SBA rules · SOP 50 10 8.1

When does an SBA loan need a Phase I environmental site assessment?

A Phase I Environmental Site Assessment (Phase I ESA) is required when commercial property collateral involves an environmentally sensitive industry, a gas station, an on-site dry cleaner, or when initial environmental screenings indicate risk or warrant further investigation.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Environmentally sensitive industries: If the property's current or known prior uses match an environmentally sensitive industry NAICS code in Appendix 6, or if the business sells, supplies, or dispenses fuel, gasoline, or heating oil, the investigation must begin with a Phase I regardless of loan amount.
Gas station loans: An environmental investigation must begin with a Phase I ESA conducted by an independent Environmental Professional if the NAICS code begins with 457 or for all loans secured by real or personal property currently used to operate a gas station or commercial fueling facility.
Dry cleaners: For any property with on-site dry cleaning facilities, whether currently operating or operated historically at the site, that uses, used, or likely used chlorinated and/or petroleum-based solvents, a Phase I followed by a Phase II is mandatory.
Adverse Records Search with Risk Assessment: If a Records Search with Risk Assessment concludes that the property is anything other than "low risk" for contamination, the lender must obtain a Phase I ESA.
Transaction Screen recommendations: If the Environmental Professional conducting a Transaction Screen concludes that further investigation is warranted, the lender must obtain a Phase I ESA, unless prior permission is granted to bypass directly to a Phase II.

The source

What the SOP says

“If there is a NAICS code match to an environmentally sensitive industry identified in Appendix 6, the Environmental Investigation must begin with a Phase I, regardless of the amount of the loan.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Environmental Investigation Steps (lines 1500-1508)✓ Verified

“If the NAICS code begins with 457 (gas stations with or without convenience stores), the Environmental Investigation must begin with a Phase I and the SBA Lender must also refer to and, if applicable, comply with “Environmental Investigation Requirements for Gas Station Loans” in Appendix 7.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Environmental Investigation Steps (lines 1500-1508)✓ Verified

“A Phase I should always be obtained if the business sells, supplies or dispenses fuel, gasoline, heating oil, even if the NAICS code for the business is not identified on this list of environmentally sensitive industries.

SOP 50 10 8.1, Appendix 6: NAICS Codes of Environmentally Sensitive Industries* > 812921 PHOTOFINISHING LABORATORIES (except one hour) (lines 4570-4573)✓ Verified

“Begin with a Phase I ESA with the additional requirement that it be conducted by an independent Environmental Professional;

SOP 50 10 8.1, Appendix 7: Requirements Pertaining to Gas Station Loans > NOTE (lines 4576-4584)✓ Verified

“Prudent lending practices dictate and SBA requires that for any Property with on-site dry cleaning facilities, whether currently in operation or operated historically at the site, that uses, used, or likely used chlorinated and/or petroleum-based solvents, a Phase I followed by a Phase II Environmental Assessment is required.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Drycleaners (lines 1576-1577)✓ Verified

“If the Records Search with Risk Assessment concludes that the Property is anything other than “low risk” for Contamination, the SBA Lender must obtain a Phase I ESA.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Environmental Questionnaire and Records Search with Risk Assessment Results: (lines 1509-1511)✓ Verified

“If the Environmental Professional conducting the Transaction Screen concludes that further investigation is warranted, the SBA Lender must obtain a Phase I ESA.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Transaction Screen Results: (lines 1512-1514)✓ Verified

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