I recently wrote about why small businesses should evaluate going green via a carbon offset program, because of concerns regarding global warming among the majority of consumers. If your company is considering additional ways to implement such an eco-friendly strategy, there is a new program available that can help you offset some costs: $50 million are up for grabs around the country by qualifying small businesses.
Sponsored by Bank of America, the purpose of the program is to finance the cost of retrofitting older commercial and residential buildings to improve energy efficiency. Bank of America is offering $50 million in low-cost, long-term loans to finance the retrofits. Given the current state of the economy, most business owners are hesitant to pay for the cost of efficiency improvements. While these types of investments do have a positive return, the period of time required to see that return can be long. In some cases it can take decades. By lowering the investment required through cheap financing, the total cost of the retrofit goes down and the cash flow required to pay back the loan is lower. This reduces the barrier for approval among small business owners that own buildings.
Bank of America is not distributing the funds directly. Instead, they are offering them through community development financial institutions or CDFIs. CDFIs are financial institutions chartered to serve markets or groups that have historically been considered underserved. They include community development banks, community development credit unions, community development loan funds, community development venture capital funds, microenterprise loan funds, and community development corporations.
Many CDFIs specialize in particular sectors, populations or project types. Bank of America is currently accepting applications from CDFIs for access to the $50 million in credit plus an additional $5 million as grants to assist with the implementation costs. The winning CDFIs will be announced in November 2011. Once announced, businesses can begin the process of applying for access to these low cost funds to finance efficiency retrofits.
A maximum of 12 CDFIs will split the funds. If a winning CDFI approves your company for a loan, you will be required to provide energy and resource consumption statistics both before and after the improvements to determine the effectiveness of the investment.
If you have a relationship with a local CDFI, you should encourage them to apply for these funds so your company can have an opportunity to access them if they win. The CDFI should apply here for the grant after establishing an account on Bank of America grant's website.
If you don’t have a relationship with a local CDFI, then start working on establishing one. These organizations provide funding, training, networking and other valuable services. While they are financial institutions, their primary mission is to develop their local community and many times will provide access to funding under terms that a non-CDFI institution can’t match.
Here is a list of CDFIs organized alphabetically by state. The list contains 862 CDFIs that have been certified by the Community Development Financial Institutions Fund. This certification confirms that they meet the criteria as CDFIs and can apply for the program. Strategically, it would be best to find a local CDFI that already has experience in energy efficiency retrofit projects. Here is a list of CDFIs (recently updated) that is organized by type of organization.