3 Energy Efficiency Financing Options for Businesses

  • December 22, 2020

The ways a business can invest in renewable energy continues to grow. An organization might invest in installing solar panels, wind turbines or even biogas. This variety of renewable energy project types allows for a business to utilize the best renewable energy solution for its needs.

One way a company should consider increasing its sustainability is through energy efficiency. Generally, a business can assess and improve its energy efficiency levels by finding ways to use less energy. For example, a business might increase its efficiency through building renovations.

Before beginning any energy efficiency project, you must first obtain the right funding. The best energy efficiency financing options will depend on your project. Some energy efficiency loans work with solar projects, while others are made for wind or biogas projects.

Keep reading to learn about several types of energy efficiency loans to find the appropriate financing for your project.

Energy Efficiency Financing Options For Businesses 

SBA 504 Loan

A common way you might improve your company’s energy efficiency is through renovations. There are numerous types of renovations your business might consider when looking at energy efficiency.

Let’s say you’ve recently run an energy audit on your office building. This audit showed you that one pain point for your energy usage comes from the building’s air leakage. As a result, you’ve decided to invest in a renovation project to improve your building’s air barrier.

In this scenario, a beneficial energy efficiency financing option would be an SBA 504 loan. An SBA 504 loan is typically used for commercial real estate projects. Specifically, this type of loan is used by small businesses when acquiring, renovating, building, or purchasing CRE.

Because this loan is structured for small businesses, it makes renewable energy renovations to existing CRE easier to achieve. Additionally, an SBA 504 loan term allows a business more time to accumulate wealth from its renovations.

Construction Loan

Perhaps your business is interested in a renewable energy project that involves construction. This could include the construction of solar panels, wind turbines or other sustainability equipment.

For a renewable energy construction project, an ideal energy efficiency financing option would be a construction loan. A commercial construction loan is structured for projects that involve franchise expansion, group-up construction and property renovations.

Not only can a construction loan fund your project, but there are post-project benefits to consider as well. With a construction loan, a business can use floating or fixed rate financing or refinancing. Construction loans also help to create economic growth by supporting sustainable energy development.


Your business may want to improve energy efficiency by installing renewable energy assets like solar panels. However, the cost and risk associated with owning this asset may be too high. In this case, a business can benefit from energy efficiency loans like the sale-leaseback.

Through the sale-leaseback structure, a business can generate capital by selling its renewable energy assets without losing access. As a result, the business can continue using the asset without the associated risks of owning the asset.

The seller is also given the option to buy this asset back at the end of the loan term. Thus, a sale-leaseback structure allows a business to generate capital while still improving their energy efficiency quickly.

Want to learn more about the energy efficiency loans that are available to you?

Partner with AVANA Capital‘s expert renewable energy finance team to find a fitting energy efficiency finance option for your needs.