New Changes to the SBA SOP

by | Aug 1, 2023 | Guides, SBA

The U.S. Small Business Administration (SBA) has released a new Standard Operating Procedure (SOP) for 7(a) and 504 Loan Programs that will become effective August 1, 2023. The new SOP, referenced as SOP 50 10 7 for Lender and Development Company Loan Programs, will apply to all applications received by the SBA on or after August 1, 2023.

Lender Participation Requirements have been removed from SOP 50 10 and have been issued under SOP 50 56 1, which is also effective August 1, 2023. As a result, the loan requirements for 7(a) and 504 Loans have been reorganized into three sections of SOP 50 10 7.

The Environmental Policy and Procedures can now be found in Section A, Chapter 5 of the SOP. 

Significant changes in the new SOP include the following:

  • Additional guidance regarding applicability of the Environmental Policies and Procedures
  • Additional requirements for Child-Occupied Facilities
  • References to the updated ASTM standards for Phase I Environmental Site Assessments (ASTM E 1527-21) and Transaction Screen Reports (ASTM E 1528-22)
  • A change to the NAICS codes related to Gasoline Stations and Fuel Vendors
  • A change to the NAICS codes related to Food Manufacturing

SOP 50 10 7 specifies that “SBA’s environmental policies and procedures apply to all SBA Lenders on all 7(a) and 504 loan programs, except where otherwise indicated. Environmental policies apply only to real estate acquired, refinanced, or improved by the loan proceeds. This section is not applicable to real estate collateral that is available from, for example, a lien filed for a loan where proceeds are not used to acquire, refinance, or improve the real estate.

With regard to Child-Occupied Facilities, the requirement of a lead risk assessment and testing for lead in drinking water at all taps and fountains potentially used a drinking water source for children remains.

In addition, a “new lead risk assessment and new testing for lead in drinking water at all indoor and outdoor taps and fountains accessible to children and therefore potentially used as a drinking water source for children are required for each new loan. The assessment and any tests must have been conducted within one year of submission of the reports to SBA or reliance upon the report by a Lender utilizing its delegated authority.

Appendix 4 of SOP 50 10 7 includes definitions for various environmental terms including a Child-Occupied Facility, Phase I ESA, and Transaction Screen. The current ASTM standards are included in the definitions for a Phase I ESA and Transaction Screen.

Appendix 6 of the SOP includes the list of Environmentally Sensitive Industries by NAICS codes. Under the new SOP, gasoline stations have been combined with Fuel Vendors under a new code (457). Fuel vendors that only sell propane and firewood are excluded from this category. In addition, Food Manufacturing (311) is considered environmentally sensitive if tanks (aboveground or belowground) are present.

The new SBA SOP 50 10 7 can be found here; information regarding significant procedural updates to the entire SOP can be found here; and the Lender Participation Requirements (SOP 50 56 1) can be found here.