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Small Businesses Left Out of Energy Efficiency Funds

February 18, 2014 By Linda Hardesty

A Department of Energy webinar being held today titled “Energy Efficiency Financing Programs 101” will discuss, among other things, why financial institutions often don’t serve small businesses very well when it comes to financing for energy efficiency upgrades.

The webinar will feature Mark Zimring of Lawrence Berkeley National Laboratory, who was the primary author of the State and Local Energy Efficiency Action Network’s paper “Energy Efficiency Financing Program Implementation Primer,” which finds that banks and other lenders have the perception that lending to certain customer segments represents too high a risk relative to the potential financial return.

Better information on the performance of energy efficiency financing may be sufficient to make financing more accessible to these customers, however, there are some customers that may be deemed by private lenders as unprofitable to serve, regardless of better performance data.

While private sector financial institutions, in general, seek purely financial returns, taxpayer and utility ratepayer funds target a range of system and public benefits including energy savings, reduced environmental impacts and diversification of resources. This more holistic view may lead to a different assessment of risk and return based on broader programmatic goals, and may warrant long-term provision of taxpayer or ratepayer direct loan capital to overcome barriers to adoption for hard to reach customer segments.

Although huge investment houses such as Deutsche Bank and Goldman Sachs have billions they’re looking to invest, they aren’t interested in smaller projects, even “small” multimillion-dollar projects. Because each deal requires bankers’ time, the big investors want bundled projects, says the Guardian.

3 comments on “Small Businesses Left Out of Energy Efficiency Funds

  1. What is the point of this article? OK, we get it. Lending to small businesses is a rare occurrence. Argument made several times. Is there a solution offered? What benefit or value is there making the argument of small businesses receiving loans is very challenging without proposing a solution?

  2. We offer project financing for any size project from $2,000 to $5,000,000. Funding is not the issue, make sure the LED retrofit company needs to select the right product for the application, not the best in house profit product.

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