A new green finance initiative, backed by the Carbon Trust in partnership with Siemens Financial Services, providing a fund worth £550 million to UK based businesses for the installation of low carbon and energy efficient technologies opened for applications on 26 April 2011.
The scheme is the first dedicated low carbon private finance initiative in the UK and aims to provide finance for energy efficient 'green' equipment to businesses over the next 3 years. Financing of £1000 upwards will be provided from Siemens Financial Services to eligible businesses to spend on any equipment or measures meeting the scheme's energy-saving criteria based on a cost, energy and carbon saving assessment carried out by the Carbon Trust. Repayments will be calculated so as to be offset by the resulting anticipated energy savings; the financing option is designed to pay for itself.
The new scheme replaces the Carbon Trust's government funded 0% interest SME Loan Scheme for businesses sited in England and Scotland. However, these 0% loans are still available to business sites in Wales or Northern Ireland.
Energy Efficiency Financing for Business Scheme
Who can apply?
Any UK business seeking to invest in cost-effective energy saving equipment is eligible, provided they have been trading for at least 12 months (for an incorporated business) or 36 months (for an unincorporated business) and subject to credit approval. The application process is predominantly online, although there will be alternative methods.
How much can be borrowed?
There is no maximum amount that can be applied for but the loan will be subject to credit checks and asset risk assessments. Loans will range from £1000 – c. £1 million according to the Carbon Trust spokesperson, averaging £30,000 for SMEs.
What is the interest rate?
The interest rate on each loan will be variable based on the applicant's credit history and the cost of the project. The Carbon Trust say interest will be at a commercial but market competitive rate.
How is the loan repaid?
The payments will be fixed at a rate calculated to match or exceed the recipients anticipated energy savings. The loan term will be pre-arranged and will last between 1 to 7 years. Longer term loans may become available.
What would I spend it on?
The new scheme aims to enable businesses to implement energy saving technology and the funding can cover the entire cost of any eligible project. Assets and/or measures of any nature proposed by the applicant, provided that they are shown to be carbon, energy and cost saving solutions, will be eligible under this scheme.
A further Siemens financed venture is set to be launched later this year offering procurement support in purchasing equipment from accredited suppliers.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
