It’s now easier than ever for businesses to go green with a newly available funds for those who seek low-cost loan for energy efficiency projects.
I recently wrote about why small businesses should evaluate going green via a carbon offset program, because of concerns regarding global warming among the majority of consumers. If your company is considering additional ways to implement such an eco-friendly strategy, there is a new program available that can help you offset some costs: $50 million are up for grabs around the country by qualifying small businesses.
Sponsored by Bank of America, the purpose of the program is to finance the cost of retrofitting older commercial and residential buildings to improve energy efficiency. Bank of America is offering $50 million in low-cost, long-term loans to finance the retrofits. Given the current state of the economy, most business owners are hesitant to pay for the cost of efficiency improvements. While these types of investments do have a positive return, the period of time required to see that return can be long. In some cases it can take decades. By lowering the investment required through cheap financing, the total cost of the retrofit goes down and the cash flow required to pay back the loan is lower. This reduces the barrier for approval among small business owners that own buildings.
Bank of America is not distributing the funds directly. Instead, they are offering them through community development financial institutions or CDFIs. CDFIs are financial institutions chartered to serve markets or groups that have historically been considered underserved. They include community development banks, community development credit unions, community development loan funds, community development venture capital funds, microenterprise loan funds, and community development corporations.
Many CDFIs specialize in particular sectors, populations or project types. Bank of America is currently accepting applications from CDFIs for access to the $50 million in credit plus an additional $5 million as grants to assist with the implementation costs. The winning CDFIs will be announced in November 2011. Once announced, businesses can begin the process of applying for access to these low cost funds to finance efficiency retrofits.
A maximum of 12 CDFIs will split the funds. If a winning CDFI approves your company for a loan, you will be required to provide energy and resource consumption statistics both before and after the improvements to determine the effectiveness of the investment.
