SBA 7(a) Q&A
Short answer
Environmental due diligence, such as a Phase I ESA, is required for real estate to identify potential environmental hazards.
For transactions involving real estate, lenders are required to conduct appropriate environmental investigations to identify recognized environmental conditions (RECs). This typically involves an Environmental Questionnaire for lower risk properties, or a Phase I Environmental Site Assessment (ESA) for higher risk properties or where concerns arise.
If you are buying a dry cleaning business with its associated property, the lender will likely require a Phase I ESA to assess potential soil or groundwater contamination from chemicals previously used.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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