Energy Improvements Financing
Building and business owners can access debt financing easily at reasonable rates.
Debt financing is simple and avoids additional administration and project management costs.
On-balance-sheet liability means investments with longer payback periods (>2 years) and higher capital costs can be seen as too risky for SMEs.
Business owners that are well-established and do not have challenges to accessing capital would likely take advantage of traditional financing if the ROI on proposed retrofits is attractive. Some banks offer financing options for energy retrofits at low-interest rates to support local businesses and their sustainability goals.
The lease-to-own model avoids the upfront capital cost of implementing retrofits.
The business owner is responsible for ensuring that they can repay the lease and would need to ensure that the projected energy savings present a viable business case after the leasing interest payments are considered.
Some lenders provide a lease-to-own model that matches lease payments with expected savings from the installed equipment. Business credit risk and technical risk of the expected savings are key considerations.