SBA Updates Lender and Development Company Loan SOP

October 25, 2023

Yesterday, October 24, 2023, the United States Small Business Administration (US SBA) released an updated version of its newest Standard Operating Procedures (SOP) under Lender and Development Company Loan Programs. The new SOP, Version 50 10 7.1, will go into effect on November 15, 2023. All lenders, certified development companies (CDCs), SBA employees, and applicants/borrowers of 504 and 7(a) loans will be subject to the changes therein at that time.

The environmental policies of the SOP are contained within Chapter 5, Section E of the new SOP. The primary highlighted change from the previous version (50 10 7) is that in subsection d, paragraph vii, the word “groundwater” has been removed regarding contamination originating from another site. In other words, SBA henceforth will require a discussion of mitigating factors related to known contamination resulting from neighboring properties regardless of media type. That section now reads as follows:

• Contamination Originating from another Site. If Contamination on the Property is shown to have come from another property, approval or disbursement may be considered if:
  1. Another Person with sufficient resources is performing Remediation pursuant to a Remediation action plan that has been approved by the appropriate Governmental Entity; or
  2. The state has laws or regulations that provide that an owner or operator of property will not be responsible for Contamination from another site; or
  3. The Governmental Entity provides satisfactory written assurance that it will not hold the Property owner liable for the Contamination. The SBA Lender should attempt to have the SBA Lender and SBA included by name in the letter along with the Property owner and future purchasers.

SCS Engineers continues to monitor this and other SOPs/guidelines that dictate proper performance of due diligence for specific lending programs. Please contact Rachel McShane for more information.