{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-environmental-due-diligence-is-required-for-raw-land-purchased-with-an-sba-7-a-loan-f","api_url":"https://dealroom.so/api/public/questions/what-environmental-due-diligence-is-required-for-raw-land-purchased-with-an-sba-7-a-loan-f","question":"What environmental due diligence is required for raw land purchased with an SBA 7(a) loan for future business use?","topic":"Real estate","audience":"borrower","bot_mode":"buyer","short_answer":"For raw land, environmental due diligence typically involves a Phase I Environmental Site Assessment (ESA) to identify potential contamination risks, as required by SBA policy.","rule":"SBA policy (SOP 50 10) mandates appropriate environmental due diligence for real estate collateral. For raw land, especially if it has a history of commercial or industrial use, a Phase I ESA is generally required. This assessment identifies recognized environmental conditions (RECs) that could pose a risk to the collateral's value or the borrower's ability to repay.","example":"If you're buying a piece of raw land for $300,000 to eventually build a warehouse, the lender will likely require a Phase I ESA before loan approval. If the Phase I identifies potential contamination, further investigation (e.g., Phase II ESA) may be necessary.","what_lenders_check":"Lenders are concerned about potential environmental liabilities that could impact the value of the collateral or burden the borrower with clean-up costs, jeopardizing loan repayment. They rely on qualified environmental professionals.","required_facts":["Raw land","Environmental due diligence","Phase I ESA","Contamination risk","Collateral value"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"related_questions":[{"question":"Can I include the purchase of commercial real estate, where the business operates, within the same SBA 7(a) loan for a $2 million deal?","url":"https://dealroom.so/sba-7a/questions/can-i-include-the-purchase-of-commercial-real-estate-where-the-business-operates-within-th"},{"question":"What type of property appraisal is required if my $1.2 million SBA loan includes commercial real estate?","url":"https://dealroom.so/sba-7a/questions/what-type-of-property-appraisal-is-required-if-my-1-2-million-sba-loan-includes-commercial"},{"question":"Can I use an SBA 7(a) loan to purchase the real estate where the business operates?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-purchase-the-real-estate-where-the-business-operates"},{"question":"What happens if the business I am acquiring is located in a leased property?","url":"https://dealroom.so/sba-7a/questions/what-happens-if-the-business-i-am-acquiring-is-located-in-a-leased-property"},{"question":"What kind of environmental due diligence is required if the business real estate is included in the loan?","url":"https://dealroom.so/sba-7a/questions/what-kind-of-environmental-due-diligence-is-required-if-the-business-real-estate-is-includ"},{"question":"Can an SBA 7(a) loan be used to buy a business that has environmental issues?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-buy-a-business-that-has-environmental-issues"}],"related_terms":[{"term":"Raw Land","url":"https://dealroom.so/glossary/raw-land"},{"term":"Environmental due diligence","url":"https://dealroom.so/glossary/environmental-due-diligence"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"SBA 7(a) Loan Program","url":"https://dealroom.so/glossary/sba-7-a-loan-program"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/what-environmental-due-diligence-is-required-for-raw-land-purchased-with-an-sba-7-a-loan-f","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}