SBA SOP 50 10 8, A.Ch5.E.4 — Environmental Investigation Steps

SOP 50 10 8 A.Ch5.E.4

Effective 2025-06-01 · publisher's stamp for this provision

4. Environmental Investigation Steps NAICS Codes. For all Property except a unit in a Multi-Unit Building, the SBA Lender must begin by making a Good Faith effort to determine the NAICS code(s) for the Property’s current and known prior uses and compare the NAICS code(s) to the list of environmentally sensitive industries in Appendix 6. For a unit in a Multi-Unit Building, the SBA Lender may proceed directly to Subparagraphs ii.a) and b) of this Paragraph below. i. If there is a NAICS code match to an environmentally sensitive industry identified in Appendix 6, the Environmental Investigation must begin with a Phase I, regardless of the amount of the loan. If the NAICS code begins with 457 (gas stations with or without convenience stores), the Environmental Investigation must begin with a Phase I and the SBA Lender must also refer to and, if applicable, comply with “Environmental Investigation Requirements for Gas Station Loans” in Appendix 7. ii. If there is not a NAICS code match to an environmentally sensitive industry, or if the Property is a unit in a Multi-Unit Building, the SBA Lender must proceed as follows: a) If the loan amount is up to and including $250,000, the Environmental Investigation may begin with an Environmental Questionnaire. b) If the loan amount is more than $250,000, the Environmental Investigation must, at a minimum, begin with an Environmental Questionnaire and Records Search with Risk Assessment. b. Environmental Questionnaire Results. If the Environmental Questionnaire reveals it is unlikely that there is environmental Contamination at the Property and that no further investigation is warranted, the SBA Lender must retain the results of the Environmental Investigation in the SBA Lender’s file. If at any time an Environmental Questionnaire reveals that further investigation is warranted, the SBA Lender must obtain, at a minimum, a Records Search with Risk Assessment. Environmental Questionnaire and Records Search with Risk Assessment Results: i. If the Environmental Questionnaire reveals it is unlikely that there is environmental Contamination at the Property and that no further investigation is warranted, and the Records Search with Risk Assessment concludes that the Property is a “low risk” for Contamination, the SBA Lender must keep a copy of the Environmental Questionnaire and the Records Search with Risk Assessment results in the loan file. ii. If the Records Search with Risk Assessment concludes that the Property is anything other than “low risk” for Contamination, the SBA Lender must obtain a Phase I ESA. Transaction Screen Results: i. If the Environmental Professional conducting the Transaction Screen concludes that no further investigation is warranted, the SBA Lender must keep a copy of the Transaction Screen and review in the loan file. ii. If the Environmental Professional conducting the Transaction Screen concludes that further investigation is warranted, the SBA Lender must obtain a Phase I ESA. If an Environmental Professional recommends proceeding directly from the Transaction Screen to a Phase II (thus bypassing the Phase I), and the SBA Lender concurs, the SBA Lender must seek in advance an exception to policy from the SBA Environmental Committee, which may be granted on a case-by-case basis. Phase I ESA Results: i. If the Environmental Professional conducting the Phase I ESA concludes that no further investigation is warranted, the SBA Lender must keep a copy of the Phase I ESA and review in the loan file. If the Environmental Professional conducting the Phase I ESA concludes that further investigation is warranted (typically a Phase II), and the SBA Lender still wants to make the loan, the SBA Lender must proceed as recommended by the Environmental Professional, or in the alternative submit results for an exception to policy at [email protected]. In requesting an exception to policy, the SBA Lender must provide the SBA Environmental Committee with justification for the exception at [email protected]. SBA will require compliance with all of an Environmental Professional’s recommendations (including “housekeeping measures,” such as secondary containment, decommissioning monitoring wells, sealing floor drains, etc.). ii. In the rare instance where an exception to policy may be warranted, SBA Lenders must provide the SBA Environmental Committee with justification for not wanting to follow the Environmental Professional’s recommendations and obtain committee approval. Phase II ESA Results: i. If the Environmental Professional conducting the Phase II ESA concludes that no further investigation is warranted, the SBA Lender must retain a copy of the environmental documents and review in the loan file. ii. If the Phase II ESA reveals Contamination and the SBA Lender still wishes to make the loan, the SBA Lender must ensure that the Environmental Professional has documented: a) Whether the Contamination quantities exceed the reportable or actionable levels; b) Whether Remediation is necessary; c) An estimate of any Remediation costs (Environmental Professionals may use ASTM E2137-01 Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Matters); and d) The projected completion date of any Remediation. iii. If the Environmental Investigation reveals Contamination, the SBA Lender should determine whether disbursement is appropriate under one or more of the factors identified below in Paragraph 5, Property Contamination or Remediation.

Source: SBA SOP 50 10 8, A.Ch5.E.4 — Environmental Investigation Steps · source URL · snapshot 535743ffe062cc34