How do I present a bakery’s production equipment list to a lender?
Group the list by function: mixing, proofing, baking, cooling, packaging and refrigeration. For each item give the make, model, age, condition and serial number, and note anything leased or already pledged. Add service records, photographs and an independent appraisal if you have one, so the lender can see what would hold its value.
A lender reading a bakery equipment list wants to know two things: can the bakery produce what it sells, and what would the equipment fetch if it had to be sold. Organize the list so both answers are easy to find. Put the ovens, mixers and sheeters first, since they drive output, then the smaller items.
Note the condition honestly. Mention which ovens are near the end of their life and what a replacement might involve, because a lender will notice anyway. Attach service invoices and any inspection reports, which show that the equipment has been looked after.
Confirm ownership item by item. If a machine is on a lease or has a lender’s claim against it, say so and explain how that will be cleared. If you are buying the bakery, ask the seller to give you this in writing. Connect the list to the numbers. The lender will compare it with the financial statements, so make sure depreciation and repairs there are consistent with what you describe. Your accountant can help with that. A short cover page that summarizes the list helps a busy loan officer.
Key takeaways
- Group equipment by function and put the output-driving machines first.
- Disclose condition and ownership problems before the lender finds them.
- Make sure the list agrees with the financial statements.
- Add a one-page summary so the loan officer can read the list quickly.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentEquipment valuation: How to do it
- 02Business Development Bank of CanadaGovernmentEquipment purchase financing for entrepreneurs
- 03Business Development Bank of CanadaGovernmentHow a bank looks at your business
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