SBA Crash Course – Topic 5: SBA Screen Outs and Appeals

SBA Crash Course – Topic 5:

SBA Screen Outs and Appeals

Not all environmental due diligence reports make it through the review process at SBA’s Sacramento Loan Processing Center (SLPC) squeaky clean. Some require additional clarification and others additional response actions.

One of the most common screen outs is due to the lack of data provided in the report itself. Most commonly, missing the “Section G” information, now referred to as Paragraph 6 – “Property Contamination or Remediation.” If the subject property has been impacted from an adjoining property or is the source area itself, the Phase I report must include a write-up on delineation, remediation, collateral value, and at least one of the mitigation factors listed in the SBA SOP.

The best way to go about appealing a screen out is to specifically answer the SBA’s concerns on the letter/email sent to the client. As a consultant, I will always ask to see this letter; occasionally the need expressed by the lender/borrower is not actually what the SBA is requesting. There may even be instances where clarification is needed.

Unfortunately, for every case that can be appealed there are several cases in which additional work is needed. For example, if the screen out for a dry cleaner was due to the lack of data provided (i.e. soil gas only), the SBA will likely request that additional samples of soil and groundwater be collected, as all media is required for dry cleaner releases whether on- or off-site. If this was not viable or feasible, you can appeal this with your justifications.

The key to screen outs and appeals is to provide the specific data the SBA is asking for and keep it clear. Do not include additional information that is not needed and be sure to speak to a consultant who is familiar with the process and can offer a straightforward answer of what can or can’t be done.

The SBA Crash Course Series:

Topic 1: The SBA SOP and Why You Should Care
Topic 2: The Environmental Questionnaire
Topic 3: The Records Search with Risk Assessment
Topic 4: The Transaction Screen Assessment
Topic 5: SBA Screen Outs and Appeals
Topic 6: Reliance Letters
Topic 7: The Phase I ESA and Beyond