lenders reserve the right to appoint valuers themselves, often using a restricted list of approved surveyors. These valuations, similar to those conducted for Building Society mortgages, confirm adequate value for lending purposes but may not provide a warranty on the property’s general condition.

Structural surveys, while the most detailed (and expensive), assess the property's exact structural condition. These are usually only required for very old or questionable properties but can offer valuable peace of mind. A structural survey would eliminate the need for a separate bricks and mortar valuation.

Additional Notes: These surveys are not limited to freehold properties. For leasehold properties, you may be responsible for repairs and maintenance under the terms of a "fully repairing and insuring lease." In such cases, a full structural survey can identify any defects you might inherit as part of this obligation. Additionally, a "schedule of dilapidations" can be prepared to outline repairs that fall outside your responsibility or limit future repair liabilities.

Learn more, contact Nationwide Business Finance to find out the best options available for your needs.

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