NJBIZ reported last week that SBA loan volume in New Jersey surged 23% in Q4 2012. This was surprising considering the negative expectations from the Superstorm Sandy aftermath. A contributing factor is that the max SBA loan amount was raised from 2 million to 5 million which will make property, which is relatively expensive in New Jersey, more accessible for small businesses. The strength of Q4 could be an indicator of a robust 2013 for New Jersey and the increase in loan amount will likely lead to the purchase of more real estate.
Environmental issues can often complicate a transaction or transfer of commercial property, for example by making a loan harder to repay if costly environmental cleanup is needed at a site. For this and other reasons, the SBA has very specific requirements regarding environmental due diligence for 7a and 504 loans.
So what do SBA lenders and CDCs in NJ need to know about the SBA environmental due diligence requirements?
The first thing you need to check is SBA’s list of “environmentally sensitive industries” which tend to have a higher risk of contamination to determine if the collateral property’s use fits any of those categories (as determined by NAICS codes). If the property type is on this list, you will need to have a Phase I Environmental Site Assessment (ESA) completed, no matter what the loan amount. For gas stations and drycleaners, there are further SBA due diligence requirements.
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