Running a waste-management business is a bigger responsibility than most: you not only commit to protect the environment and community, but to a financial burden as well. In Ontario, waste operators have to post security to the government in case anything fails, which ties up resources that could be better used to invest, innovate and grow.
That is why Purves Redmond Limited (PRL) is launching a new way to easily access Ministry of Environment (MOE) Bonds. To do it, we’ve joined forces with the Ontario Waste Management Association (OWMA). Together with our insurance partners, we have developed an online application that requires minimal effort and can be completed in minutes.
To walk through how it works, we spoke with Matthew Newman who is the Surety Practice Leader at PRL. With more than 15 years of underwriting and brokering experience, Matthew has negotiated bonds on behalf of countless businesses in waste management, construction and mining. He was instrumental in brokering this exclusive program.
Why did PRL create the MOE Bond Program?
In Ontario, the MOE requires landfills, transfer stations and other waste facilities to secure financial assurance in order to operate. If they default or cannot fulfill environmental and legal obligations, the MOE can use these funds to cover the resulting costs, including cleanup of contaminated sites, preventing negative environmental impact, future maintenance and so on.
A Letter of Credit (LOC) tends to be the most commonly used financial assurance, but surety bonds are an overlooked alternative. In the past, bonds were harder to obtain and many operators were not aware that bonds could be accepted. However, our new OWMA bond program makes accessing these bonds easier than ever.
Who is eligible?
The PRL MOE Bond Program is available exclusively to members of the OWMA. The OWMA represents the majority of Ontario’s waste management and recycling industry, with more than 250 private and public companies, including landfills, transfer stations, disposal sites, sewage, incineration, composting and other types of waste-management facilities. If you’re not currently a member, you can apply to join on the OWMA website.
Why should you consider a Bond over a LOC?
There are some misconceptions that the MOE only accepts LOCs as financial assurance or that the alternatives are simply too difficult to obtain from insurers. By working with OWMA and our surety partners who understand this risk, we were able to develop this program that makes it easier for OWMA members to qualify for these bonds.
There are several key advantages to placing a bond rather than using a LOC:
- Frees up liquidity: These bonds don’t require you to supply cash collateral and won’t tie up your credit facility, so you can invest in other areas of your business.
- Competitive pricing: Our high-volume arrangement means that we’re able to pass along cost savings to you!
- Easy process: LOC applications can take weeks through a bank, but we’ve set up a virtual process that’s fast – sometimes with instant approval.
Additionally, we have seen how this program really benefit smaller operators. For example, one of our clients who operates a single transfer station in the Greater Toronto Area was required by the MOE to post financial assurance in the amount of $700,000. Normally, to get a LOC, the bank would require our client to post cash collateral for the full $700,000. Luckily, with our surety program, we instead arranged an agreement that helped him satisfy MOE regulations without having to supply any collateral of his own.
How do I apply?
The OWMA will provide its members with access to the online application. The process typically takes about 10 minutes and you will just need to provide some basic information about your business and upload a few documents. Depending on the application, approval can be instant for some applications while other applications will receive a response within 24 hours.
Can this program help waste companies that are large or have more complex needs?
PRL specializes in surety bonding and insurance for waste management, construction and mining companies, so we have experience arranging solutions for large landfill capping and closure bonds, construction performance bonds, curbside pickup contracts and more.
This program is geared towards businesses that require MOE Bonds up to $1,000,000. We can absolutely assist businesses with larger or complex requirements through this program; just give us a call.
The MOE Bond Program is now live! To apply, please look out for an email from the OWMA, or contact Matthew for more information:
Matthew Newman, CPA, CMA
Partner | Surety Practice Leader