General, USDA Business & Industry Loans

Taking A Closer Look at Appraisal Reports

Taking A Closer Look at Appraisal Reports: Understanding Third Party Reports with North Avenue Capital.

Knowing the different types of third party reports your business must undergo before it can officially apply for a USDA Business and Industry Loan is an important first step.

Those third party reports include:

  1. Appraisal Reports 
  2. Environmental Reports 
  3. Feasibility Studies 

At North Avenue Capital (NAC), we are dedicated to helping you strengthen your foundation and providing you with the resources to allow your business to grow. In this guide, we break down everything you need to know about appraisal reports.


  1. Applying for Your USDA B&I Loan: What Are Appraisal Reports? 
  2. Breaking Down Types of Appraisal Reports 
  3. How Appraisal Reports Work
  4. Get in Touch with North Avenue Capital Today

Applying For Your USDA B&I Loan: What Are Appraisal Reports? 

When applying for a USDA B&I Industry Loan, a Fair Market Value Appraisal serves as a way to assess how much a property is worth. This process ultimately drives how much a lender (NAC) is able to lend you. There are three parties involved in these appraisal reports. They are as follows:

  1. The Borrower
  2. The Lender
  3. The Appraiser 

An appraisal report typically takes between three and five weeks to complete.

How Appraisal Reports Work

  1. Appraiser’s bid on the project and the borrower chooses a bid which they would like to take. A borrower can choose to accept a bid at a higher cost for a faster turnaround time.

      2. The borrower sends the lender (NAC) a deposit to hire the appraiser. Borrowers must pay the lender before the appraisal company can begin.

      3. It’s important to note, this process includes a lot of interaction between the borrower and the appraiser. This can include but is not limited to:

    • Access to a site/property – For example, if there’s a building an appraiser must access, the borrower needs to be available to make sure they are able to get inside.
    • Access to documents – For Machinery equipment, a borrower must be ready to provide the maintenance records/ service records if asked by an appraiser. For real estate improvements, construction contracts, material costs, schematics and drawings will all be needed to determine the as-built value. 

Breaking Down Types of Appraisal Reports 

There are two types of commercial real estate appraisal reports.  They can include:

  1. “As Is” Appraisals – This report assesses already existing projects. Factors can include:
    • Existing buildings/property 
    • FF&E 
    • Value indicated by recent sales of comparable properties in the market
    • Value that the property’s net earning power will support

     2. “As Built” Appraisals – In this report, construction bids, drawing/plans, material costs, etc.  are collected, and the appraiser determines the as-built value of the real estate improvements. The lender                (NAC) can then lend depending on the as-built value. Project examples include:

    • Construction of a hotel 
    • Construction of a manufacturing facility  
    • Improvements to an office building  

Machinery & Equipment Appraisal Reports

Machinery & Equipment (M&E) appraisals take a look at current the market conditions and asses the condition and remaining useful life of each piece of equipment which determine the overall value. Which in turn, this will determine the total amount of collateral coverage the M&E provides towards the loan.

 Asset classes can include:

    • Vehicles
    • Manufacturing equipment 
    • Industrial engineering equipment

Get in Touch With North Avenue Capital Today

North Avenue Capital encourages you to get in touch with one of our loan specialists before you begin the process of completing Fair Market Value Appraisal.

NAC is ready to help you learn more about how to fund your next project today! To get in touch today, we encourage you to fill out the attached form HERE.

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