By Joseph W. Berlin, PE, CFE
The Small Business Administration (SBA) amended its Environmental Due Diligence (EDD) requirements for SBA loans (SOP 50 10 5(A)). These more stringent SBA require- ments went into effect on March 1, 2009.
Based on our SBA experience, the following list of special considerations are important to keeping your deals on track:
• All Phase I Environmental Site Assessments (ESAs) must be conducted by an Environmental Professional as defined in ASTM E1527-05, which commonly exceeds lender require- ments.
• For certain properties such as gas stations, the EDD must be completed by an Environmental Professional that is a currently Licensed Professional Engineer (PE) or Registered or Professional Geologist (RG) (SOP 50 10, Appendix 5).
• An ASTM-Phase I ESA is required if the NAICS Code for the property’s current and known prior uses lists an Environmen- tally Sensitive Industry (SOP 50 10, Appendix 4).
• If the loan exceeds $150,000, additional investigation is required even if the site is not occupied by an SBA-defined Environmentally Sensitive Industry (e.g. Environmental RiskScanTM).
• For select properties, an Environmental Transaction Screen can satisfy SOP 50 10; however, the work must be conducted by an Environmental Professional as defined by ASTM.
• All EDD must have an SBA-specific reliance letter (SOP 50 10, Appendix 3).
• Buildings constructed prior to 1978 that will be used for daycare or childcare require a lead risk assessment (lead- based paint, drinking water).
• Dry cleaners and gas stations in operation for over five years require a Phase II ESA (soil or groundwater sampling) in addition to a Phase I ESA.
Our team has over a decade of experience with SBA transac- tions and has the qualifications (PE, RG) needed to meet the more stringent SBA requirements outlined in this briefing.
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Request Information: To learn more about how we can help you, request a copy of our Environmental Due Diligence Q&A and Flowchart. It provides an illustration and explanation of each step of our EDD process.
Contact John Michalec With Questions: With BLDI, you get environmental expertise from a business- savvy team of geologists, engineers and scientists. Contact John Michalec with any questions. By phone: 616.459.3737 By email: johnm@bldi.com