Energy reduction program goal provides larger 504 loans

The SBA 504 Program has a relatively new Public Policy Goal that is allowing business to afford the building that is right for them and conserve energy at the same time. The reduction of existing energy consumption by at least 10% provides a 504 Gross Debenture of up to $4,000,000. This cannot apply to a startup business; however, an existing business buying a building may be eligible if the new location uses at least 10% less energy than the prior location. 

For example, Furniture Factory Direct is a retail home furnishings company with retail locations in Tacoma, Tukwila and Lacey, Washington with a warehouse and corporate office facility in Kent.

They wanted a loan to purchase of an existing retail building in Lakewood, Washington to will replace their Tacoma facility. Even though the project would create 35 new jobs it was limited to $1,500,000 in SBA 504 funds.  In order to take advantage of the 50/40/10 financing structure and get the building they wanted they needed $2,000,000 in SBA funds. The public policy goal of meeting a 10% savings in energy cost allowed them to do that.

The new building uses energy efficient lighting, signage and new heat pump units so Furniture Factory Direct should see their electric and gas bills reduced by 60%! As proof to the SBA Infinity Electric Solutions Co. simply provided an Energy Consumption Comparison letter.

This project used the 504 Loan Program for a straight purchase of commercial real estate. They chose an existing energy efficient building that was move-in ready and qualified for a larger loan.  The energy reduction public policy goal allowed them to purchase a more expensive, but more energy efficient building. 

Alternatively, with the 504 program a business could purchase a less efficient existing building and finance improvements that would make the building at least 10% more efficient. TierPoint, a Data Center services provider in the Inland Northwest is another example of a 504 qualifying energy reduction project: TierPoint Announces Financing for $8.2 Million Environmentally Friendly TierPoint 3 Data Center.

In either scenario job creation is not a requirement, but is always recorded.