Did you know about a short cut permitted for SBA’s environmental due diligence on 7(a) and 504 loan programs?
When the results of the Environmental Questionnaire on low-risk properties indicate that environmental contamination is unlikely at the site and no further investigation is warranted, SBA’s policy (Information Notice: SOP 50-10-06, dated 10/01/2020) allows lenders to submit the Environmental Questionnaire by itself and forgo more comprehensive environmental due diligence.
This is how it works.
- 1.The SBA Environmental Questionnaire and site visit are required of all loans on low-risk properties. But if the loan meets certain qualifications, then your environmental due diligence can start and stop with completion of the Environmental Questionnaire. Those conditions include:
- The loan amount is below $250,000.
- The property type is excluded from SBA’s list of environmentally sensitive industries (e.g., gas stations, dry cleaners, auto shops, etc.).
- No property/site contamination is known or observed.
- Completion of the Questionnaire including signature of the owner/operator.
- 2.When further environmental investigation is warranted by loan size, property use, or other circumstances, SBA lenders still need to obtain the Environmental Questionnaire because it must be included with other required desktop environmental reports like, at minimum, the Records Search with Risk Assessment (RSRA) that is prepared by independent environmental professionals.
