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The SBA Green Loan Program

In this article, you will learn what the SBA Green Loan Program is.

What Is the SBA Green Loan Program?

The SBA Green Loan Program is a federal government initiative that provides loans to small businesses to help them finance energy-efficient upgrades. The program was created in response to the growing need for businesses to reduce their carbon footprint and save money on energy costs.

The SBA 504 Green Loan program makes it possible for small firms who are interested in expanding their operations to qualify for loans secured by commercial real estate. 

The Small Business Administration (SBA) will provide financing of up to $5.5 million for a single project through the SBA 504 Green Loan program. 

There is a cap of $16.5 million on the total amount of SBA financing that can be obtained through the use of SBA 504 Green Loans. Each loan has a maximum of $5.5 million. Individual projects can cost more than $16.5 million, but the total amount that can be borrowed through SBA Green loans cannot exceed that amount.

Key Benefits of the SBA Green Loan Program:

  • You can borrow more from the SBA. The maximum amount that the SBA can contribute has been increased to $5.5 million per project up to $16.5 million in total SBA funding.
  • Higher Option for Aggregate Lending. Borrowers can have multiple SBA 504 Green Project loans with a $16.5M aggregate cap limit on capital (up to the maximum SBA/CDC contribution of $5.5 million per project). These loans can be consolidated into one loan.
  • Save Money: A decrease in energy expenses will have positive benefits for the company's finances over the long term and the majority of energy upgrades and equipment may be financed within the confines of the loan.

Am I Eligible for an SBA Green Loan?

The borrower must satisfy one goal below in order to qualify:

  • GOAL 1: Cut energy consumption by at least 10 percent. Improvements made to a building that is currently occupied by the borrower are required to demonstrate a minimum 10% reduction in energy usage (when compared to the building's historical consumption). This can be accomplished through upgrades in equipment such as improved lighting, insulation, HVAC, and other energy-consuming equipment. Borrowers who wish to purchase or construct a replacement property are required to relocate to an area (as evaluated by the SBA) that has the potential for similar historical energy use.
  • GOAL 2: Generate at least 15% renewable energy. It is required that the building undergo renovations that increase its production of renewable energy by at least 15%. Solar, wind, geothermal, hydroelectric, and biomass are all potential sources of energy that can be produced.
  • GOAL 3: LEED Certification. Even if there are no records of the property's past energy use, a project may still be eligible for certification under the LEED system provided it is built from the ground up or retrofitted utilizing LEED standards and all required upgrades are implemented.

In conclusion, the SBA Green Loan Program is a great way for small businesses to get the funding they need to go green. With low interest rates and flexible terms, this program is designed to help businesses save money and reduce their environmental impact. If you are thinking about making some green improvements to your business, be sure to check out the SBA Green Loan Program.

If you want to learn more about this exciting SBA loan program, contact our experienced commercial loan advisors.