Green 504 Loans
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Energy Efficient Construction
- Green Building Retrofits
- Green Energy Use or Production
- Solar and Renewable Energy
Equipment Financing
Renewable Energy Project Financing
If you need funding - equity or debt - for a renewable energy project then please visit our project financing page. (100% financing is available for strong projects).
Small & Mid Sized Businesses Eligible for Green 504
Small and mid-sized businesses that go green are now eligible for larger commercial real estate and equipment loans with the SBA 504 loan program.
How to Qualify:
- Build a new facility (or renovate an older building) and make it 10% more energy efficient *
- Use (produce) renewable or alternative energy on site for use in your business (i.e. solar power)
- Produce renewable energy or renewable fuels for others - or for sale to the local utility.
- Incorporate Sustainable Design in the construction or renovation of a building you own or are about to purchase.
SBA Green 504 Benefits
The 504 loan has always been an outstanding program and the green aspect has made it even better. In fact, going green can also bring you new customers - according to a recent study by Javelin Research 43% of consumers said they are more likely to do business with companies they perceive to be green.
Additional reasons to consider the 504 program:
- you can use the 504 program to finance renewable, green energy equipment
- the 504 program is one of a few affordable commercial loans available at this time
- 504 loans are available with as little as 10% down/10% equity
- a Green Retrofit Refinance is now allowable
- Businesses with net (after tax) income of up to $3 million can now qualify
- the 504 is long term fully amortized financing at below market rates
- SBA loan fees are currently waived
- Going Green can also help you get more SBA Eligibility
Green 504 Loan for Energy Efficient Construction, Renovation or Refinance
The 504 loan from the Small Business Administration is for healthy businesses looking to build, purchase, remodel or refinance* and the "green 504 loan" or as we call it, The Green Choice Loan,™ now opens the program up to more businesses by allowing larger loan amounts.
Your business can also take advantage of significant State and Federal Tax Deductions for making a building more eco-friendly and improving it's energy efficiency. This is great news for both small and mid-sized businesses who would like to do their part for the environment and save themselves some money in the process.
Renewable Energy Equipment Financing with the 504 Program
The Green 504 loan limit is not restricted to real estate.
The same loan limits apply to renewable energy equipment - photovoltaics/solar panels, solar thermal equipment - or any other expensive renewable energy production equipment with a useful life of more than 10 years, but many SBA lenders are not yet comfortable financing alternative energy equipment.
There is an alternative: renewable energy equipment leasing.
More 504 Green Information:
Solar Power
Solar Power is the most common and abundant form of green power or renewable energy. It is also one that the majority of businesses should be able to utilize since many have either roof space or available land for solar panel installation.
If you are financing or refinancing an owner occupied building
you might want to consider incorporating a solar system into the project using the 504 program.
Manufacturing and warehousing businesses can really benefit from solar power since they typically have a larger roof area than most other types of businesses.
Renewable Energy Production
Businesses that produce alternative and renewable energy on site also qualify for
maximum financing. Biofuel/Biodeisel or ethanol producers are
good examples of businesses that could use the 504 for
the purchase of energy producing equipment or expansion of
their facilities.
* Energy Efficiency
Many other types of businesses could attain a 10% decrease in energy consumption through the use of:
- energy efficient insulation
- energy efficient natural light or more efficient lighting
- improved HVAC
- energy efficient windows
- energy efficient or sustainable design features
Significant Tax Benefits and Deductions for Going Green
Going Green can save you a lot of money and drastically reduce your energy usage which is obviously great for the environment, and green building can also net you hefty tax savings as well. The federal government and many states and local utilities have tax incentive plans for the installation of green and renewable energy systems that offer significant first year rebates which in some cases offset the majority of renewable energy installation costs.
North Carolina State University has compiled a comprehensive "Database of State Incentives for Renewables and Efficiency" that details State, Federal and local incentives for all types of renewables. You can access it at www.dsireusa.org
The current tax code also allows you to take advantage of a Commercial Building Tax Deduction made possible by Energy Policy Act of 2005 which was recently extended to 2013. This deduction is for "energy efficient building expenditures" and it allows a deduction of up to $1.80 sq ft. Typical allowances include:
- HVAC systems
- Hot water systems
- Building envelope systems
- Partial deductions for improvements in interior lighting
Here is a link with more details: Commercial Building Tax Deductions
Green Energy Production
Businesses engaged in green and renewable energy production can now build or renovate commercial property and facilities to suit their needs with an SBA 504 loan. Businesses that produce or manufacture any of the following types of renewable energy qualify:
- Solar Power
- Wind Power
- Hydro Power
- BioMass, BioDiesel
- GeoThermal Energy
- Ocean Thermal
Buildings or Facilities Constructed or Renovated Using Sustainable Design
Incorporating "sustainable design" into your commercial building project also enables you to take advantage of the SBA 504 loan. By working with qualified architects and engineers and within the guidelines set by the Leadership in Energy and Environmental Design (LEED) standards, your project should be eligible for the Green 504 and you would reap the many benefits of having a green building. (Sustainable Design or LEED certification do not by themselves qualify a building for the program, but it is very likely that a facility built to be sustainable or using LEED standards will be 10% more energy efficient.)
There are numerous ways to build a more energy efficient building, but perhaps the easiest is to use prefabricated modular construction and there are companies that specialize in LEED qualified "green" modular construction. Please click the following link for more info: Prefab Buildings.
NON-SBA Renewable Energy Equipment Financing
Obtaining a Green Small Business Administration loan to finance a green building for a healthy business or a well thought out and well capitalized new business is very possible, but finding a lender that is willing to finance renewable energy equipment like a large solar installation can be difficult, but there are other options.
Technically, the 504 program is ideal for financing a Solar PV system, biofuel manufacturing equipment or other renewable energy equipment, but the limiting factor is that SBA loans are reliant on traditional lenders to provide financing and most of the traditional lenders are either not lending or have no interest in anything but real estate.
Real Equipment Solutions
We have lending relationships that allow us to provide either a Long Term Loan or a LEASE to finance Solar installations (especially those making use of Feed-in Tariffs or PPA's), and we are currently working on a few other options.
Renewable energy equipment financing is available, but until the market becomes more mature, it is best to contact us at 1-800-414-5285 to see if your project is financeable.
Renewable Energy Credits and Solar Farms
If you are developing a solar farm or some other type of renewable energy production facility it may be possible to use the Green 504 to do it, but you are more likely to get financing through other more established solar pv financing financing programs or through other Federal programs. Please call us at 1-800-414-5285 for more info.
Approval may depend on the renewable energy credits or incentives for your state (some of which are substantial) and/or how strong you are as a borrower, but it is possible.
There is also a 30% Federal Tax Credit or Grant currently available for many renewable energy projects and there is no limit on the dollar amount of the credit/grant for following types of renewable energy:
- solar/photovoltaics
- solar thermal
- solar water heat
- biomass
- geothermal
The grant is also assignable to a lender and may be used towards your down payment/equity injection.
If you have land or available roof space you may be able to significantly offset your energy costs and possibly sell energy back to your utility. Some states have substantial renewable energy incentives and in some states the renewable energy credits may produce enough cash flow to qualify for the loan.
More SBA Eligibility
The higher loan amounts now available for green businesses also provide a good solution
for those who already have SBA financing on another
business property and would like to access more
money through the SBA. For instance, if you already have a $2 million SBA 504 loan you may be able to borrow another $2 million if you go green.
Please contact us at 1-800-414-5285 to find out more about Renewable Energy and The Green Choice Loan™ and to see how our expertise with the 504 loan can help your business.
*The SBA green refinance currently requires a business "expansion," but that will change if one of the current bills aimed at helping Small Business is passed. The current bill is is HR 5297 and if it is passed it will allow a refinance without an expansion and that should pave the way for many businesses to energy efficient retrofits of their buildings.
More SBA 504 loan information > SBA 504 loans
Maximum (SBA) Loan Amounts
The implementation of most of the above will enable you to borrow the maximum 504 loan amount and finance projects upwards of $12,000,000+...and it is technically possible to finance projects up to $20 million, but the BIG caveat here is that most banks and lenders will not do the larger loans at the moment. Hopefully this will change as the economy recovers.
Non-SBA Financing for Green Energy Projects
We also are able to assist with financing for large renewable energy projects should you require financing for a much larger project. Please click the following link for more info: renewable power production financing.
