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SBA Gas Station Loans

Charlotte, North Carolina - In order to identify and mitigate the environmental risks associated with gas station loans, the U.S. Small Business Administration (SBA) has developed guidelines that loan applicants must follow during the application process.

The SBA requires that the Environmental Investigation for a Gas Station loan include a Phase I Environmental Site Assessment, a review and analysis of relevant environmental records for the subject property and adjoining properties, and equipment testing (described below).  If a Phase II assessment is recommended by the Phase I consultant, the Phase II assessment must be prepared by an Environmental Professional who holds a Professional Engineer or Professional Geologist license and has a minimum of three (3) years of relevant experience.

Equipment testing must include testing of the underground storage tanks (USTs), lines and associated leak detection devices.  The testing must occur within the 12-month period prior to submission of the Environmental Investigation and must be conducted by an independent contractor using a method that is accepted by the regulatory agency having jurisdiction. Finally, the Environmental Professional must conclude whether or not the gas station is in compliance with regulatory requirements.

If the property is contaminated and the lender does not intend to decline the loan, an SBA Indemnification Agreement signed by the seller is required. A template for this document can be found in Appendix 6 of the SBA Standard Operating Procedure, SOP 50 10 5(I).   A waiver from the SBA Environmental Committee can be sought under circumstances where an Indemnification Agreement is not practical. In addition to the Indemnification Agreement, the Environmental Policies and Procedures section of the SOP, “Approval and Disbursement of Loans when there is Contamination or Remediation” must be followed. The information submitted under this requirement includes documentation regarding the nature and extent of contamination; the method, status, costs and time-frame for remediating the site; Responsible Party designation and financial responsibility for the contamination; collateral value variables; and a determination of possible mitigating factors.

The SBA’s “Requirements Pertaining to Gas Station Loans” are found in Appendix 5 of the SOP 50 10 5(I), which has an effective date of January 1, 2017. For additional assistance addressing the SBA’s new requirements, please contact us at 866.913.9738.



About Environmental Risk Innovations (ERI)
"Environmental Risk Management Solutions Under One Roof."
ERI is the nation’s largest environmental risk consulting firm, specializing in the management of environmental risk for commercial lenders. ERI’s clients include a broad base of commercial lenders, from regional banks to banks with national footprints. ERI provides third-party review of environmental assessment reports and conducts Records Search with Risk Assessments (RSRAs)/desktop reviews on commercial properties. ERI is not a traditional environmental consulting firm that performs Phase I or Phase II Environmental Site Assessments. As a result, ERI’s recommendations represent a truly independent, third party opinion that conforms to the client bank’s specific risk tolerance. The key to our success is the collaboration of all of ERI’s permanent environmental risk management professionals working together in a single office location in Charlotte, North Carolina.

For more information on ERI's environmental consulting expertise, please contact Karen Nelson at knelson@eRiskInnovations.com or Greg Lathan at glathan@eRiskInnovations.com or 866.913.9738.

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