On October 19th, EDR hosted a webinar to provide the industry with a first look at the nine key areas of changes to the environmental requirements under the new SBA SOP 50 10 5(J) that came out on October 13th. Our event drew more than 400 attendees, mainly 7(a) and 504 lenders from across the U.S. More questions came in than we were able to address during the live event, including many requests for the resources that presenter James Haberlen referenced in his presentation. Below are answers to all the questions submitted. Note that in several cases, EDR sought clarification directly from the SBA’s Environmental Committee to ensure accuracy for our viewers. Below the Q&A is a list of EDR’s resources designed to help you make a smooth transition over to the new requirements by the January 1, 2018 effective date.

Question: The scope of the Records Search with Risk Assessment can include file review if recommended. What if the file review resolves the issue and is integrated in the RSRA review?

ANSWER (provided by the SBA’s Environmental Committee): “If a file review contributes to a low risk finding, that would be OK.”

Question: The SBA’s SOP 50 10 5 says that if a Transaction Screen comes back with recommendations that a Phase I should be done. Is there a way to bypass that as it is likely the Phase I will also come back with the same recommendations?

ANSWER (provided by the SBA’s Environmental Committee): “No.  However, a lender or CDC could seek an exception to policy from the SBA Environmental Committee.  Lenders should use caution when starting with a Transaction Screen when it isn’t required under the SOP, as a lender runs the risk of having to pay for a TSA and Phase I.”

Question: Does the SBA still require closure of an environmental condition (no further action designation from the state authority) prior to loan closure?

ANSWER (provided by the SBA’s Environmental Committee): “An NFA letter is one of many mitigating factors that may allow for disbursement in the presence of contamination.  Not all mitigating factors require an NFA letter.”

Question: What does the EP/consultant have to do for the National Register of Historic Places designation?  Does the RSRA have to contain a declarative statement as to whether the site is a historic place?

ANSWER (provided by the SBA’s Environmental Committee): “They are unrelated.  That said, it might be helpful to lenders, CDCs and SBA if information about a property’s listing on the National Register of Historic Places is included in an appraisal or is shared with the client, however we don’t see the necessity of including this information in an environmental assessment.  We note that this is more of an SBA loan eligibility issue, and a property’s listing on the national register is something that might be something that would be helpful for a lender or CDC to know about early on.  Again, this is not an environmental issue, but rather an eligibility issue.”

Question: So what is the earliest trigger date for the one-year shelf-life for a Phase I ESA report?  Is it the beginning of the work to research the Phase I, or is it the ‘final date’ placed on the Phase I report?  ASTM E1527-13 states that: ‘A Phase I for which the information was collected or updated within one year prior to the date of acquisition of the property may be used provided’ that certain parts are updated.  That suggests that the beginning of the Phase I is the trigger, not the date on the report.

ANSWER  (provided by the SBA’s Environmental Committee): “See the definition of Phase I ESA in SOP 50 10 5 (J), Appendix 2 Specifically, the SOP states “…if it was performed within one year of the date upon which it was submitted to a SBA loan processing center…”  We interpret “performed” to mean “completed.”  We will clarify this in the next version of the SOP.”

Question: What about recommendations provided for non-scope items such as asbestos containing materials, lead based paint surveys, wetlands, etc.?  Do they carry the same weight/requirement as a recommendation for a Phase II?

ANSWER  (provided by the SBA’s Environmental Committee): “Generally, we view these as housekeeping recommendations that should be complied with, and SBA will look for evidence that these housekeeping items have been complied with.”

Question: I was recently told that you can no longer fill out a reliance letter for more than one report included.  In other words, every report needs its own reliance letter now.  Is this correct?

ANSWER  (provided by the SBA’s Environmental Committee): “No, this is not correct.  Environmental firms can always include more than one of their reports (for example, both a Phase I and a Phase II) in one reliance letter.  Keep in mind, though, that if different environmental firms prepared different reports, then a separate reliance letter will be necessary for each firm.”

 Question: What happens if an RSRA comes back high or elevated risk?

ANSWER: You may ask your EP what the options are and one possibility may be to go to county offices and do a file review. On an SBA loan, however, you don’t have any latitude. If the RSRA come back with either “high” or “elevated” risk, a Phase I ESA by a qualified environmental professional is the next step.

NOTE TO READERS: The U.S. SBA’s Environmental Committee is extremely responsive to industry questions or requests for clarification. If anything in SOP 50 10 5(J) is unclear, submit a question to them at 


Several attendees asked for the EDR resources that were referenced during the live webinar. You will find links to our webcast recordings, presentation slides and other reference tools related to the updated SBA SOP 50 10 5(J) on this comprehensive web page, including: