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New SBA SOP 50 10 5 (D), Includes Changes to Loan Due Diligence

The 2011 updates to the SBA's SOP 50 10 5 (D) include some important changes to the environmental due diligence done on SBA loans.

By Gary Reynolds | Updated on September 21, 2011

The Small Business Administration (SBA) just released its 2011 revisions to one of their Standard Operating Procedures, SOP 50 10 5 (D), which includes some important revisions to the Environmental Investigation required for loan due diligence. 

For those not familiar with SBA’s Environmental Investigation requirements, they consist of a tiered approach in which higher risk properties such as gas stations or drycleaners must undergo more thorough due diligence including a Phase 1 Environmental Site Assessment, whereas lower risk properties such as commercial office buildings may only undergo an environmental screening.  The screening tools include an Environmental Questionnaire, a review of regulatory and historical records (called a Records Search with Risk Assessment or “RSRA”), and/or an environmental Transaction Screen.  A property is deemed high or low risk by it’s NAICS code – the SBA maintains a list of which NAICS codes are considered high risk.

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