On March 18, 2008, the U.S. Small Business Administration (SBA) released a revision to its procedures under the Lender & Development Companies Loan Programs (SOP 50-10(5)). These new procedures go into affect on May 1, 2008. Some of the key changes are procedures related to environmental assessments detailed under the Environmental Policies & Procedures requirements. This Regulatory Briefing summarizes some of the key elements of these new SBA requirements.
The goal of the policy is to identify properties that have a higher risk for environmental contamination, and to assure that if contamination is present, it is addressed in a manner that reduces the potential liability of SBA and the lender. The basic structure is SBA requires an Environmental Investigation of ALL COMMERCIAL property loans it is securing; The level of the Environmental Investigation will depend on the risks for contamination.
The determination of the appropriate level of Environmental Investigation will follow a formal process path, so that Lenders can quickly determine what documentation SBA will require for individual loans. At a minimum, the investigation will require an evaluation of current and past uses, and completion of an Environmental Questionnaire. The SBA Environmental Policy also provides specific guidance on steps required based on the results of the environmental investigation.
In August 2008, SBA made some revisions to their requirements, which mainly changed loan value thresholds.
Here are two links for more information: