Environmental Upgrade Finance Available with Infinite Energy
Environmental Upgrade Finance (EUF) is a form of funding to assist building owners with purchasing energy efficiency upgrades, renewable energy equipment and becoming more sustainable without any out-of-pocket expense. With the help of a lender, tenants and building owners pay for their energy efficiency upgrades through their council rates.
Energy efficiency upgrades can include any project that improves the energy, water or environmental efficiency of a building. Improvements include solar, lifts, LED lighting, facade, air conditioning, double glazing, waste management and end of trip facilities, with these upgrades delivering considerable benefits to a building’s occupants.
EUF is available to businesses, property owners, councils and community groups in select councils, seeking to invest in energy efficiency and renewable energy. The full list of participating councils can be viewed here.
Repayments
EUF is formed through an agreement between a property owner, a bank and local council. The unique benefit of EUF is that repayments are made via a property owners council rates, where the requirement to pay becomes a charge on the land, rather than the individual or business.
Repayments are made via quarterly, fixed council rates, which is then passed onto the lender. The use of a council rates system enables a high level of security as the loan is attached to council, making it more secure and prioritised over other debts attached to the land, if there is a loan default. This security allows lenders to offer long-term loans at competitive interest rates.
In the case where tenants are benefiting directly from the upgrades, such as reduced utility costs, the tenant will be required to provide written consent and contribute towards the repayments.
Benefits of Environment Upgrade Finance
Environmental Upgrade Finance has several benefits that make purchasing sustainable upgrades easy and hassle-free.
- No upfront capital or security: EUF allows businesses to undertake renewable energy projects without requiring up-front capital or using existing business assets as security. Instead, the requirement to pay becomes a charge on the land, repayable through council rates.
- Improved cash flow and lower annual repayments: In some cases, energy efficiency projects can result in greater energy savings than the financing costs.
- Claim on tax: As the building owner owns the asset, a tenant may be able to claim depreciation of the asset, and the debt may be deductable at the company tax rate. Environmental Upgrade Finance does not appear on a tenant’s business’s balance sheet, with the expense seen as an outgoing from council rates. Property owners should seek independent tax and accounting advice for their specific situation.
- Loans are collected through council rates resulting in better terms: By having the repayments come from council rates, the repayments work out to be much less than if the building owner was to secure a bank loan.
- Building occupants receive benefits: Tenants can experience the benefits of efficiency upgrades through reduced utility costs and improved conditions associated with the improvements.
- Building owners increase asset value: the value of a building can significantly increase with the efficiency upgrades and improvements.
How Infinite Energy Can Help
Infinite Energy is able to provide EUF to commercial clients located in Victoria, New South Wales and South Australia. To help you secure Environmental Upgrade Finance, Infinite Energy will arrange finance via the Sustainable Melbourne Fund finance company. The finance company will liaise with your local council, who will then organise the purchase of the system. Payments will be set up as part of the quarterly council rates.
Finance terms are flexible and can be up to 20 years. The agreement is set up in the landlord’s name and can be transferrable to a new owner if the building is sold. After such time the total repayments have been paid, the landlord will own the asset.
If you would like more information on securing Environmental Upgrade Finance, click here.
