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SBA Phase I Environmental Site Assessment

Understanding the nuances of SBA Phase I ESAs really matters.


Partner is truly an expert at Small Business Administration (SBA) environmental due diligence for the SBA Advantage Loan Program and the SBA Grow Loan Program, including SBA Phase I Environmental Site Assessments. The scope of work for an SBA Phase I Environmental Site Assessment (ESA) is the same as the AAI / ASTM E1527 scope of work, but there are a few nuances with the report as noted below. The main components of the Phase I Environmental Site Assessment are a site and area reconnaissance, review of regulatory and historical records, and interviews with key site personnel.

The turnaround time for the Phase I Environmental Site Assessment should be expected to average three weeks. The more time given to an environmental consultant, the better. The Phase I ESA report will have fewer data gaps (such as a file review that couldn’t be done due to a short turnaround time). This data can sometimes make the difference between having to recommend additional work or not.

Adherence to the EP’s Recommendations

It is important to note that the SBA requires adherence to all recommendations for further investigation made by the Environmental Professional (EP) within the Phase I ESA report including any investigations regarding Recognized Environmental Conditions (RECs) such as a Phase II Subsurface Investigation.

Non-scope items in an SBA Phase I ESA

The SBA also requires adherence to any non-scope or non-REC additional investigations recommended by an Environmental Professional in the SBA Phase I Environmental Site Assessment. Examples of this include a recommendation to complete an asbestos survey or add secondary containment around hazardous-substance containers; these are known as “housekeeping” actions. Some lenders choose to have these housekeeping actions discussed and completed prior to the completion of the Phase I ESA report in an effort to avoid slowing down the process.

Partner emphasizes communication on every project and will be happy to assist in addressing housekeeping items in the most cost- and timeeffective manner. It should also be noted that these items may entail additional fees.

SBA Reliance Letter

Another nuance of the SBA Phase I Environmental Site Assessment is that it must be accompanied by an SBA Reliance Letter, which grants the SBA ability to rely on the report. The SBA has specific language that it requires be used for its reliance letter and will not accept a Phase I ESA Report that does not have this signed reliance letter.