http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=22265

Hot off the presses, the US Small Business Administration has updated its Standard Operating Procedures (SOP 50 10 5(c)) for lenders and CDC's using the 7A and 504 programs.  There are several changes that have been applied to the new SOP which are noted below.  However, much like previous versions, the same policies apply to both lenders and CDC's.  Once I review the SOP in its entirety, I will post more about the SOP and its intentions.

As someone who has been very involved with the development and implementation of this new way of doing business at both former employers, as well as with ORMS, it is very satisfying to see many of the suggestions that we made be put into effect.  For now, the major changes appear to be:

• An easy one, the new SOP changed from SOP 50 10(B) to SOP 50 10 5(c).    It goes into effect on 10/1/10.
• In the past, a questionnaire that revealed potential environmental issues was required to be bumped up to a Transaction Screen.  Now, it is only requiring an RSRA (Records Search with Risk Assessment) to be conducted as the next step.  In essence, SBA has eliminated the Transaction Screen (TSA) as a form of due diligence under its current SOP.
• If an escrow is being used, the source of the escrow funds cannot be the SBA loan proceeds;
• However, escrowed funds may be used for remediation but any remaining funds cannot be released until a "closure letter" or "no further action" letter is received or when all monitoring wells have been decommissioned;
• The requirement for a Phase I for gas stations and dry cleaners to be completed by a Professional Engineer or Professional Geologist has been removed. 
• However, Phase II ESA's must still be completed by a PE or PG with 3 years of relevant full time experience.
• There was also a significant clause removed regarding groundwater contamination coming from a neighboring property.  The lender/CDC no longer has to demonstrate that the contamination has not caused significant damage to the collateral value and marketability of the Property.
• Under Appendix 4, NAICS Code 8123, Laundry and Dry Cleaning Facilities, it now states if dry cleaning operations have ever existed on site...
• The requirement of what type of testing is required for tanks and lines for Gas Stations has been removed and left "The Environmental Investigation for all Gas Station Loans must include testing of all USTs, lines and related equipment by an independent contractor using a methodology acceptable to the Governmental Entity with oversight authority." to stand on its own and leave the testing method up to the PE/PG. 

This is what we have so far.  We have been getting many inquiries about the SOP and ORMS is happy to assist with the environmental risk areas in any way possible.

SBA 5010(c).pdf (2.96 mb)