SOP, Version 50 10 7 for the Small Business Administration’s Standard Operating Procedures for Lender and Development Company Loan Programs effective on August 1, 2023.
On May 10, 2023, the United States Small Business Administration (US SBA) issued a long-anticipated informational notice regarding implementing their newest Standard Operating Procedures (SOP) under Lender and Development Company Loan Programs. According to this notice, the new SOP, Version 50 10 7, goes into effect on August 1, 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.
Today’s SCS blog provides critical guidance to entities needing environmental due diligence or other services under the auspices of US SBA programs.
The environmental policies of the SOP are contained within Chapter 5, Section E of the new SOP. One highlighted change from the previous version (10 5 6) is that these policies apply “only to real estate acquired, refinanced, or improved by the loan proceeds” and do not apply to collateral. For the commercial real estate subject to the program, the following summarizes the basic requirements:
The SBA SOP also has specific requirements for “Special Use Facilities,” which differ from other property types. The three categories of Special Use Facilities include child-occupied, dry cleaners, and gas stations. Of the three, the new version of the SOP contains a point of clarification pursuant to child-occupied facilities. It now explicitly specifies that all such facilities constructed before 1978 must undergo a Lead Risk Assessment (RA) and test all taps, water fountains, and spigots for lead in drinking water. The RA should be conducted within one calendar year of submission to SBA for approval and follow US Department of Housing and Urban Development (HUD) Guidelines.
As always, SCS aims to make the process of securing both conventional and SBA loans as painless as possible. Rest assured that we fully understand the program’s intricacies and are well-positioned to assist you with environmental requirements related to this program.
Meet Author Rachel McShane
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