Utilities, cities, and states often offer businesses 0% or low-interest loans for energy efficiency projects. This is a great way for businesses to save money while decreasing energy usage and reducing greenhouse gas emissions! Read on for loan details, program examples, and resource links.
by Jeremy Gross, Green Economy Post
Do you want your business to be energy efficient? Do you want to save money, lower your energy usage, and reduce your greenhouse gas emissions?
While switching your light bulbs to CFL’s can be a great first step for adding dollars to your bottom line, implementing bigger energy efficiency projects may require investing larger amounts in equipment or structures. With the recent recession, many budgets are tight and you may not have much room to wiggle for additional purchases. Even if you have the money, a loan may be a better use of capital.
The great news is that utilities, cities, and states often offer low interest loans for energy efficiency projects. The loans are usually accompanied by no or low application fees, in addition to no or low-cost energy audits and analysis to evaluate efficiency improvements.
Sometimes you’ll even come across the holy grail of loans – 0% interest! For instance, if you have a small business in Tennessee, the Tennessee Department of Economic and Community Development offers a 0% interest loan if you’re located in designated rural and urban communities.
Be sure to check out the bonus link at the bottom of this post for a comprehensive list of state and local energy efficiency programs!
What projects are eligible?
So if you’re ready to move beyond CFL’s and simple programmable thermostats, then what should you investigate? Below is a high-level – but not all encompassing – list of projects that might be eligible for energy efficiency loans. Some will be useful for specific industries, but many are applicable to any business.
May be applicable to any business:
- Energy Efficient Lighting Systems
- Renewable Energy Systems
- Solar Power / Photovoltaics
- Energy Efficient HVAC Systems and Chillers
- Solar Water Heat & Solar Space Heat
- Renewable Transportation Fuels
- Weatherization
- Energy Efficiency Management systems
May be applicable to specific businesses:
- CHP (combined heat and power) / Cogeneration
- Pump, process or refrigeration system improvements
- Landfill Gas, Biomass, Hydroelectric, Geothermal Electric
- Municipal Solid Waste
- Variable Frequency Drives
- Premium Efficient Motors
- Air Compressors
- Energy Efficient Dry Type Transformers
- Custom Energy Efficiency Measures
What will the loan application require?
Applying for a business energy efficiency loan is pretty much like applying for a regular loan. You’ll need your business and personal financial statements in order, business description, owner / employee information, tax returns, and possibly a business plan.
But depending on the program, you may also need information related to the energy efficiency project along with energy audits / feasibility studies. Some questions you should think about include:
- What is the project summary?
- What does the current energy usage look like, and what will it look like once the project is implemented?
- How much energy will your project produce or save?
- What is the life expectancy of the efficiency measures?
- What is the return on investment and payback period?
- Who is your engineer, contractor, utility, equipment dealer?
Program Examples
Let’s explore a few state-specific loan programs available to help implement energy efficiency projects to save money and the environment. Here are some examples from around the United States:
Please note: contact agencies and programs for the most current rates, loan amounts, and details. They are subject to change.
Connecticut Light and Power Small Business Energy Advantage Loan Program
Loan Amount: $500 to $100,000
Loan Term: maximum of three years
Interest Rate: 0% for CL&P customers
Note: The loan must be used for upgrading or replacing existing electrical equipment with high-efficiency electrical equipment. The financed amount will appear on your monthly electric bill, allowing you to make just one monthly payment for both your SBEA loan and your electric bill.
Mississippi Development Authority Energy Investment Loan Program
Loan Amount: $15,000 to $300,000 per business
Loan Term: maximum of seven years
Interest Rate: 3% below the prime rate
Note: Two main goals of the Energy Investment Loan Program is job creation and the use of energy efficient practices.
Loan Amount: between $20,000 and $20 million
Loan Term: range from five to fifteen years
Interest Rate: 5.5% – 6.5%
Note: Project needs to either save energy, or produce renewable energy, or use recycled materials to create products, or use alternative fuels.
Tennessee Small Business Energy Loan Program
Loan Amount: up to $300,000
Loan Term: not to exceed seven years
Interest Rate: 0% for businesses located in Three-Star communities; all others 3%
Note: Eligibility is limited to companies with fewer than 300 employees or less than $3.5 million in annual gross sales.
Vermont Business Energy Conservation Loan Program
Loan Amount: $5,000 to $150,000
Loan Term: Typically, five years but some loans may be amortized up to ten years
Interest Rate: First three years – WSJ Prime Rate minus 3%, adjusted as WSJ Prime Rate changes. There is a floor of 2%. Then the rate will be fixed for the remaining term at the Vermont Small Business Loan Program Index Rate.
Note: Eligible Vermont businesses include those in the following industries: manufacturing, or the processing and assembly of products; hospitality; service providers; farms; and retail. Non-profit businesses are also eligible.
BONUS LINK:
Here’s a link to a comprehensive list of state and local energy efficiency programs! Each listing will guide you to programs that, in addition to loans, will help small businesses become energy efficient, find grant opportunities, and discover no or low-cost technical assistance.
