How to Cover the Cost of Anaerobic Digesters in the US

  • March 25, 2020

Going green is no longer a fad. A new level of social and environmental responsibility is required to do business. From giant waste services companies like Waste Management to your local mom-and-pop laundry, the green bug has bit every business. It’s not always by choice, either. Some states have enacted tough restrictions on businesses forcing more environmentally-conscious policies. California, for example, created new low carbon fuel standards back in 2009. And, in 2019, in New York, Maryland, and New Jersey, new food recycling standards left retailers scrambling for an affordable solution. Sometimes going green requires a little funding and new green technology solutions. That’s where anaerobic digesters come in.

What Is Anaerobic Digestion and Why Your Business Needs It?

Anaerobic digestion is the process of turning biodegradable materials into biogas in the absence of oxygen. Simply put, it’s the process of turning waste into fuel. With this rise of environmentally-conscious consumers and increasing governmental regulation, you can see why investors have flocked to anaerobic digester projects over the past few years. They are the ideal solution for companies looking to adapt to a changing regulatory environment, present a green public image, or save money on fuel costs. There’s only one problem. There are significant start-up costs when it comes to putting in industrial-scale anaerobic digesters in the US.

Your Financing Options

Thankfully, to cope with anaerobic digesters’ cost as a consumer, you have a couple of options. First, there are two types of loans available through the U.S. Small Business Administration that small businesses could utilize for an anaerobic digester in the US. The first is a regular SBA 504 loan. The SBA 504 loan is ideal for small business owners looking to purchase real estate or equipment. SBA 504’s do max out at a total loan value of $5 million, and there are a number of SBA loan requirements to qualify. However, they require only a small down payment and have below-market fixed interest rates for long-term stability. If you can jump the hoops for an SBA 504 loan, then you might want to try for an SBA 504 Green loan as well. With only a small number of additional requirements to qualify, you can receive an additional $500,000 in funding. If you don’t represent a small business or you’re having trouble qualifying for an SBA 504 loan, then there’s always a good old-fashioned conventional construction loan. These require higher down payments than SBA 504 loans, but if you need the funding, they are well worth the risk. And finally, there are bridge loans available to help overcome any unexpected funding shortfalls.

The Proposal

After you’ve decided on the type of loan you’ll need, it’s time to make your proposal. Securing a loan these days requires a lot of consistent communication with your lender and tons of paperwork. You’ll need to prepare a proposal that illustrates you meet all the requirements for loan approval. Still. more than that, you’ll also need to show a deep understanding of the market, and your business’ financials and the path to repayment, if you want to be approved. Anaerobic digestion is a technology of the future that can help make our planet a better place today, and thankfully the funding is only a phone call away!

Are you looking for a lender who can meet the unique needs of your anaerobic digestion project?

Contact the team at AVANA Capital today, and you’ll be on the way to a greener tomorrow!