Upon completing environmental risk evaluation (due diligence) including cost-to-cure and the time-to-cure, bankers generally have a better understanding of the environmental conditions associated with their collateral. Depending on the issue, there are a host of environmental risk mitigates that can help to get the deal done.
What You Can Do
Understand the loan structure and to determine if the bank would assume the full risk associated with the environmental issue.
Consider if the loan failed, would it be necessary to foreclosure on the environmentally impacted collateral or would there be other options.
Consider revaluation of the collateral with the environmental issue included to determine if the deal is still attractive.
Consider loan enhancements such as pre-closing requirements, escrow, additional collateral, or personal guarantees to cover the cost of the environmental issue.
Consider loan protection such as environmental insurance or an indemnity. Since environmental issue vary, it is wise to retain environmental professionals including consultants and attorneys to make certain that the bank fully understands the potential consequences of taking ownership of such properties.
Consider what bank resources it would take to oversee the management of an on-going remedial project, if the bank chooses to allow the borrower to proceed with such activities during the life of the loan.
How the EBA Can Help
If you need are dealing with such issues there are resources and professionals within the EBA that can help. The members only portion of the website offers multiple links to historic presentations and the directory offers connections to the many professionals that regularly address such issues.