Collateral valuation is the process of determining the current market value of assets pledged as security for a loan or credit facility. It involves assessing the quality, liquidity, and risk associated with the collateral to ensure it adequately covers the lender's exposure in the event of default.
Valuations may be performed using various methodologies, such as appraisals, market comparisons, and others depending on the asset type (e.g., real estate, securities, or equipment). Accurate and timely collateral valuations are critical for risk management, regulatory compliance, and informed decision-making in lending and financial operations.
Valuation types
Our create collateral and add collateral valuation endpoints take a valuation_type in their request bodies , the following are the available valuation types Canopy supports
| Value | Description |
|---|---|
| FULL_APPRAISAL | Could be used for real estate, equipment, and even things like A/R and inventory; this implies a physical visit to, or review of, the collateral. |
| DESKTOP_APPRAISAL | Indicates the valuation was still performed by a third-party, but without the physical part of it; they do it from their desk using all info available to them. |
| MARKET_VALUE | This could be used for liquid financial assets where the value is easily known (e.g. stock, securities, cash, crypto). |
| LENDER_ANALYSIS | This is a catch-all for an analysis performed by the lender. |
| BORROWER_PROVIDED | This is a catch-all that indicates the valuation was estimated/provided by the borrower. |