U.S. SBA TIP SHEET: Avoiding Environmental Screen Outs

NOTE TO EDR INSIGHT READERS:

This Tip Sheet was created by the U.S. Small Business Administration’s Environmental Committee based on the thousands of environmental investigations they review each year. It is being redistributed with permission from Eric Adams and Stephen Reynolds in the SBA’s Environmental Committee to assist lenders in avoiding any delays in the loan approval and review process.

U.S. SBA: Tips to Reduce Environmental Screen Outs

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Submitting Environmental Investigations to Sacramento Loan Processing Center (SLPC)

– Ensure all appendices and attachments to the environmental assessment are submitted

– Ensure all scanned documents are legible.

– Ensure all environmental documents are submitted as document type: EX-17 when using the E504 system.

CDC Checklist for Submitting Environmental Investigation

– Ensure the CDC Checklist is included for all environmental document submittals.

– Ensure the correct NAICS codes for the past and current use of the property is included on the CDC Checklist.

– The CDC must provide comments and sign the CDC Checklist.

– Ensure the CDC comments on the CDC Checklist match the environmental professional’s recommendations and conclusions.

– Provide the SBA Loan Number or the control number on the CDC Checklist.

– If a 504 Loan is approved after pre-application, include the control number and/or SBA Loan Number so the documents can be associated with the pre-application file.

Reliance Letters

– Any Transaction Screen Analysis, Phase I Assessment or Phase II Assessment must be accompanied by the SBA Reliance Letter and Certificate of Professional Liability Insurance.

– Ensure the SBA Reliance Letter is not altered or modified.

– Ensure the Certificate of Professional Liability Insurance with Errors and Omissions statement is submitted with the SBA Reliance Letter.

– Ensure the coverage period in the Certificate of Professional Liability Insurance includes the date of the environmental assessment.

– Ensure the SBA Reliance Letter has the same date as the Transaction Screen Analysis, Phase I Assessment or the Phase II Assessment.

Address Changes

– If the addresses on the CDC Checklist and the environmental documents are different than the address on the loan authorization, please provide an explanation.

– Submit a 327 form for an address change prior to submitting the environmental documents.

Resubmissions

– Send in the requested environmental documents– not all documents.
– Follow the instructions provided at the bottom of the environmental response from SLPC.

Environmental Questionnaires

– State the past and current use of the property and the adjoining properties in an Environmental Questionnaire (EQ)

– The EQ must be signed by the owner or operator of the site and the CDC.

– If the owner is unable or unwilling to sign the EQ and the property is not in an environmentally sensitive industry (ref Appendix 4 of SBA SOP 50-10(5)), then a Transaction Screen Analysis is the minimum requirement for submission.

-If a property is a daycare center, child care center, nursery school or a residential care facility occupied by children, state the construction date of the building. If the date of construction is prior to 1980, a lead risk assessment (for lead based paint) and testing for lead in drinking water is required.

Contamination, Environmental Professional Recommendations and Gas Station Loans

– Ensure all information -as stated in SOP 50-10(5) (E), Subsection G (Approval and Disbursement of Loans When There is Contamination or Remediation) – is submitted if requesting approval of funds with known contamination, on-going remediation, or monitoring on the property.

– If there are contaminants on the Property, get the environmental documents to SLPC as soon as possible – SLPC will need concurrence by SBA District Counsel

– If the environmental professional states no further action and there are contaminants on the property, ensure all information -as stated in SOP 50-10(5) (E), Subsection G (Approval and Disbursement of Loans When There is Contamination or Remediation) – is submitted if requesting approval of funds with known contamination, on-going remediation, or monitoring on the property.

– If RSRA indicates “elevated” or “high risk,” conduct a Phase I Assessment – not a Phase II Assessment.

– Recommendations by the environmental professional need to be completed before submission to the SBA. Send in documentation such as contractor’s receipts, etc.

– In addition to a Phase I Assessment, gas station loans must include a determination by the environmental professional stating whether or not the gas station is in compliance with all state requirements, if any, pertaining to tank and equipment testing. Regular monitoring and inspection results do not meet this requirement.

Environmental Appeals Committee

– Attach any SBA Environmental Appeals Committee decisions with the environmental submissions and resubmissions

– All requests for an exception to SBA’s environmental policy must be sent to the SBA Environmental Committee at environmentalappeals@sba.gov