Every lender, be it a traditional bank or a financial institution, scrutinizes a business’ assets to evaluate the business’ current standing and its future potential in order to estimate the repayment value of the loan borrowed. The major aspects that lenders look at are the business’ history, revenue generation, credit score, balance sheet, business credit, and equity contributions. While a business that fulfills the primary requirements of a lender would be eligible for the loan, other businesses that fall short of certain criteria may be required to provide a collateral, additional tangible or intangible assets, in order to acquire the desired loan.

Here is a list of tips that can help you understand the effective use of assets as a collateral for acquiring business loans:

• Keep track of the value of each asset on your balance sheets. Valued assets reflected in a business’ balance sheet shows that the business is managing their assets for the long run. Getting an independent appraiser to value a business’ assets can help reflect their value appropriately in the balance sheet.