SBA Phase I requirements

The Small Business Administration (SBA) defines the Phase I Environmental Site Assessment (ESA) it accepts on a 7(a) or 504 loan in Appendix 4 of its Standard Operating Procedure (SOP) 50 10 8.1: a Phase I that complies with All Appropriate Inquiries (AAI), conducted by an Environmental Professional under the latest ASTM International standard, currently ASTM E1527-21. SBA adds its own conclusion, a dating rule tied to the SBA loan number, insurance and impartiality for the professional, and its Reliance Letter. 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.

Who the rule binds

SBA Lenders on 7(a) and 504 loans, who must meet the environmental policies however a loan is processed (SOP 50 10 8.1, Section A, Ch. 5, Para. E).
When a Phase I comes in. On a match with an environmentally sensitive industry, a records search rating other than low risk, or a Transaction Screen that warrants more investigation (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Environmental Investigation Steps). Dry cleaners and gas stations have rules of their own.
Who decides on the result. The professional concludes; the lender files the report or, still wanting the loan, follows the recommendation or seeks the Environmental Committee's exception (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Phase I ESA Results).

What it asks

Standard and signature. An AAI compliant Phase I, conducted by an Environmental Professional under ASTM International's most recently adopted Phase I standard, currently ASTM E1527-21, with 40 CFR 312.20 cited beside it. Someone who is not an Environmental Professional may help under the supervision or responsible charge of one, as long as one then reviews the Phase I and signs it (SOP 50 10 8.1, Appendix 4, Phase I Environmental Site Assessment).
The professional. Anyone meeting 40 CFR 312.10(b): a current license or registration as a Professional Engineer or Professional Geologist, or a government license or certification to perform environmental inquiries, each with relevant experience equal to 3 full-time years; a bachelor's or higher degree in engineering or science from an accredited institution, with 5; or 10 years. SBA also requires that the professional be impartial and carry errors and omissions insurance of at least one million dollars per claim (or occurrence) (SOP 50 10 8.1, Appendix 4, Environmental Professional).
Opinion and conclusion. The professional gives an opinion on whether the inquiry found conditions indicative of any of these at the Property: recognized environmental conditions (RECs), controlled RECs (CRECs), historical RECs (HRECs) and Environmental Issues. SBA also requires a conclusion either that the Property's risk of Contamination is minimal enough that no further investigation is warranted, or that the risk is enough to warrant more; a similar statement may serve. Where more is warranted, the professional should describe the recommendation in detail (SOP 50 10 8.1, Appendix 4, Phase I Environmental Site Assessment).
Dating. Every Environmental Investigation Report must bear a date within one year of the issuance of the SBA loan number (SOP 50 10 8.1, Section A, Ch. 5, Para. E). For a Phase I, Appendix 4 adds that SBA, notwithstanding EPA's regulations on updating a Phase I after 180 days, will take an otherwise AAI compliant Phase I for review if it is dated within that year. That acceptance does not apply to liquidations under SOPs 50 55 and 50 57 (SOP 50 10 8.1, Appendix 4, Phase I Environmental Site Assessment).
Reliance Letter. Every Phase I must come with SBA's Reliance Letter in Appendix 5, even when the report is addressed to the lender (SOP 50 10 8.1, Section A, Ch. 5, Para. E).
Results. No further investigation warranted: the lender keeps the Phase I and its review in the loan file. Further investigation warranted, typically a Phase II, and the lender still wants the loan: it must proceed as the professional recommends, or send the results with its justification to EnvironmentalAppeals@sba.gov for an exception to policy, which is for the rare case and needs the committee's approval. SBA will require compliance with all the professional's recommendations, housekeeping measures included, for example secondary containment, sealed floor drains and decommissioned monitoring wells (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Phase I ESA Results).
Bypassing the Phase I. If a Transaction Screen's professional recommends skipping to a Phase II and the lender agrees, it must first seek an exception from the Environmental Committee, which may grant one case by case (SOP 50 10 8.1, Section A, Ch. 5, Para. E, Transaction Screen Results).

What it means for the Phase I and the consultant

Two clocks. The inquiry rule, quoted below, counts from the date of acquisition: one year for the inquiry, and 180 days for five components: the interviews, the lien search, the government records review, the visual inspections and the professional's declaration (40 CFR 312.20(a), (b)). SBA's year lies between the report's date and the issuance of the SBA loan number, and the Phase I standard notes that a report's date generally does not show when its components were done (E1527-21, 4.6.3). The SOP itself says parties may still wish to keep strictly to EPA's timeframes, so as not to put legal and regulatory protections at risk (SOP 50 10 8.1, Appendix 4, Phase I Environmental Site Assessment).
SBA's conclusion goes past the standard. E1527-21 requires opinions on each finding and Conclusions listing RECs, CRECs included (E1527-21, 12.6, 12.7); it says the professional should give an opinion on additional investigation, requires no recommendations, and other services belong in the terms of engagement (E1527-21, 12.8 to 12.10). SBA frames its conclusion in its own term, Contamination: Hazardous Substances in quantities or conditions that subject the Property, or potentially subject it, to a Governmental Entity's directive or order (SOP 50 10 8.1, Appendix 4, Contamination).
Environmental Issues. Neither Appendix 4 nor the standard's terminology defines the term (E1527-21, 3.2).
Impartiality. The standard allows the professional to be an independent contractor or the user's employee (E1527-21, 3.2.30); SBA requires impartiality, certified in its Reliance Letter.

What the rule says

“All appropriate inquiries” pursuant to CERCLA section 101(35)(B) must be conducted within one year prior to the date of acquisition of the subject property

40 CFR 312.20(a), edition revised as of July 1, 2025

Notwithstanding paragraph (a) of this section, the following components of the all appropriate inquiries must be conducted or updated within 180 days of and prior to the date of acquisition of the subject property

40 CFR 312.20(b), edition revised as of July 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.