Financing for Energy Efficiency Improvements

In December, I wrote that energy efficiency is the business opportunity for 2009. However, we all know that businesses and consumers can’t buy many of the energy efficiency products and services without financing. So, where’s the money?

Government Help?

If you are a small business or want to sell energy efficiency products to a small business, you might think that a logical place to start is the US Small Business Association. However, I don’t think that the SBA has any special loan guaranty programs for renewable energy or energy efficiency purchases. Please comment below if you have had experience with any of the above financing programs or if you know of others!

Recently, the SBA did announce grants to specific small business development centers for energy efficiency programs. Although I don’t see any reference to financing, if you can qualify for a general SBA loan, energy efficiency improvements could be a good use of proceeds!

Another Federal government agency, the EPA, has a list of resources as part of its Energy Star for Small Business program. When I clicked on “California” I received this list, which includes some lenders.

If your business wantEnergy Star Mortgages to sell energy efficiency products or services to homeowners, then you’ll be happy to see an increasing number of related loan products for homeowners. For a number of years there has been an Energy Efficient Mortgage program, but I’ve heard that is hasn’t been very popular with banks and homeowners. And now, In the northeast, there is a pilot program for a promising-sounding Energy Star Mortgage, which allows homeowners to finance energy efficiency retrofits with a tax-deductible interest payments.

Private Sector Financing SourcesGreenstreet loan Umpqua Bank

Private banks are starting to innovate with “green loans”. One that was launched late last year is by Umpqua Bank and the Energy Trust for Oregon is the Greenstreet lending program is for installing solar energy systems or energy efficiency improvements. Businesses who are customers of Portland General Electric, Pacific Power, NW Natural or Cascade Natural Gas can apply for loans of $5,000 to $100,000 with a fixed 6.5% interest rate. There is also a program for homeowners.

ShorebankI have also read in several places that Shore Bank in Chicago and other banks have Homeowners’ Energy Conservation Loan Programs.

More Innovation in Financing Energy Savings

If you live in California, check your city’s potential programs for financing that can be tied to your property tax bill. Berkeley and Palm Desert were two of the first cities to launch such programs, but in July, 2008, the State of California enacted AB 811, which facilitates municipal property-tax financing for energy efficient improvements statewide.

More To Come

Although I don’t yet know what the next segments will include, I know this is the first in a series of posts about financing for energy efficiency improvements. I am hopeful that we are just beginning to see innovations in financing for energy efficiency retrofits and product purchases.

About the Author

A strategy and marketing consultant, Leah enjoys highlighting the efforts of, and providing information for, social entrepreneurs. In her consulting practice, she works with cause-related businesses and enlightened investors--to see people succeed at doing good for the planet and local communities while doing good for themselves. Leah has a B.S. in business from UC Berkeley and an MBA and Certificate of Public Management from Stanford University. More information at
  • On-Bill Financing is another option for financing energy efficiency improvements. Through an OBF program, a utility company allows qualified commercial customers to pay for energy-efficient business improvements through an interest-free loan on their monthly bill. The energy savings are used to offset the loan, so the monthly expenses are lower than taking a conventional loan and may be completely offset by energy savings. When the loan is paid off, the utility bill says lower permanently. Right now OBF is only available in parts of California, Connecticut, Rhode Island and Massachusetts—with a program in New York State coming soon, small business organizations are lobbying aggressively to make it available throughout the country so check with your utility company.

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  • Why does there have to be a separate, special loan guaranty programs for renewable energy or energy efficiency purchases? Regular SBA-guaranteed loans are perfect for these projects.

  • Thanks Jennifer! On-bill financing programs are also being developed for low-income homeowners, which helps companies selling energy efficiency retrofits and energy efficient products, such as new appliances or furnaces.

    We’re living in a time of financial innovation. (There are some areas with silver linings.) But, you bring up a good point, that most of these loan products and financing programs are regional, and business owners will have to research what is available in their state/city.

  • Mike, I agree. Businesses who have been operating for three years should always consider Small Business Administration-guaranteed loans. Many people don’t know that SBA loans can even be used to purchase business real estate.

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  • Jason has several aprograms designed for B2B Energy Product Financing…

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