Financing Energy Efficiency Upgrades
Loans— If a business cannot afford to make a full cash purchase for efficiency improvements, it can borrow money from a lender. Your borrowing ability, interest rate, and length of the loan period will depend on current debt and “credit-worthiness.” Correctly designed, your upgrade can generate energy savings that meet or exceed the monthly loan payment. Additionally, many vendors of energy efficient equipment offer loans to small businesses to finance their products and/or services.
Leasing— Certain equipment may be available for lease, with payments that are usually lower than most loans. Depending on the terms, a lease may give you flexible options to ultimately own the equipment through a lease-to-purchase agreement; simply end the lease and return the used equipment; or to renew the lease for new equipment.
Group Purchasing— By joining with members of local or national business organizations, you can participate in the purchase of a higher volume of a product or piece of equipment to get a “price break” or “economy of scale,” similar to a large corporation. Your business organization may already offer some types of member service group purchasing. ENERGY STAR provides assistance on group purchasing through its Quantity Quotes website where small businesses can request bids on a growing list of ENERGY STAR qualified products that currently includes light bulbs, light fixtures, clothes washers, dehumidifiers, dishwashers, refrigerators and room air conditioners.
Performance Contracting— If you are a small business owner who has a good credit history, yet lacks adequate cash and doesn’t want to borrow money, “performance contracting” may be a good option. A Service and Product Provider (SPP) or Energy Service Company (ESCO) will provide equipment installation/operation at no “up-front” cost to the business, and all the financial savings from the upgrade goes back to the business owner. This type of contract can be somewhat complicated, but it is an increasingly successful and popular form of energy efficiency financing. (The ENERGY STAR Service and Product Provider directory can help you find companies that offer performance contracting and other options.)
