SBA 504 Loan Program for Energy Efficiency Projects

June 3, 2009

The Small Business Administration has a plan to help small business and encourage energy upgrades to buildings. If you do an energy audit and show an action plan to improve energy efficiency the SBA will double the size of the loan that they will guarantee. Normally, lenders benefits from up to a $2 million loan guaranty, now under the new SBA 504 Loan Program for Energy Efficiency Projects, SBA Lenders will benefit from as much as a $4 million loan guaranty. SBA Loans are far better than conventional loans as they allow for up to 90% leverage have low rates.

To qualify for the additional loan amount the borrower will need to show a detailed plan on how they will increase their energy efficiency by 10% or install a renewable energy source. To accomplish the former, the borrower will need an energy audit of their current building and a plan projecting future energy usage. The energy audit and the action plan are provided by energy engineering firms such as Partner Energy.

Of course, he borrower must implement the plan, but 10% energy efficiency improvement is easily achievable. The Energy Audit will likely reveal several relatively inexpensive ways to improve energy usage and the borrower’s investments will likely have payback periods of less than 5 years.

For SBA loans over $5 million, the SBA 504 Loan Program for Energy Efficiency is a great deal. The borrower gets a great loan in terms of leverage and rate and is required to make a inexpensive investments in their building in return.


Energy Benchmarking

May 5, 2009

In California Assembly Bill 1103 (AB 1103) requires that commercial buildings are benchmarked for energy efficiency in 2009 and that their Energy Star rating is disclosed to buyers, lenders and lessees during any real estate transaction that occurs after January 1, 2010. 

Commercial building owners would be wise to begin benchmarking their portfolio now in 2009.   Energy Auditing companies such as Partner Energy can provide low cost benchmarking services that meet the legal requirement and identify low hanging fruit for energy savings.  

Buyers of buildings in 2009 are requesting that an basic energy audit be included as an add on to their Property Condition Assessment.


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