Lowering operational expenses without impacting quality or productivity makes good financial sense for any business. Reducing your company's energy consumption is a surefire way to accomplish this. Thanks to a great program from the SBA, business owners looking to purchase commercial real estate have more incentives than ever for going green. Community Business Finance's 504 Loan Program is an effective way for businesses to get financing with below market interest rates and a 10% down payment. By including energy-efficient upgrades into the project, business owners can dramatically increase their long-term savings as well as reduce their out-of-pocket costs.
Finance Unlimited Projects
Under SBA regulations, a business is capped at $5 million in total 504 loan financing. However, by including methods of reducing energy consumption, this cap is raised to $5.5 million per project, with no limit on the number of projects that qualify. This means that business owners that have previously reached their SBA maximum can still qualify for additional loans.
504 loans can be used to purchase land, real estate plus improvements, new construction, and equipment. Closing costs and soft costs can also be included. The SBA guaranteed portion of each loan is up to 40% for a maximum of $5.5 million, and a commercial lender funds at least 50% of the total project cost, with no limit on this first lien. This means that there is no limit to the size or number of 504 loan projects that a business may finance, as long as they qualify. This is great news for businesses that want to finance multiple projects.
In addition, under the green initiative, the usual job creation or job retention requirements do not apply. This means that businesses with fewer employees can qualify for financing, such as parking garages and self-storage companies.
How to Qualify
First, your business must qualify for a 504 loan. These qualifications are explained in our 504 School. To qualify as a green energy project, one of two criteria must be met. First, the project must reduce your energy consumption by at least 10%. This means your business will use 10% less energy, not simply reduce your energy costs by 10%. Or second, the upgrades must produce at least 10% of the energy used from renewable sources, such as solar power. It is important to note that new construction only qualifies if it meets the energy production criteria.
Upgrades for renewable energy sources include installing solar panels and wind turbines and using biofuels. Upgrades for reducing energy consumption include new HVAC, lighting, windows, insulation, and building automation.
Long Term Benefits
Federal Tax Credit - The Federal Business Energy Investment Tax Credit is in effect through December 2016. This gives federal tax credits to business owners that make qualifying energy-saving upgrades.
Utility Savings – Energy-efficient upgrades can dramatically reduce energy costs. It is possible to recoup the cost of the upgrades in just a few years depending on the amount of savings.
Increased Resale Value – When businesses are ready to sell the building, the money invested in green upgrades adds value to future buyers.
Going green has many advantages, and Community Business Finance can help your business save even more money through its 504 Loan Program.
Fill out a short online form to Get Started and a loan expert will contact you to discuss your needs.
You can also contact our offices:
Business Development Director
800-462-1017, ext. 203
713-457-1650, ext. 201