SBA ENVIRONMENTAL POLICIES AND PROCEDURES

The Steps of an Environmental Investigation



NAICS Codes. For all Property except units in a multi‐unit building, CDC must begin by making a Good Faith effort to determine the


NAICS code(s) for the Property’s current and known prior uses and compare the NAICS code(s) to the list of environmentally


sensitive industries in Appendix 4. For units in a multi‐unit building, Lender may proceed directly to paragraphs 2.a) and b) below.


1. If there is a NAICS code match to an environmentally sensitive industry identified in Appendix 4, the Environmental Investigation


must begin with a Phase I, regardless of the amount of the loan.


If the NAICS code begins with 447 (gas stations with or without convenience stores), CDC must refer to, and if applicable comply


with, “Environmental Investigation Requirements for Gas Station Loans” in Appendix 5.


2. If there is not a NAICS code match to an environmentally sensitive industry, the CDC must proceed as follows:


a) If the loan amount is up to and including $150,000, the Environmental Investigation may begin with an Environmental


Questionnaire.


b) If the loan amount is more than $150,000, the Environmental Investigation must, at a minimum, begin with an Environmental


Questionnaire and Records Search with Risk Assessment.


3. Environmental Questionnaire Results. If the Environmental Questionnaire reveals it is unlikely that there is environmental


contamination at the Property and that no further investigation is warranted, CDC must submit the results of the Environmental


Investigation to SBA with recommendations and seek SBA’s concurrence.


If at any time an Environmental Questionnaire reveals that further investigation is warranted, CDC must obtain, at a minimum, a


Transaction Screen.


4. Environmental Questionnaire & Records Search with Risk Assessment Results


a) If the Environmental Questionnaire reveals it is unlikely that there is environmental contamination at the Property and that no


further investigation is warranted, and the Records Search with Risk Assessment concludes that the Property is a “low risk” for


Contamination, CDC must submit the results of the Environmental Investigation to SBA with recommendations and seek SBA’s


concurrence.


b) If the Records Search with Risk Assessment concludes that the Property is an “elevated risk” or “high risk” for Contamination, CDC


must obtain a Phase I ESA.


5. Transaction Screen Results


a) If the Environmental Professional conducting the Transaction Screen concludes that no further investigation is warranted, the CDC


must submit the results of the Environmental Investigation to SBA with recommendations and seek SBA’s concurrence.


b) If the Environmental Professional conducting the Transaction Screen concludes that further investigation is warranted, the CDC


must obtain a Phase I ESA.


6. Phase I ESA Results


a) If the Environmental Professional conducting the Phase I ESA concludes that no further investigation is warranted, the CDC must


submit the results of the Environmental Investigation to SBA with recommendations and seek SBA’s concurrence.


b) If the Environmental Professional conducting the Phase I ESA concludes that further investigation is warranted (typically a Phase


II), and the CDC still wants to make the loan, the CDC must proceed as recommended by the Environmental Professional, or in the


alternative submit the results of the Environmental Investigation to the SBA with recommendations and seek SBA’s concurrence. In


general, SBA will require compliance with all of an Environmental Professional’s recommendations (including “housekeeping


measures,” such as secondary containment, decommissioning monitoring wells, sealing floor drains, etc.). In the rare instance where


an exception may be warranted, CDCs must provide a rationale for not wanting to follow the Environmental Professional’s reccomendations.
 
PRESENTED BY:-
SHILPI KUMARI
PGDM-3rd sem