Not always. Whether you need a business valuation for a bank loan depends on the lender, the loan and the security offered. Lenders set their own requirements, and some may insist on a valuer from their own panel. Ask your lender what they need, and who must prepare it, before you order any valuation.
Do banks require a business valuation for a loan?
Some do and some do not. It depends on the lender, the size and type of loan, and what security you are offering.
Whether a valuation is needed depends on the lender's policy, the loan and the security offered.
The only reliable answer comes from your lender. Ask them before you spend money on a report.
What does a lender usually look at instead?
Lenders mainly want to know you can repay the loan and what happens if you cannot. A valuation is only one part of that picture.
The Australian Government's guide to applying for a business loan says lenders usually want to see your business plan before they approve a loan. It also lists paperwork such as identification, financial reports, cash flow statements, financial forecasts, lease agreements and your personal financial information.
For a secured loan, the lender also looks at the collateral, meaning the assets they can take if the loan is not repaid.
Why might my lender use its own valuer?
Some lenders keep a panel, which is a list of valuers they have approved. If your lender requires a panel valuer, a report from anyone else may not be accepted.
This is the lender's choice, not a judgement on any other report. Lenders want consistency and control over who they rely on.
So the first question to ask is simple: do you need a valuation, and if so, must it come from your panel?
What should I ask my lender first?
Ask for their valuation requirements in writing before you order anything. That avoids paying for a report the lender will not use.
Useful questions:
- Do you need a business valuation for this loan at all?
- Must the valuer be on your panel, or can I choose my own?
- What must the report cover, and what basis of value do you need?
- What valuation date should it use?
- Does the report need to be addressed to you, or name you as a party that can rely on it?
- Do you need any particular qualifications from the valuer?
What does a valuation for a lender usually need?
A lender will often want a report that is independent, signed, and clear about its purpose, the date, the evidence relied on and its limits. It may also need to allow the lender to rely on it.
| Item | Why a lender cares |
|---|---|
| Independence | The valuer should have no stake in the loan or the deal |
| Stated purpose and intended users | The lender may need to be named as able to rely on it |
| Valuation date | The value should be current for the decision |
| Method and assumptions | The lender can see how the figure was reached |
| Earnings adjustments explained | Add-backs are tested, not taken on trust |
| Signature | Someone is responsible for the opinion |
| Limitations | The lender knows what the report does not cover |
The lender's own list takes priority over this one. Requirements vary between lenders.
What can Valuo offer for a lender?
The Business Value Report is not for lenders. For a lender purpose, the Professional Valuation Report is the one to discuss, and we confirm your lender's requirements before you pay.
Here is how it works in practice:
- Business Value Report: not suitable for a bank or any other lender. It is for your own decisions and is not signed.
- Professional Valuation Report: a full independent valuation, signed by the valuer responsible. Because lenders often set their own requirements, a person checks them with you and confirms the scope and fee in writing before anything is paid.
- If your lender requires a panel valuer: we can only help if we meet the lender's requirements. If we do not, use the lender's panel.
- Complex cases: groups of three or more entities, or revenue of $10 million or more, receive a fixed fee quoted before any work starts, through Oliver Group.
A lender decides for itself whether to accept any valuation. No report can promise loan approval.
How much does a Professional Valuation Report cost?
The fee depends on the annual revenue of the business. These are the Professional Valuation Report fees.
| Annual revenue | Professional Valuation Report |
|---|---|
| Under $1 million | $1,495 + GST |
| $1 million to under $2 million | $1,995 + GST |
| $2 million to under $5 million | $2,995 + GST |
| $5 million to under $10 million | $3,995 + GST |
For a lender purpose, the fee and scope are confirmed in writing after we check the lender's requirements, before you pay.
What should I do next?
Ask your lender what they need first. If they are happy for you to choose your own valuer, tell us the lender's requirements when you start.
- Get your fixed fee
- See all pricing and how it works
For questions about the loan itself, speak to your lender, accountant or a finance broker. Healthcare practice owners can talk to Medival.
Questions
Will my bank accept any business valuation?
Not necessarily. Lenders set their own requirements and some only accept valuations from valuers on their own panel. Ask your lender, in writing if you can, before you commission a report.
What is a lender's panel valuer?
A panel valuer is a valuer a lender has approved to prepare valuations for it. If your lender requires one, a report from anyone else may not be accepted, even if it is thorough.
Can I use a Valuo Business Value Report for a loan?
No. The Business Value Report is for your own decisions and is not for lenders or other third parties. For a lender, the Professional Valuation Report is the one to discuss, and we confirm the lender's requirements before you pay.
Does a valuation mean my loan will be approved?
No. A lender decides for itself whether to accept a valuation and whether to approve a loan. A valuation is one piece of information among many, including your business plan, cash flow and security.
General educational information, not advice. Examples are hypothetical and do not value a real business. The right treatment depends on the purpose, the evidence and the agreed scope.