Glossary · Doing the deal
Environmental due diligence
In short
The process of evaluating a property or business for potential environmental risks and liabilities. Buyers must conduct this to identify contamination, regulatory non-compliance, and associated costs before closing.
What it means in a deal
This typically starts with an Environmental Questionnaire, potentially leading to a Phase I Environmental Site Assessment or even a Phase II. The SBA mandates specific environmental reviews based on the property type and business NAICS code. Do not skip this step; it protects you from inheriting major problems.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Environmental due diligence
- What environmental due diligence is mandatory for real estate collateral?
- What if the acquired business has environmental contamination issues discovered during due diligence?
- What if the lender requires additional environmental due diligence beyond a Phase I report?
- When is a lender permitted to waive environmental due diligence requirements for real estate collateral?
- What is the lender's responsibility regarding environmental due diligence for non-real estate collateral?
- What environmental due diligence is mandatory for real estate collateral securing a 7(a) loan?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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