SBA lead requirements for a child-occupied facility

The Small Business Administration (SBA) treats a Child-Occupied Facility 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. The definition reaches only buildings constructed before 1978, and for them the SOP asks for a lead risk assessment and for testing of the drinking water taps and fountains children may use, done anew for each loan, and bars disbursement until the risk to young children from lead is sufficiently minimized. 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 (SOP 50 10 8.1, Section A, Ch. 5, Para. E). The paragraph excepts no processing method.
A Child-Occupied Facility. A building, or part of one, built before 1978 that one child younger than 6 visits regularly, on two or more different days in a week running Sunday through Saturday, with every day's visit at least 3 hours long, the week's visits together at least 6 hours, and the year's at least 60 hours (SOP 50 10 8.1, Appendix 4, Child-Occupied Facility).
Examples and places. Day care centers, preschools and kindergarten classrooms, among others. Such a facility may be in target housing, a term Appendix 4 leaves to any definition in CERCLA, 13 CFR or 40 CFR, or in a public or commercial building (SOP 50 10 8.1, Appendix 4, Child-Occupied Facility).
Common areas and exteriors. In a public or commercial building, the facility takes in only the common areas children under 6 use routinely, such as restrooms and cafeterias, and not hallways, stairways, garages or other areas they only pass through. Of the building's exterior, it takes in only the sides immediately next to the facility or to those common areas. The definition refers to 40 CFR 745.83 (SOP 50 10 8.1, Appendix 4, Child-Occupied Facility).
Who decides. The lender may not disburse until the risk is sufficiently minimized; the SOP names no measure for that. Any exception to SBA's environmental policies goes to the Environmental Committee, whatever the processing method (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Child-Occupied Facilities; Submission of Environmental Investigation Reports).

What it asks

The SOP frames these as additional assessments that prudent lending practices dictate for a Child-Occupied Facility (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Child-Occupied Facilities):

A lead risk assessment. Facilities constructed before 1978 must undergo one.
Lead in drinking water. Required testing at every tap and fountain children may use as a drinking water source.
New work for each loan. The SOP requires, for each new loan, a fresh lead risk assessment and fresh testing of every tap and fountain, inside or outside, that children can reach and so may drink from.
Timing. The assessment and the tests must be conducted no more than one year from the date SBA issues the loan number.
Standards named. Every lead assessment must conform to the Environmental Protection Agency's (EPA) rules in 40 CFR part 745 and to the guidelines of the Department of Housing and Urban Development (HUD) titled Guidelines for the Evaluation and Control of Lead-Based Paint Hazards in Housing, Second Edition, July 2012. The handbook carries neither.
The file. The results are kept in the loan file.
Disbursement. The lender may not disburse until the risk that infants and small children are exposed to lead has been sufficiently minimized.

What it means for the Phase I and the consultant

Outside the Phase I's scope. The Phase I standard lists lead-based paint, where it has no tie to a release into the environment, and lead in drinking water among its non-scope considerations. No assessment of them is required for all appropriate inquiries as the standard defines them, and a user may contract for them as additional services (E1527-21, 4.4, 12.10, 13.1.2, 13.1.5.9, 13.1.5.10). The SOP's lead work stands apart from its Phase I. The SOP's Environmental Questionnaire, where used, must ask whether lead paint is present at the Property, unless ASTM Questionnaire A stands in for it (SOP 50 10 8.1, Appendix 4, Environmental Questionnaire).
The facts that decide it. The year the building was built; whether the same child under 6 visits often and long enough to meet the definition's thresholds; which common areas and exterior sides those children use; and which taps and fountains, indoors and out, they can reach. The Phase I's site visit notes the approximate age of buildings and the potable water source, and building department records are among its standard historical sources (E1527-21, 8.3.4.5, 9.4.7, 9.4.9). Attendance and tap access are not among the standard's site visit items.
What the SOP leaves unsaid. It does not say who performs the lead risk assessment or the water testing, beyond conformance with the two standards it names. Its Reliance Letter covers a Transaction Screen, a Phase I and a Phase II, and names no lead assessment (SOP 50 10 8.1, Appendix 5).
A different rule. The handbook's page on lead-based paint on an FHA multifamily loan rests on HUD's MAP Guide, which applies HUD's lead-based paint regulation, 24 CFR part 35; the SOP names neither here.

What the rule says

Part 120 has no lead rule. It counts "SBA Standard Operating Procedures (SOPs)" among Loan Program Requirements (13 CFR 120.10), and the lender's documentation duty runs to them:

An SBA Lender or Intermediary must maintain sufficient documentation to demonstrate that Loan Program Requirements have been satisfied.

13 CFR 120.180, 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.