Business valuations for business funding

Business valuations play a pivotal role in securing small business funding (whether equity or debt) in nature and obtaining business loans for small businesses. Although lenders are primarily interested in the availability of cash flows to service debt, it also helps when the value of the equity in the business is considerably higher than the debt being raised. Most small businesses are unable to raise debt unless there is considerable skin in the game for shareholders. A valuation helps demonstrate the value of the equity that has been built by shareholders. This can help attract additional equity investors (possibly negating the need for debt) or get a lender across the line with granting credit to the business.

Although bizval does not specifically offer a credit assessment with the ratios that are typically used by lending institutions (like interest cover and solvency ratios), the valuation process is helpful for founders who are putting in place funding strategies that may include a mix of equity and business finance. In helping businesses finance their growth, bizval believes that an entrepreneur empowered with the knowledge of the valuation of the business has a greater chance of success.