Why Standard Flood Certificates Aren’t Enough for Commercial Loans

Understanding Flood Risk in Commercial Lending

When issuing commercial loans, lenders must assess a property's flood risk. Traditionally, this has been done using standard flood certificates, which simply state "yes" or "no" if a property is located in a FEMA-designated Special Flood Hazard Area (SFHA).

While this basic determination may be enough for residential loans, it falls short in the commercial lending space, where properties often contain multiple structures with varying levels of flood exposure.

The Problem with Standard Flood Certificates

A single flood determination for an entire commercial property doesn’t always tell the full story. Consider a commercial real estate loan where a borrower is financing multiple buildings on a single parcel.

With a standard flood certificate, you might only see a flood zone determination for the parcel as a whole, leaving out critical details, such as:

• How many structures are on the property?
• Which structures are in a FEMA flood zone?
• Where exactly do the flood risk boundaries fall?

This limited information can lead to compliance risks, insurance issues, and financial losses if lenders don't accurately determine when flood insurance is required and on which structures.

A Better Solution: ServiceLink’s Master Certification of Services (MCS)

Recognizing the gaps in standard flood certification, ServiceLink developed the Master Certification of Services (MCS)—a first-of-its-kind commercial flood compliance solution that delivers:

• Aerial Map Identifying Every Structure – Instead of a general flood determination, lenders receive a detailed structure map with each building numbered for easy reference.
• Flood Overlay Map – Aerial images are overlaid with FEMA’s SFHA boundaries, showing exactly which buildings are in high-risk flood zones.
• Master Structure Schedule – A detailed list of all structures, specifying which ones require flood insurance based on FEMA data.
• Notice to Borrower – Ensuring compliance and transparency by providing clear flood information.

How This Benefits Lenders & Borrowers

For Lenders:

• Reduce Compliance Risk – Know exactly which structures require flood insurance.
• Improve Loan Processing Efficiency – Avoid back-and-forth disputes over flood status.
• Enhance Due Diligence – Gain a more accurate flood risk profile before closing.

For Borrowers:

• Clarity on Insurance Needs – Avoid unnecessary flood insurance costs.
• Faster Loan Approvals – Less ambiguity means a smoother underwriting process.
• Informed Decision-Making – Know what’s at stake before purchasing a commercial property.

A Competitive Edge in Flood Compliance

Not all flood vendors provide this level of precision and reliability. ServiceLink’s MCS is:

• The only flood compliance product of its kind
• Manually verified by commercial flood mapping experts
• Backed by a $10M E&O policy

At Birchwood Credit Services, we partner with industry leaders like ServiceLink to ensure that lenders have the tools they need to make informed, risk-conscious lending decisions.

Don’t Settle for Incomplete Flood Determinations

For commercial loans, a simple "yes" or "no" flood certificate isn’t enough. Lenders need structure-level data to accurately assess flood risk, maintain compliance, and protect their investments.

🔹 Want to learn more? Contact us today to see how ServiceLink’s MCS can transform your flood compliance process.

📞 Call us at 800.910.0015 or visit www.birchwoodcreditservices.com to get started!