As both commercial and residential interest rates continue to lower, we are noticing an increase in demand for environmental services driven by refinancing, in addition to new mortgage applications.

The Connection between Real Estate Financing and Environmental Site Assessments (ESAs)

Many of our referrals come from trusted real estate professionals—lenders, mortgage brokers, real estate agents, lawyers, and developers. When market activity increases, there is a corresponding need for environmental support.

How ESAs Protect Both Lenders & Businesses

• Lenders aim to limit the risk to their investment before lending large amounts of money to their clients
• Buyers want to be confident they aren’t inheriting any surprises that might impact the value of the property they are buying
• Sellers use ESAs to establish fair market value for their property, and to enable a smooth transaction if the seller requires the ESA for financing

When Is the Best Time to Start?

If a business loan is on your radar, we recommend speaking with your broker or lender a full quarter (3 months) ahead, as commercial refinancing takes time to gather all of the documents your lender may request for review with your application.

There is a misconception that business financing follows the same trends as residential, which typically responds to Bank of Canada (BoC) rate adjustments and schedules.

Commercial lending rate changes are less predictable, as they are influenced by BoC rates but also consider bond yields, inflation, the job market, regional differences and more. They also depend on case-specific factors such as your company’s past and projected financial health.

Streamlining Your Commercial Financing Application

The first call you should make is to a qualified commercial financial broker. Your broker will help you explore potential options and guide you through the process.

Your broker will be looking for confirmation of your company’s financial situation, that of its directors, and documentation to demonstrate its long-term viability.

To start the process with your broker, you can expect to share the following documents:

• Current Notice of Assessments (NOA)
• Corporate Articles of incorporation showing who its directors are
• For each director – 2 years of NOA, income declaration T4’s, T1’s and T5’s
• Corporate Financial Statements
• Environmental Site Assessments (if available, as they are often requested by the lender)

Preparing for a Commercial or Industrial ESA

As mentioned earlier, ESAs are often a requirement for most lenders, to mitigate their own risk in lending on a particular property.

Quick tips to streamline your ESA experience, and potentially save time and money.

• The typical timeline is 2-3 weeks for a CSA Phase 1 ESA and 6-8 weeks for a Phase Two ESA
  • If there’s a strong potential for a Phase 2, AEL can book utility locates concurrently, since half of the P2 timeline is waiting for Ontario One Call
  • A Canadian Standards (CSA) ESA and a Letter of Reliance signed by a Qualified Person are included in your reporting package
• Prepare for a site walkover
  • Ensure chemical storage and utility rooms are accessible, clean and organized
• If you’ve had previous ESAs done on your site:
  • Your old reports must be reviewed by your environmental consultant, as part of your new ESA
  • Are there existing Monitoring wells on site that can be sampled if a Phase 2 ESA is recommended? If they are viable, this can save you a lot of time and money.
• Plan your budget accordingly. We developed an online quotation tool to help you determine the approximate Cost of a Phase 1 ESA for your site

Why Choose AEL for your Environmental Site Assessment?

With over 25 years in business, AEL’s environmental reports are accepted by all major banks as well as alternate lenders, and we are on many bank’s preferred vendor list (under our parent company AEON Egmond Ltd.)

We collaborate daily with lenders, brokers, real estate agents, business owners and their representatives.  If you have any environmental questions related to business refinancing, one of our environmental professionals would be happy to support you.