First Utah Bank offers “green” financing for businesses

Here at First Utah Bank, we’re proud to offer lending solutions to businesses that match their corporate ethics standards. Small business owners who want to grow their company while also meeting or exceeding their sustainability goals should consider applying for a Small Business Administration (SBA) 504 Green Loan Program. Whether you’re a small business in Lehi, Salt Lake City, or the surrounding area, this may be a loan program for you.

Through the 504 Green Loan Program, businesses are eligible to receive up to $5.5 million in financing to help them improve their energy efficiency and overall profits. Organizations can use these loans to support business upgrades and value improvements.

What is the SBA 504 Green Loan Program?

The SBA 504 Green Loan Program was created to provide companies with a financing option that incentivizes them to increase their company’s sustainability. Business owners who qualify for SBA 504 financing may be eligible for multiple SBA 504 2nd mortgages of up to $5.5 million per 504 green friendly project; however, the outstanding gross debentures issued for a small business concern, including its affiliates, cannot exceed $16.5 million in the aggregate. These amounts are not reduced by any other outstanding SBA financing (7a, Community Advantage, regular 504).

Here are some other benefits to this funding program:

• 10-, 20- and 25-year amortization terms available.
• Associated fees and soft costs can be financed in the loan (architectural and engineering fees, appraisals, closing costs, etc.).
• Up to 90% financing at below-market, semi-fixed interest rates.

There are also specific requirements to how small businesses can use the funds from a 504 green loan. To be eligible for up to $5.5 million per project, each project must meet the following requirements:

• Energy Reduction: The project must be a new facility that’s replacing an existing facility or a retrofit of an existing facility and include technologies that reduce energy consumption by at least 10%. Energy consumption requirements are done via an energy audit by a third-party qualified consultant.
• Renewable Energy: Plant, equipment and process upgrades of renewable energy sources (solar, wind, turbine, thermal) used to run a facility or renewable fuel producers, including biodiesel and ethanol producers. Projects must generate more than 15% of the energy used at the project facility.

How Do You Qualify for a 504 Green Loan?

There are four main qualification requirements for a company that wants to take advantage of this type of financing: They include:

• You must be a for-profit company.
• 51% or more of the location must be owner-occupied.
• The business must have a tangible net worth of less than $15 million.
• You must have an average net income after federal income taxes (excluding any carry-over losses) from the preceding two completed fiscal years of $5 million or less.

In addition to the requirements listed above the SBA also requires that all projects must meet at least one of their specific sustainability goals:

• The funds must be used to reduce energy use by at least 10%.
• The projects must generate at least 15% renewable energy once completed.
• A project can qualify if it’s built or certified using LEED Certification

Not every building will have historical energy records available, which is why the SBA is allowing businesses to instead complete any improvements to the LEED standard.

You can also qualify for the SBA Green Loan Program by acquiring or building a new building that produces enough of its own renewable energy to cut its energy consumption based on what it would have been without the improvements. Businesses can qualify by using any of the common sources of renewable energy available today, including solar, wind and geothermal. Even better, installation costs for the new equipment can be included in the overall loan amount.

How Could a 504 Green Loan Benefit Your Business?

There are real-world benefits to this type of financing. Not only does it make you more desirable to your customers, but it could potentially save you a lot of money in the long run. You’ll also work in a much healthier environment. Benefits to utilizing this loan program include reduced operating costs, lower utility bills and lower carbon emissions. You and your employees will also breathe in cleaner air.

We’re currently working with business banking customers to provide them with options when it comes to 504 Green Loan financing. Are you a small business in Utah or Salt Lake Valley looking for an SBA loan that speaks to your sustainability goals? If so, it’s time to pay a visit to your local First Utah Bank branch or visit the business lending section of our website to find out how we can help you take advantage of this new program!