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SBA LOANS – WHEN TO ORDER AN ENVIRONMENTAL STUDY

May 22, 2014

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SBA lenders must be aware of the need to order environmental studies on properties that serve as collateral on a SBA loan.  An Environmental Investigation must be conducted before taking any Loan Action that could result in a loss, or increase the risk of loss, due to the actual or alleged presence of Contamination. For example, an Environmental Investigation must be conducted before:

  • Accepting Property as substitute collateral;
  • Releasing a lien on collateral for substantially less than its estimated Recoverable Value based on unsubstantiated allegations of Contamination;
  • Abandoning collateral, which would otherwise have Recoverable Value, based on unsubstantiated allegations of Contamination;
  • Acquiring title to Property held as collateral, e.g., by purchasing it at a foreclosure sale or accepting a deed-in-lieu of foreclosure;
  • Taking over the operation of a business that uses Hazardous Substances or is located on Contaminated Property regardless of whether the Borrower owns the Property;
  • Selling REO or acquired personal property collateral for substantially less than its appraised value based on unsubstantiated allegations of Contamination; and
  • Abandoning REO or acquired personal.

Read entire article… Source: Prudent Lenders, LLC. Author: Lance Sexton

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