The first priority for any business is concern for where the green, the money, will come. As environmental conservation and sustainability become a larger consideration for consumers when purchasing products, businesses have to make upgrades or remodel to stay on top. While there is often a cost savings after a period of time, unfortunately, these modifications do not come cheap in the short term. Unless you are a new business that has already secured your loan with green designed into your plans, finding a loan to finance green changes can be intimidating. Thankfully, there are several options out there for business owners to consider.
Government Lending a Green Hand
With the help of the Department of Energy (DOE) and the Small Business Administration (SBA), many banks are able to feel secure giving businesses loans for green upgrades due to government backing. There is the DOE’s 1705 program which can help with either installing renewable energy systems, or actually help a company planning to start in this industry. For more information on this project and others, check out www.lpo.energy.gov . On the SBA site, www.sba.gov , there are several possibilities to review for loans. The SBA also has a Green 504 program loan, which will help back loans for local institutions when a retrofit of a building is being done. These can be in amounts over five million dollars. The SBA site has a search engine that can help a business locate government backed and other loans.
Loans aren’t from Banks Only Anymore
In the State of New York, they are proving that loans for energy conservation projects do not have to come from just banks anymore. In 2011, the State approved an “On-Bill Financing” program where businesses or citizens can apply for an energy loan to retrofit their buildings or houses. The cost savings from their energy bill could then be used in turn to pay off the loan. The loan payment would be charged on the individual’s utility bill, the originator of the loan. Of course, having the charge on the utility bill itself warrants timely payment. Through guaranteeing payment, the State has helped its citizens reduce energy cost, and increase jobs in the green industry. Many states are paying close attention to New York’s success as they put together loan plans themselves.
A Really Green Bank
In Texas, there is a bank actually called Green Bank. With Green Bank, a consumer can actually obtain a loan for a home or business that meets the federal rating of an Energy Star home, or LEED certified building. As a reward for going with a green structure, Green Bank will give any loan with a principal balance over $300,000 a $500 return. Any loans over $600,000 will receive awards of $1,000 each year the principal is above that number. They also reward customers getting a home improvement loan of $200,000 or more. Green Bank is definitely leading the way for other banks to follow.
Bank of America Makes a Ten Year Commitment
In 2007, Bank of America made a commitment to the green movement by promising to invest over twenty billion dollars in the next ten years to the environmental conservation movement. In 2011, they committed fifty-five million dollars to back up local institutions providing loans for retrofitting buildings and store fronts with energy saving upgrades. They recognize that allowing for the loans to do energy efficient improvements will allow a business to save more money, and in return ensure repayment of the loan. Even though the application process for 2011 is coming to a close, Bank of America’s promise to continue their effort until 2017 makes the coming years full of future hopes.
Look For More to Come
As the success of these forward thinking programs becomes apparent, more and more banks will follow their leads. When the basis for energy saving upgrades is to lower a customer’s energy costs, making more capital available, then loans for such upgrades is simply a win-win scenario. As more loans for retrofits are approved, this in turn will create more jobs to help complete those upgrades. When more jobs are created, the economy will become more stable and banks will become confident is giving out more loans.