By Bill Anderson, FCCA, Chief Executive Officer, Assetica — 2026-07-18
UAE banks lending against a business, or against its equipment, want an independent valuation before they approve. But lenders read value differently from buyers: they discount for downside, weight tangible assets, and stress the cash flow that services the debt. What a bank actually wants in the report, why the loan-security value is lower than the sale value, and how to present a business that gets financed.
A buyer pays for the future: growth, goodwill, the going concern. A lender protects against the future going wrong and may have to recover quickly from whatever can be sold under time pressure. So banks anchor to a forced sale or loan-security basis rather than market value, discount goodwill heavily because it evaporates in a distressed sale, and focus on assets they can take security over. The same business can carry a market value of AED 10 million and a loan-security value of AED 6 million, both correct for their purpose. A report that does not state its basis is the one a credit committee sends back.
Security: the value of collateral on a basis the bank could realise, meaning property, plant, machinery, vehicles and quality receivables on both market and forced-sale bases, with existing charges disclosed. Serviceability: whether maintainable cash flow covers the debt service through a realistic downside, expressed as a debt service coverage ratio with a floor. A business can be asset-rich and fail serviceability, or asset-light with contracted cash flow and pass. The report must speak to both.
A clearly stated basis of value (ideally both market and forced sale); an asset register reconciled to the accounts with existing charges disclosed; maintainable earnings normalised for owner and one-off items; a debt service coverage view under base and downside cases; and independence, because a borrower's or their accountant's valuation carries little weight. Reports to RICS and IVS standards formatted for a bank audience read as credible rather than optimistic.
Many UAE facilities are secured on equipment: manufacturing plant, construction machinery, vehicles, generators. The valuation is a specialist plant-and-machinery exercise priced on the regional secondary market and depreciated replacement cost, always shown on both market and forced sale bases because the bank lends against the lower figure. Complete service records, import papers and manuals raise the realisable value, so documentation directly affects the facility size.
Why is my bank valuation lower than what my business could sell for?
Because a lender values what it could recover if the loan went wrong, not what a buyer would pay on a good day. Banks anchor to a forced sale or loan-security basis, discount goodwill heavily, and focus on assets they can take security over. The same business can carry a market value and a materially lower loan-security value, and both are correct for their purpose.
What does a UAE bank want in a business valuation?
A clearly stated basis of value (usually both market and forced sale), an asset register reconciled to the accounts with existing charges disclosed, normalised maintainable earnings, a debt service coverage view under base and downside cases, and independence from the borrower. Reports to RICS and IVS standards, formatted for a credit committee, are what get read as credible.
Do I need a separate valuation for equipment finance?
The equipment is valued within the same engagement as a specialist plant-and-machinery exercise, on both market and forced sale bases, because the bank lends against the lower figure. Complete service records, import papers and manuals raise the realisable value, so documentation directly affects the size of the facility.
Does the bank accept my accountant's valuation?
Generally not. A valuation prepared by the borrower or their own accountant carries little weight with a lender because of the obvious interest in a higher number. Banks want an independent report, on the right basis of value, prepared to recognised standards.
How long does a lender-ready valuation take?
Typically five to seven business days from receiving your accounts, asset register and details of existing facilities, with expedited two to three day delivery available where a financing decision is time-sensitive.