Short answer: A reliance letter is a consultant’s written permission for someone other than its client, usually a lender, to rely on its report. Under SOP 50 10 8.1, every Transaction Screen, Phase I and Phase II needs SBA’s Appendix 5 letter, which waives liability caps up to $1,000,000; an RSRA (Records Search with Risk Assessment) needs none. Other Phase 1 reliance letters are usually negotiated and keep the contract’s liability limits.
This guide covers both kinds of environmental reliance letter. The SBA reliance letter is a federal form whose wording cannot be changed and whose terms favor the lender and SBA. A conventional letter usually has no prescribed form, so its value depends on the terms behind it. (Appraisals and audits have reliance letters too; this page covers only environmental reports.)
What a reliance letter is and why lenders require one
A consultant works for its client, the party that orders the report, and consultants’ contracts and reports traditionally limit reliance to that client (LightBox, 2013). ASTM E1527-21, the standard for a Phase I environmental site assessment (ESA), calls that party the “user” and requires a later user of the same assessment to meet the user responsibilities too (Section 4.6.4). A reliance party is anyone else the consultant agrees in writing may use and rely on the report: the lender, the SBA, a second lender, an investor or a buyer.
One environmental attorney writes that without a reliance letter, only the original client “could enforce any rights under the report” (Stuart Kaplow, February 2025); whether a party without a letter has any claim against the consultant is a question for counsel.
Lenders ask for reliance for three reasons:
- To hold the consultant to its work. A reliance letter extends the consultant’s liability to the relying party if the work is found deficient, on the terms the letter sets (Kaplow, above).
- Because a program requires it. SBA, Fannie Mae and Freddie Mac all require reliance, and SBA and Freddie Mac prescribe the wording.
- Because the lender’s risk is the collateral. EPA notes that a lender’s secured lender exemption under CERCLA, the federal Superfund law, does not depend on All Appropriate Inquiries (AAI), and that banks may guard against loss in collateral value by requiring borrowers to qualify for the liability protections (EPA lender liability fact sheet, page 3). The lender judges that risk from the report, so it wants the right to rely on it.
Which reports need the SBA reliance letter
SOP 50 10 8.1, SBA’s standard operating procedure for 7(a) and 504 lenders, effective October 1, 2026, says in Section A, Chapter 5, Paragraph E.3 that all Transaction Screens, Phase I and Phase II ESAs “must be performed by an Environmental Professional and be accompanied by the Reliance Letter in Appendix 5,” and the letter is required “even if the Environmental Investigation Report is addressed to the SBA Lender.” On a 7(a) loan, failure to follow these rules “may result in a denial of SBA’s guaranty” (Paragraph E).
| SBA report | Appendix 5 letter | What the SOP says |
|---|---|---|
| Environmental Questionnaire | No | Completed or reviewed by the lender, signed by the current owner or operator; no box on the letter |
| Records Search with Risk Assessment (RSRA) | No | It “need not be addressed to the SBA and need not be accompanied by a Reliance Letter” (Appendix 4) |
| Transaction Screen (ASTM E1528-22) | Yes | Paragraph E.3 |
| Phase I ESA or updated Phase I (ASTM E1527-21) | Yes | Paragraph E.3; the box reads “A Phase I (or an Updated Phase I)” |
| Phase II ESA | Yes | Paragraph E.3 |
Because the form has no RSRA option and its text cannot be changed, an RSRA cannot carry a true Appendix 5 letter. A lender that wants reliance on an RSRA under its own policy needs a conventional letter. A report attached to SBA’s Appendix 8 indemnification agreement must also include a reliance letter (Appendix 8, Part II). Our guide to SBA environmental requirements explains which report each loan needs.
7(a) and 504 loans: who the letter names
The letter is addressed to the named SBA Lender and to the U.S. Small Business Administration. SOP 50 10 8.1 defines an SBA Lender as a 7(a) lender or a certified development company (CDC), citing 13 CFR 120.10 (Section A), and its environmental definitions add that the term Lender “does not include the Third Party Lender on a 504 loan” (Appendix 4). So on a 7(a) loan the letter names the 7(a) lender, and on a 504 loan it names the CDC and SBA, not the bank making the first mortgage. If that bank also wants to rely on the report, it needs its own reliance, in the report or in a separate conventional letter, because Appendix 5 cannot be edited to add a party.
What the SBA Appendix 5 letter says, term by term
Appendix 4 states that “The language in SBA’s standard reliance letter may not be modified,” and that lenders and CDCs “should not enter into any agreement that alters the terms” of the letter. The form is the same in substance as in the 2025 SOP. The official text is Appendix 5 of the SOP itself, which SBA posts as a Word (.docx) file on its SOP 50 10 page; copy the letter from that file, not from an older SOP or a retyped version.
| Part of the letter | What it says | What it means in practice |
|---|---|---|
| Heading | On the letterhead of the Environmental Professional (EP) or the EP’s firm, dated, addressed to the named SBA lender and SBA, with the borrower, property address and report number(s) | A letter to one lender does not carry over to another |
| The Environmental Professional | The named EP meets 40 CFR 312.10(b) and “has performed or supervised” each investigation checked | Only the EP behind the work can sign |
| The report | Boxes for a Transaction Screen (currently ASTM E1528-22), a Phase I or Updated Phase I (currently ASTM E1527-21, with the 40 CFR 312.22 “additional inquiries” addressed) and a Phase II, each with its date and any addenda | No box exists for an RSRA or a Questionnaire |
| Reliance | The EP and firm “authorize(s) Lender and SBA to use and rely upon” the investigation and to give the borrower a copy “for information purposes only” | The borrower gets no reliance through this letter |
| Not an update | “This letter is not an update or modification,” and the EP does not warrant that conditions are unchanged | The report must meet the age rules on its own |
| Insurance | The EP or firm was covered “as of the date of the Environmental Investigation” by errors and omissions (E&O) insurance of at least $1,000,000 per claim (or occurrence), with evidence attached | The certification speaks as of the investigation date, not the letter date; SBA’s own EP definition requires the same coverage (Appendix 4) |
| Liability limits | As to the lender and SBA, waives “any dollar amount limitations on liability up to $1,000,000” and any time limits other than state or federal statutes of limitation | A cap in the consultant’s contract, such as three times the fee, cannot limit the lender’s or SBA’s claims below $1,000,000, and the contract’s claim deadlines do not apply to them; statutes of limitation still do |
| Indemnification | The EP and firm “waive any right to indemnification from the Lender and SBA” | The consultant cannot look to the lender or SBA to indemnify it |
| Impartiality | The EP certifies (1) that, “to the best of their knowledge,” the EP is independent of the seller, borrower, operating company and anyone in which the seller has an ownership interest, and (2), without that qualifier, that no one unduly influenced the investigation or its contents | A consultant tied to the seller or borrower cannot sign |
| Acknowledgment | Intentional falsification or concealment of a material fact may lead to prosecution under laws including 18 U.S.C. 1001, the federal false statements statute | The certifications are made to a federal agency |
| Signatures | The EP “must always sign”; if the EP is employed or retained by a firm, an authorized firm representative also signs; evidence of insurance is enclosed | Expect two signatures and an insurance certificate |
How to check an SBA reliance letter
- The report. The checked box, report date, borrower, property address and report number all match the report, including any addendum.
- The addressee. The lender’s legal name and address are correct. On a 504 loan, the letter names the CDC.
- Signatures. The EP has signed and, where a firm is involved, so has an authorized firm representative. The EP named in the letter is the EP who signed the report’s declaration.
- Insurance. The enclosed evidence shows E&O coverage of at least $1,000,000 per claim or occurrence on the investigation date.
- Unchanged text. The letter matches Appendix 5 of the current SOP word for word, with nothing added, deleted or qualified and no terms and conditions attached. If a consultant asks the lender to sign anything that limits the letter, the SOP says lenders should not enter into it.
- Report age. The report is dated within one year of the date the SBA loan number is issued (Paragraph E.3). On a purchase, also check the component dates against the closing date (see Timing below).
Lenders processing delegated, 7(a) Small Loans, SBA Express and Export Express loans do not submit the report through the SBA Loan System but must keep a copy in the loan file (Paragraph E.3). The letter rules are the same.
Phase 1 reliance letters for conventional lenders
Outside SBA lending, there is usually no prescribed form: the consultant uses its own letter or reviews the lender’s template. Freddie Mac, below, is an exception that prescribes the reliance wording for the report itself. Lender Consulting Services, a due diligence firm that serves lenders, lists the minimum contents as the letter’s date, the issuer and addressee, the report date, the property address and a statement of reliance. It adds that, unless otherwise noted, a reliance letter “is subject to the agreement with the entity that engaged the ESA,” and that the original client must approve first (Lender Consulting Services, 2023).
So a conventional letter usually carries the original contract’s limits to the relying party. A LightBox report on a 2012 roundtable of Phase I consultants described the traditional condition as the relying party accepting the scope, the report’s limitations and the consultant’s terms, “including limitations to total liability,” and noted that some firms add sunset clauses (LightBox, 2013). One consultant’s published sample letter grants named parties permission to rely on the report’s findings “in accordance with” its attached terms, which the recipient signs to accept. Those terms cap liability at three times the fee and bar any claim not raised in a written arbitration demand within 120 days of project completion (A3 Environmental sample letter, February 2023).
Agency lenders set their own rules:
- Fannie Mae multifamily. The Phase I “must be ordered by the Lender” and must be addressed to, and authorize reliance by, the lender, Fannie Mae and their successors and assigns. The borrower “may not rely on the Phase I ESA ordered by the Lender” and is expected to do its own diligence (Form 4251, April 2025, Sections 1.A and 1.D).
- Freddie Mac multifamily. Freddie Mac’s reliance language goes in the report itself and covers the seller/servicer, Freddie Mac, their successors and assigns, regulators and securitization parties, among others (Multifamily Guide, Chapter 61, Section 61.3(d)).
| Term | SBA Appendix 5 letter | Typical conventional letter |
|---|---|---|
| Wording | SBA’s text; “may not be modified” | Consultant’s form or lender’s template; negotiable |
| Who is named | The SBA lender (the CDC on a 504) and SBA | The parties listed; agency loans may require successors and assigns |
| Dollar cap on liability | Waived up to $1,000,000 as to lender and SBA | Usually the original contract’s cap |
| Time limit for claims | Waived, except statutes of limitation | The contract’s deadline may apply |
| Indemnification of the consultant | Waived as to lender and SBA | Depends on the terms incorporated |
| Insurance | At least $1,000,000 per claim E&O, evidence attached | May include evidence of insurance; the lender can require specific coverage |
| Relying party signs | No | Often must accept the terms in writing |
What to check in a conventional reliance letter
- Named parties. The exact legal entity, plus successors and assigns if the loan may be sold or securitized.
- The report. Title, date, project number and addenda. Lender Consulting notes the letter will not summarize findings, so get the complete final report.
- Incorporated terms. Which contract applies, the liability cap, the claim deadline, any arbitration clause and the governing law.
- Your signature and the duration. Whether you must countersign, and any sunset date on reliance.
- Insurance. A certificate of the consultant’s professional liability coverage, if your credit policy requires one.
What a reliance letter costs
We found no survey of reliance fees newer than 2013. These are the published figures, with their dates.
| Source | Date | Figure |
|---|---|---|
| LightBox survey of Environmental Professionals | 2Q 2013 | 27% of respondents who issue letters charged nothing; the rest $50 to $2,200, average $464 |
| Geo Forward (consultant) | Updated April 8, 2024 | $250 to $600 per Phase I letter, or 10% to 20% of the original fee |
| Lender Consulting Services | May 2, 2023 (page last modified January 20, 2026) | 10% to 20% of the original fee |
| Stuart Kaplow (attorney) | February 8, 2025 | Environmental consultants typically 10% to 20% of the original fee |
| A3 Environmental (consultant) | As shown October 2026 | SBA letters typically no cost; non-SBA letters requested later “a few hundred dollars” |
| Moraine buyer’s guide | May 19, 2026 | Usually free when named at engagement; $500 to $1,500 per party added after the fact |
| Compyle Environmental | October 2026 | SBA Appendix 5 letter included; $99 per added party; letter issued within 1 business day of a complete request |
A3 Environmental gives the reason a later letter costs more: by then more time has passed, and the consultant takes on risk for a party that was not part of the original transaction.
What a reliance letter does not do
It does not update the report. The SBA letter says so, and so does the conventional sample above. For EPA’s 180-day and one-year clocks, ASTM E1527-21 says the report date “generally does not represent” the dates of the components and should not be used to test them (Section 4.6.3), so those clocks run from the component dates. SBA and Freddie Mac test the report date instead (see Timing below).
It does not give you CERCLA protection by itself. A Phase I lets a buyer “satisfy one of the requirements” for the landowner liability protections (ASTM E1527-21, Section 1.1). Under 40 CFR 312.20(d), a buyer may use a report prepared for someone else as part of its own inquiry only if the report meets the rule and the buyer reviews it, makes its own inquiries into specialized knowledge, purchase price and commonly known information, and updates the inquiry as needed. The lien search is also the buyer’s task unless the EP obtains it (40 CFR 312.22).
ASTM says “No specific legal relationship” between the EP and the user is needed to meet the standard (Section 4.9), so a reliance letter is neither required for AAI nor proof of it. A 2012 post by Charles P. Efflandt on the American College of Environmental Lawyers blog, written under the earlier E1527-05 standard, makes the same point: a reliance letter establishes authorized user status “primarily for purposes of the party’s legal relationship with the EP.”
For most buyers the relevant protection is the bona fide prospective purchaser (BFPP) defense, which also requires continuing obligations after closing: required notices, reasonable steps to stop or prevent releases, cooperation and access, compliance with land use restrictions, and answers to information requests and subpoenas (EPA lender liability fact sheet, page 2). Whether you qualify is a question for environmental counsel.
It does not give the borrower reliance on the lender’s report. The SBA letter allows the borrower a copy for information only, and Fannie Mae says the borrower may not rely on the lender’s Phase I. A buyer that wants contractual rights against the consultant should be the client, or a named reliance party, on a Phase I.
Getting reliance on an existing report or another firm’s report
- Ask the firm that wrote it. Only the firm whose EP performed or supervised the work can authorize reliance on it, and it will usually need its original client’s consent. If the firm declines or no longer exists, no other firm can grant reliance on that report, and ASTM E1527-21 itself gives no right to rely on a prior assessment (Section 4.7.1).
- Confirm the report fits the loan. For SBA, a Transaction Screen, Phase I or Phase II needs an Appendix 5 letter naming your lender. Some programs, such as Fannie Mae multifamily, require a lender-ordered report.
- If the firm agrees and the report is current enough under the age rules below, get the letter. For SBA, check it against Appendix 5 word for word.
- If not, update or replace it. A Phase I update redoes the interviews, government records review, site visit and EP’s declaration and reissues the report; the lien search, the fifth time-sensitive component, must also be current and is the user’s task under ASTM E1527-21. Another firm may use the earlier report’s information only with “current investigation” (ASTM E1527-21, Section 4.7.1); it then issues its own updated report and, for SBA, its own Appendix 5 letter, checking the box for “A Phase I (or an Updated Phase I)”. SOP 50 10 8.1 does not say whether a second firm may perform the update, so confirm with your SBA lender before ordering. If the original work will be more than one year old at closing, a new Phase I ESA is needed, which can still draw on the old report’s information.
- If you are buying, do your own user inquiries in every case.
Timing: when to ask and how old the report can be
Name every reliance party when you order. It is the cheapest time, and the consultant can deliver the SBA letter with the report. A reliance letter does not reset any clock:
| Rule | Limit | Date that is tested |
|---|---|---|
| SBA, every report type | Dated within one year of the date the SBA loan number is issued (Paragraph E.3). SBA will accept a Phase I for review on that basis “notwithstanding” EPA’s 180-day rule, though SBA notes parties may still want EPA’s timing to protect their legal position (Appendix 4) | The report date |
| EPA AAI, a buyer’s CERCLA protections | Interviews, lien search, government records review, site visit and the EP’s declaration within 180 days before acquisition; the whole inquiry within one year (40 CFR 312.20) | Each component’s date |
| Fannie Mae multifamily | The same five components within 180 days before loan origination; the rest within one year (Form 4251, Section 1.B) | Each component’s date |
| Freddie Mac multifamily | Report dated within six months before the full underwriting package goes to Freddie Mac (Guide Section 61.2(b)(3)) | The report date |
Worked example. A borrower orders a Phase I while talking to one bank. The oldest of the five time-sensitive components, the records review, is dated June 8, 2026, and the report is dated June 19, 2026. The first bank declines. A second bank, an SBA 7(a) lender, takes the loan; the SBA loan number is issued December 1, 2026, and the purchase closes December 18, 2026.
- SBA: the report is dated 165 days before the loan number date, within one year, so it meets SBA’s one-year rule. To use this report as it stands, the original consultant must issue an Appendix 5 letter naming the second bank.
- The buyer’s CERCLA clock: 180 days after June 8, 2026 is December 5, 2026. Closing on December 18 falls 193 days after the oldest component, outside EPA’s window. A Phase I update before closing, with the buyer’s lien search also brought current, solves that, and the updated report carries its own Appendix 5 letter.
Our Phase I validity calculator runs both clocks from your dates.
Reliance letters from Compyle Environmental
- SBA Appendix 5 letter included at no charge with our Phase I ($1,495, 5 business days), our Transaction Screen ($795, 4 business days) and our Phase I update ($595 for a report we wrote, 4 business days). Prices are for standard-scope properties, and days count from authorization and confirmed site access. The letter is issued on SBA’s form without changes and signed by an Environmental Professional who meets 40 CFR 312.10.
- Reliance for your lender is included with our Phase I and our Transaction Screen. Each additional party, such as a second lender or an investor, is $99, and its reliance letter is issued within 1 business day of a complete request.
- RSRAs: SBA does not require a reliance letter, and we do not issue the Appendix 5 form for one.
- Reports by other firms: we can usually update another consultant’s Phase I if it meets ASTM E1527-21 and we can review it and perform the update components ourselves. We confirm scope and price within 1 business hour of seeing the report.
- Conventional reliance on our reports is governed by our engagement terms. Read them before you rely, as you would with any consultant.
When you order, give us your lender’s legal name and address, say whether the loan is SBA 7(a) or 504, and list every other party that will rely on the report.
Sources
- SOP 50 10 8.1, Lender and Development Company Loan Programs with Technical Policy Updates (Section A, Chapter 5, Paragraph E; Appendices 4, 5 and 8) (Word .docx), U.S. Small Business Administration, accessed October 2026
- 40 CFR 312.10, Definitions, Electronic Code of Federal Regulations, accessed October 2026
- 40 CFR 312.20, All appropriate inquiries, Electronic Code of Federal Regulations, accessed October 2026
- 40 CFR 312.22, Additional inquiries, Electronic Code of Federal Regulations, accessed October 2026
- ASTM E1527-21, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process (Scope and Significance and Use), ASTM International, accessed October 2026
- 18 U.S.C. 1001, Statements or entries generally, Legal Information Institute, Cornell Law School, accessed October 2026
- Lender Liability and Applicability of All Appropriate Inquiries (EPA-560-F-23-006), U.S. Environmental Protection Agency, accessed October 2026
- Form 4251, Environmental Due Diligence Requirements (April 2025), Fannie Mae Multifamily, accessed October 2026
- Multifamily Seller/Servicer Guide, Chapter 61, Environmental Requirements, Freddie Mac, accessed October 2026
- Some Thoughts on Phase I Reliance Letters and CERCLA All Appropriate Inquiry, American College of Environmental Lawyers (Charles P. Efflandt, January 23, 2012), accessed October 2026
- Reliance Letters: An Essential Part of Phase 1 Environmental Site Assessments, Stuart D. Kaplow, P.A. (February 8, 2025), accessed October 2026
- Reliance Letters for Environmental Site Assessments (ESAs), Lender Consulting Services (May 2, 2023), accessed October 2026
- ECR Series: “Reliance Letters? If necessary, but only for the right client and on our Terms (and conditions)”, LightBox (August 8, 2013), accessed October 2026
- General Reliance Letter (sample) and Terms and Conditions, A3 Environmental (February 2023), accessed October 2026
- SBA Environmental Reliance Letter Download, A3 Environmental (undated; as shown October 2026), accessed October 2026
- Phase 1 Reliance Letter Cost and Price, Geo Forward (updated April 8, 2024), accessed October 2026
- Phase 1 Environmental Site Assessment Cost: A Buyer’s Guide (2026), Moraine (May 19, 2026), accessed October 2026