Thursday, September 9, 2010

New SBA Environmental Policy Effective October 1, 2010

The U.S. Small Business Administration (SBA) has released the new version of the agency's SOP 50 10 5. The new policy, SOP 50 10 5(C), replaces its predecessor SOP 50 10 5(B), and will apply to all applications for 7(a) or CDC loans received by the SBA on or after October 1, 2010. The new revision includes several modifications to SBA's due diligence requirements.

Changes to the SBA's environmental policies include:

  • The only change to the NAICS code list of environmentally sensitive industrial classifications is to clarify that 8123 "laundry & dry cleaning services" applies "if dry cleaning operations have ever existed on site," not just to current operations;
  • For small loans of $150,000 or less, if the Environmental Questionnaire determines that further investigation is warranted, the lender must obtain a Records Search with Risk Assessment (RSRA) by a qualified Environmental Professional (this replaces a Transaction Screen requirement);
  • Within the unique requirements for gas station loans, the SBA eliminated the requirement that only Professional Engineers or Professional Geologists with three years of experience could conduct Phase Is on gas station sites;
  • Any Phase II ESA performed in connection with an on-site dry cleaning facility must be conducted by an independent Environmental Professional who holds a current Professional Engineer's or Professional Geologist's license and has three years of relevant experience; and
  • The only change to the SBA's standard Reliance Letter that must accompany all Transaction Screen, Phase I and Phase II ESA reports was to add the words in bold at the end of the Phase II language as follows: "A Phase II...conducted in accordance with generally-accepted industry standards of practice and consisting of a scope of work that would be considered reasonable and sufficient to identify the presence, nature and extent of a Release as it impacts the Property."

Caltha LLP assists Sellers, prospective Buyers and their Lenders in meeting Due Diligence, Environmental Site Assessment and Environmental Review requirements. To request a quote on-line, go to Caltha Environmental Assessment Quote Web Page.

For further information contact Caltha LLP at or Caltha LLP Website

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