SOP 50 10 5(K)

The U.S. Small Business Administration (SBA) issued Standard Operating Procedure (SOP) 50 10 5(K), Lender and Development Company Loan Programs, effective April 1, 2019.

This update to the previous version (J) has a few key changes that affect commercial lenders including: 

Transaction Screens (page 330)

If further investigation is recommended by an Environmental Professional (EP)–based on the findings in a Transaction Screen– the lender is required to obtain a Phase I Environmental Site Assessment (ESA).  An EP may recommend proceeding directly to a Phase II ESA, bypassing the Phase I ESA. If the lender agrees with bypassing the Phase I ESA, they must seek an exception from the SBA Environmental Committee in advance.  The SBA may grant exceptions on a case-by-case basis.

Special Use Facilities (page 334): 

The biggest changes to this section are that lead risk assessments are not limited to child-occupied facilities constructed prior to 1980, and lead assessments must comply with US Environmental Protection Agency (EPA) and US Department of Housing and Urban Development (HUD) guidelines. Special use facilities are now broken out into three facilities:

  • 1. Child-occupied facilities – A  lead risk assessment must be conducted, and drinking water must be tested for lead at all taps and fountains potentially used as a drinking water source for children. All lead assessments must comply with US EPA regulations 40 CFR 745 and HUD Guidelines for Evaluation and Control of Lead-Based Paint Hazards in Housing Second Edition, July 2012.  Results of the lead risk assessment must be submitted to US SBA. Disbursement will not be granted until the risk of lead exposure has been mitigated.
  • 2. Drycleaners – Any property currently or historically operating as a dry-cleaning facility, and uses, used, or likely used chlorinated and/or petroleum-based solvents, a Phase I and II ESA are required. The Phase II ESA must address soil, groundwater, and soil vapor, and must be completed by an independent EP who holds a current Professional Engineer’s or Professional Geologist’s license and has the equivalent of three years of full-time relevant experience.
  • 3. Gasoline stations – Specific requirements for gasoline stations are included in Appendix 5.  No significant changes to Appendix 5 were made.

To see all the changes in the SOP 10 5(K), review the SBA’s information bulletin. It’s important to note that SOP 50 10 5(K) will apply to all applications received by SBA on or after April 1, 2019.  Participants should continue to use SOP 50 10 5(J) for SBA 7(a) and 504 applications submitted through March 31, 2019.

Please contact Erin Pike, St.Germain’ Lender Services Manager if you would like to discuss how this may affect your property transactions:  207-591-7000 x37.