SBA 504 Program Update: Green Energy Loans

Effective April 30, 2024, the Small Business Administration (SBA) removed the $16.5 million cap on Energy Public Policy projects financed by the 504 Loan Program (Procedural Notice 5000-856984). These projects are also referred to as SBA 504 Green Loans. To be eligible for an SBA 504 Green Loan, borrowers must meet one of these metrics:

• Reduce energy consumption by at least 10 percent (compared to historical consumption) through building upgrades.
• Generate at least 15% renewable energy (solar, wind, geothermal, hydropower, and biomass) through property upgrades.
• Increase the use of sustainable design, including design that reduces the use of greenhouse gas emitting fossil fuels or low-impact design that reduce the use of non-renewable resources and minimize environmental impact.

Projects that meet one of the above benchmarks secure additional borrower benefits:

• Larger SBA/CDC Loan Amount – SBA maximum contribution increases to a $5.5 million cap (from $5 million) with no maximum total project limit.
• Higher Option for Aggregated Lending – Borrowers now can have multiple SBA 504 Green Loans with no aggregate cap limit on capital (up to the maximum SBA/CDC contribution of $5.5 million per project).

In addition to the borrower-friendly terms of the SBA 504 Green Energy loan, making energy efficient upgrades reduce energy costs over the long-term. It is also an opportunity to tie company brand identity to the fight against climate change.

To learn more about how a business can go green with an SBA 504 loan, download the program flyer and connect with a member of the SomerCor loan origination team today!