General, USDA Business & Industry Loans

Breaking Down Environmental Reports With North Avenue Capital

Taking A Closer Look at Environmental Reports: Understanding Third Party Reports with North Avenue Capital

Looking for a USDA Commercial Loan? In order receive these government-guaranteed loans from the USDA through North Avenue Capital (NAC), an application must be submitted on behalf of the borrower for USDA approval.  A USDA Commercial Loan requires different types of third party reports to be submitted within this application. The team at North Avenue Capital encourages their borrowers to engage in underwriting with NAC before trying to complete these reports on their own. 

USDA Commercial Loan Third Party Reports Include

  1. Environmental Report
  2. Appraisal Report
  3. Feasibility Study (For new/startup businesses)

At North Avenue Capital, we are dedicated to helping you build and strengthen your business from the ground up. In this guide, we focus on Environmental Reports.


  • Environmental Reports & Phase I Environmental Site Assessments
  • Breaking Down the Phases of Environmental Reports 
  • How Environmental Reports Work
  • Get in Touch With Us Today

Environmental Reports & Phase I Environmental Site Assessments

Environmental reports (ER) reflect the historic nature of the property and its history. ER’s are only required for construction projects.  These reports can take anywhere from 90 to 120 days to complete.  NAC will aid borrowers in finding a third party reporting company to fit their specific industry needs.  

Breaking Down the Phases of Environmental Reports 

Environmental Reports are required assessments for a business applying for a USDA Commercial Loan and consist of three different phases. They include:

  • Phase I Environmental Site Assessment (ESA): On average, The Phase I Site Assessment will take 2-3 weeks, depending on its proximity. It primarily includes a visual review of a property that includes a record search. An engineering firm will typically schedule a site visit of the real estate and assess the historical use of the land. For example, if the real estate has only ever been a piece of farmland, the Phase I ESA process is typically very easy. If it was a gas station, on the other hand, things can get more difficult. This is because there were probably underground storage tanks of petroleum that have a potential for chemical spills. If a project is identified as a “Recognized Environmental Condition” (REC), meaning there appears to be contamination, it is pushed on to a Phase II ESA


  • Phase II ESA: A Phase II ESA includes an exploratory process of the potential risk discovered in the Phase I ESA. A team must now drill between 20 and 40 feet into the earth. They do this by drilling 3 to 4-inch boreholes into the ground where they later pull dirt and rock samples to test for contamination. Depending on the site layout, the number of boreholes needed will vary. The process becomes more expensive when more holes are needed.


  • Phase III ESA: If contamination is discovered, a business must enter a Phase III ESA. This is the remediation process. Here, whatever the contamination is, has to be resolved before a project moves forward.

How Environmental Reports Work

If your business is seeking a USDA Commercial Loan for a project that includes new construction that is disturbing the earth for the first time, an environmental report (ER) must be conducted in addition to the ESA. 

An ER can include but is not limited to: 

  • A Tribal Review: Exists to verify there is no Native American heritage connected to your land.
  • A Historic Preservation Study: Evaluates if there is anything of historical significance in the proximity to your site
  • An Archaeological Study: Meant to identify any ancient and/or recent human remains in the proximity of your site.
  • Endangered Species Study: This study makes sure your project will not bring harm to any endangered species.
  • Wetland Review:  Exists to identify any nearby wetlands.

Get in Touch with Us Today

North Avenue Capital encourages you to get in touch with one of our loan specialists before you begin the process of completing your third-party reports. 

NAC is ready to help you learn more about how to fund your next project today! To get in touch today, we encourage you to fill out the attached form HERE.

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