SBA dry cleaner requirements

The Small Business Administration (SBA) treats dry cleaning as a special use in Standard Operating Procedure (SOP) 50 10 8.1, which governs the environmental review of its 7(a) and 504 loans. Where on-site dry cleaning uses, used or likely used chlorinated or petroleum-based solvents, the SOP asks for a Phase I and, after it, a Phase II, sets who may perform the Phase II and what it must cover, and allows a departure only as an exception to policy. This page rests on SOP 50 10 8.1 with Technical Policy Updates, effective October 1, 2026. SBA's lists of procedural and information notices, read October 16, 2026, show none issued after it whose title touches its environmental policies. Capitalized terms carry the meanings Appendix 4 of the SOP gives them.

Who the rule binds

Every SBA Lender, on each 7(a) and 504 loan program, unless the SOP says otherwise; on a 7(a) loan a failure to comply may lead SBA to deny its guaranty (SOP 50 10 8.1, Section A, Ch. 5, Para. E).
A Property with on-site dry cleaning, current or historical, that uses, used or likely used chlorinated solvents, of which the SOP names tetrachloroethene (PCE) and trichloroethene (TCE), petroleum-based solvents or both (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Drycleaners).
Who decides. SBA requires both assessments, and the paragraph makes no exception for any processing method. Any departure is a request for an exception to policy, sent to EnvironmentalAppeals@sba.gov (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Drycleaners). The SBA Environmental Committee, attorneys of SBA's Office of General Counsel, reviews it, and the Associate General Counsel for Litigation may overrule the committee (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Questions on SBA's Environmental Policy and Appeals).

What it asks

The trigger. Laundry and dry cleaning services, North American Industry Classification System (NAICS) code 8123, are on the SOP's list of environmentally sensitive industries where dry cleaning operations ever existed on site (SOP 50 10 8.1, Appendix 6). A match starts the investigation with a Phase I whatever the loan amount, and the lender may skip the code check for a Multi-Unit Building unit (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Environmental Investigation Steps). The dry cleaner paragraph reaches any Property where on-site dry cleaning meets its solvent test, such a unit included. It requires the Phase II as well, and does not make it depend on what the Phase I finds (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Drycleaners).

The Phase II (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Drycleaners; Appendix 4, Phase II Environmental Site Assessment):

The investigation must cover soil, groundwater and soil vapor.
Its Environmental Professional must be independent, hold a current license as a Professional Engineer or Professional Geologist, and have full time relevant experience equivalent to 3 years.
The SOP's Phase II Environmental Site Assessment (ESA) is conducted at a minimum by an Environmental Professional under ASTM's most recently adopted Phase II standard, currently ASTM E1903-19 (2020). SBA will also recognize one done to generally accepted industry practice, on a scope of work reasonable and sufficient to find whether a Release is present, and its nature and extent.
It comes with the Reliance Letter of Appendix 5 and bears a date no more than one year from the date SBA issues the loan number (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Submission of Environmental Investigation Reports).

What follows the Phase II (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Phase II ESA Results):

No further investigation warranted. The lender keeps the environmental documents and its review in the loan file.
Contamination found, and the lender wishes to go ahead. The lender must see that the Environmental Professional has documented four things: whether the quantities of Contamination exceed reportable or actionable levels; whether Remediation is needed; an estimate of its cost, for which the Environmental Professional may use ASTM E2137-22; and the date Remediation is projected to be complete.
Then disbursement. The lender should decide whether disbursement fits one or more of the mitigating factors of Para. E.5, Property Contamination or Remediation; see SBA loan on a contaminated property.

What it means for the Phase I and the consultant

The decisive facts reach back. The Appendix 6 entry turns on whether dry cleaning operations ever existed on site, and the paragraph on whether solvents are, were or likely were used there. Neither speaks of a store that only takes in and returns clothes. The Phase I standard's historical research looks for the specific use where the general use is retail, with a strip mall's past dry cleaning as its example (E1527-21, 8.3.7 and its note). See dry cleaner on the subject property.
Next door is outside the paragraph. The dry cleaner paragraph speaks of dry cleaning on the Property. A dry cleaner next door or nearby reaches the loan through the conclusion of the investigation the steps call for (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Environmental Investigation Steps).
The Phase I does not sample. The standard includes no testing or sampling of soil, water or air (E1527-21, 7.4). It counts vapor in the subsurface as migration and does not require the vapor encroachment guide (E1527-21, 3.2.53, 3.2.53.1). The soil vapor work comes from the SOP's dry cleaner paragraph.
A narrower Environmental Professional. The standard lets the environmental professional be an independent contractor or the user's employee (E1527-21, 3.2.30). For this Phase II the SOP asks for independence and the license route alone, of the four routes in 40 CFR 312.10(b); the regulation's route also accepts a registration, of which the SOP's sentence says nothing.
Contamination is the SOP's term, defined by whether a Governmental Entity's directive or order could follow (SOP 50 10 8.1, Appendix 4, Contamination). It is not the Phase I standard's recognized environmental condition (E1527-21, 3.2.73).

What the rule says

The license route of the inquiry rule's environmental professional:

Hold a current Professional Engineer's or Professional Geologist's license or registration from a state, tribe, or U.S. territory (or the Commonwealth of Puerto Rico) and have the equivalent of three (3) years of full-time relevant experience

40 CFR 312.10(b), edition revised as of July 1, 2025

Part 120 includes "SBA Standard Operating Procedures (SOPs)" among Loan Program Requirements (13 CFR 120.10). Among the events that release SBA from a loan guarantee, wholly or partly at its exclusive discretion:

The Lender has failed to comply materially with any Loan Program Requirement for 7(a) loans.

13 CFR 120.524(a)(1), edition revised as of January 1, 2025

This page is general reference for environmental professionals. It does not review any loan or project. The regulation and SBA's Standard Operating Procedure are the authority, and the determinations of SBA, or of the lender acting under the authority SBA delegates, govern.