U.S. Government Loan Guarantee Programs for Renewable Energy

There are four U.S. government loan guarantee programs that provide low-interest loans for renewable energy and energy efficiency projects.

Two of these programs – the US Department Of Agriculture Loans (USDA’s) Business & Industry (B&I) Loan Guarantee Program and Rural Energy for America Program (REAP) – provide funding for installing, using and deploying existing, commercially available technologies.

The B&I program also provides guarantees for wide variety of other loans, including:

• Business conversion, enlargement, repair, modernization, or development;
• Purchase and development of land, easements, rights-of-way, buildings, or facilities;
• Purchase of equipment, leasehold improvements, machinery, supplies, or inventory;
• Debt refinancing when new jobs will be created and other conditions are met; and
• Business and industrial acquisitions when the loan will keep the business from closing and/or save or create jobs.

The other two programs –USDA’s Section 9003 Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program and the U.S. Department of Energy’s (DOE’s) Title XVII Innovative Clean Energy Loan Guarantee Program – are designed specifically for commercializing first-of-a-kind technologies.

Existing, Commercially Available Technologies

The USDA’s B&I and REAP programs provide guarantees for loans from commercial lenders. The two advantages of these guarantees are they reduce risk for the lenders, hence, make the lenders much more willing to finance a project. The second advantage is that, because of the guarantee, lenders offer a lower interest rate, often 1 point or more below their normal commercial lending rate.

The guarantees cover loans up to $25 million per project. In some cases, it is possible to combine the B&I and REAP guarantees to cover a loan for a $50 million project.

First-of-a-Kind Technologies

For first-of-a-kind technologies, there are two choices:

• USDA’s Section 9003 program provides guarantees for loans up to $250 million from commercial lenders. Applicationsare limited to the program’s three areas of focus: biofuels, renewable chemicals and bioproduct manufacturing. In all cases, a certain amount of biofuel must be produced.
• DOE’s Title XVII Loan Guarantee Program provides ultra-low-interest loans through the Federal Financing Bank (FFB), a branch of the U.S. Treasury, from commercial lenders or a combination of the two. DOE has close to $40 billion in funding authority and has financed several projects in the billions of dollars including a $8.5 billion advanced nuclear power facility and a $5.6 billion concentrated solar power facility. Loans guarantees are available for renewable energy, energy efficiency, advanced fossil energy,advanced nuclear energy, and advanced vehicle technology manufacturingprojects.

For further information on applying for financing through one of these loan guarantees, please contact: Craig Evans, Managing Director, Renewable Energy Consulting Services, Tel: 434-303-0800, Email: craig@renwable-energy.consulting, or visit the RECS website at www.renewable-energy.consulting.

About the author

Renewable Energy Consulting Services is a professional blogger who likes to write about all Financing, grants or loan related topics. He shares ideas on Oregon Renewable Energy Companies, DOE Loan Guarantee, Renewable Energy Industry, Government Funding Solutions and more.

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