The Small Business Administration (SBA) just released its 2011revisions to one of their Standard Operating Procedures, SOP 50 10 5 (D),which includes some important revisions to the EnvironmentalInvestigation required for loan due diligence.

For those not familiar with SBA’sEnvironmental Investigation requirements, they consist of atiered approach in which higher risk properties such as gasstations or drycleaners must undergo more thorough due diligenceincluding a Phase 1 Environmental Site Assessment, whereas lowerrisk properties such as commercial office buildings may onlyundergo an environmental screening. The screening toolsinclude an Environmental Questionnaire, a review of regulatory andhistorical records (called a Records Search with Risk Assessment or“RSRA”), and/or an environmental Transaction Screen. Aproperty is deemed high or low risk by it's NAICS code - the SBAmaintains a list of which NAICS codes are considered high risk.

Many commercial lenders have a similar tiered approach toenvironmental due diligence.