Glossary · Reading the business
Soil and groundwater contamination
In short
This refers to harmful substances polluting the ground or underground water, often from past industrial activity. As a buyer, you must identify potential contamination risks because cleanup costs can be enormous and fall on the new owner.
What it means in a deal
Environmental due diligence, starting with a Phase I Environmental Site Assessment, is critical to identify potential soil and groundwater contamination. If a Recognized Environmental Condition is found, a Phase II Environmental Site Assessment may be required. Unresolved issues can delay or kill a deal, or lead to significant post-acquisition liabilities.
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 Soil and groundwater contamination
- What happens if a required environmental report (Phase I ESA) identifies potential contamination?
- What if the business for acquisition has a history of environmental contamination issues?
- What if the acquired business has environmental contamination issues discovered during due diligence?
- What specific actions must a lender take if they discover undisclosed environmental contamination post-closing?
- What are the lender's obligations if environmental contamination is discovered post-closing for 7(a) collateral?
- What is the relationship between SBA Form 1919 and 1920, and which is currently required for 7(a) loan applications?
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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