SBA 504 Green Loan

Learn more about the loan’s purpose and eligibility requirements on the SBA website.

504 Green Advantages

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Green loan proceeds not counted toward borrower eligibility limit preserving eligibility for future loans.
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Green projects have excellent returns: 100% + IRRs on Equity
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Consumers & employees appreciate “green” organizations
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Corporate stewardship by lowering a business’s carbon footprint
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Opportunity for higher building appraisals due to lower operating expenses
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Increased energy independence

WHEN IS A 504 GREEN LOAN ADVANTAGEOUS?

Sometimes a borrower (or partner in a group) has existing SBA loan exposure that blocks eligibility. This happens when the SBA portion of a borrower’s current loan(s) added to the new loan surpasses the $5,000,000 limit. By employing the 504 Green Loan, a new $5.5 million SBA debenture is allowed.
Borrowers don’t realize, regardless of current exposure, they can go back for an additional $5.5 million in SBA funding by using the 504 Green Loan. The program can be used on a “per project” basis so they can continue to expand into multiple properties (not to exceed $16.5 million SBA debenture) as long as the guidelines are met.

The SBA typically requires one job be created for every $65,000 borrowed. However, compliance is not necessary if borrowers employ the 504 Green Loan. This makes the program attractive to companies with few employees.
Borrowers often need an additional $500K over and above the $5 million cap. The 504 Green Loan allows for these extra funds.

HOW DO BORROWERS QUALIFY FOR A 504 GREEN LOAN?

Example Scenario 1

(Borrowers wishing to expand holdings)
Whether the borrower wishes to expand current space, acquire existing, or build a new building, the new project must produce enough renewable energy (solar, wind, geothermal, etc.) to offset energy use by a minimum of 15%.
Example Scenario 2

(Borrowers who lease/own currently)
1. If a borrower leases or owns a building now and wishes to build or purchase a new building for relocation, the borrower can qualify if the new building consumes 10% less energy (on a square foot basis) than the building currently leased or owned.
2. If a borrower leases a building and wishes to purchase it, improvements must be made that decrease energy use by 10%. Often lighting and HVAC upgrades and other energy efficiency measures will achieve that goal.
OPTIMUS ENERGY SOLUTION’S ROLE

To qualify, the SBA requires a third-party Verification Report demonstrating the borrower’s plan to meet requirements of the Energy Public Policy Goal. Optimus Energy Solutions provides the loan support services necessary to gain eligibility and fulfillment for your borrowers.
KEY CANDIDATES FOR 504 GREEN LOAN

Key users of the program include assisted living developers, schools, hoteliers, family entertainment centers, medical clinics, car washes, retailers, office buildings and restaurant franchises.