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Introduction to Energy-Efficiency Loans
from the Carbon Trust
Interest-free loans for businesses that want to save energy and
money
What are Energy-Efficiency Loans?
The Carbon Trust Energy-Efficiency Loans are part of a £10 million government backed
initiative. The interest-free loans of between £5,000 and £100,000 are available to
qualifying small and medium sized enterprises (SMEs) in England and Wales* (regional
variations may apply) looking to invest capital in energy saving projects. All businesses
based in Northern Ireland* that have been trading for at least 12 months may now be
eligible to apply for an interest free loan of up to £200,000. The loans are repaid over a
period of up to 4 years.
*subject to terms and conditions
Why should SMEs be interested?
Energy efficiency makes sound economic sense. When upgrading existing equipment even
a modest investment in energy saving equipment can save a company over 20% on energy
bills. In favourable cases the amount of money saved each month will exceed the loan
repayments thereby increasing company profits by hundreds, or thousands, of pounds each
year throughout the payback period. Thereafter the full value of the saving contributes to
the bottom line.
Acknowledging that capital for such investment is often difficult to obtain, Energy-
Efficiency Loans are intended to reduce this barrier by providing access to capital on very
favourable terms:
Completely interest-free
Repayment period of up to 4 years
No arrangement fees
As well as reducing the operating costs of business, greater energy efficiency also reduces
the amount of carbon dioxide emissions thereby helping combat climate change.
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What are the Eligibility Criteria to Apply for an Energy-Efficiency Loan?
Both the company making the application and the energy saving project itself have to meet
some basic criteria. These are outlined below.
The Company
To be eligible the company must be based in England or Wales and has to fall within the
definition of an SME, namely:
(1) Less than 250 full time employees
(2a) Less than €50m Turnover (approximately £35m) or
(2b) Less than €43m assets (approximately £30m)
(3) No controlling interest more than 25% by a non-SME
(i.e. it is part of a larger organisation)
In Northern Ireland all businesses maybe eligible.
In addition the company should have a trading record of more than 12 months. We are
generally unable to make loans to companies in the Transport sector, activities linked to
the production, processing, or marketing of Agricultural or Fisheries products, or for
export-related activities. Further details are available from the Carbon Trust on 0800 085
2005.
The Investment
Energy-Efficiency Loans are intended to encourage qualifying companies to invest in energy
saving equipment that either upgrades or replaces existing facilities. Any project where
the cumulative value of the energy savings resulting from the project over the first 5 years
exceeds the capital value of the loan may qualify.
Examples of the type of equipment that can offer considerable energy savings to business
include:
• Energy saving lighting
• High efficiency electric motors and drives
• Boilers and heater controls
• Building insulation
• Compressed air systems and fittings
• Insulation for boilers, hot water tanks, and pipe work
• Heat recovery systems
• Lighting controls
Note also that the loan may be used to cover, for example, installation and commissioning
as well as the capital cost of the equipment provided the payback criteria are still met.
How to Apply for an Energy-Efficiency Loan
The first step is to contact the Carbon Trust on 0800 085 2005. Alternatively, companies
are encouraged to complete the preliminary eligibility checklist on our website
www.carbontrust.co.uk/loans and send it to us.
Once initial eligibility has been confirmed each project, or set of projects, is assessed on
its technical merits and energy saving potential. In cases where the applicant has not
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completely specified their project, i.e. decided on specific equipment and a chosen
supplier, the Carbon Trust offer free technical advice. The applicant(s) could qualify for a
Free Site Survey if their energy bills are over £50,000 per annum.
In addition the Carbon Trust Delivery Programme offers more general advice to help
enterprises identify areas where and how they can make energy savings at ‘no cost’, ‘low
cost’, or through capital investment.
For Loan applications the company must obtain its own quotations for the project from
suppliers and ultimately take the decision on whether to invest. We expect the chosen
supplier to provide the client with data that quantifies the likely cost and energy savings as
part of the loan application submitted. A Carbon Trust consultant will then contact the
client to discuss the project and to calculate its potential for carbon dioxide emissions
abatement.
Once a technically eligible project has been identified by the Loans Team, a credit check
will be carried out. We assess the overall application and, if appropriate, offer the
interest-free loan. The company may then order the equipment and we will forward the
loan upon receipt of a copy of the supplier’s invoice covering the project.
The Loans Team aims to make a loan decision within two weeks of receiving the fully
completed loan application together with all the required supporting information. You
must therefore send all of the following to us when you apply:
1. Fully completed Application Form
2. Quote(s) from your supplier(s)
3. Account records as specified on the Application Form
Further Information
Eligibility
Energy-Efficiency Loans are considered to be State Aid. They are offered under the ‘de
minimis’ exemption to the State Aid regulations. This exemption does not cover the
Transport sector, activities linked to the production, processing, or marketing of
Agricultural or Fisheries products, or for export-related activities. As a result Energy-
Efficiency Loans cannot usually be offered in these cases.
The amount of ‘de minimis’ aid offered to any company in a three year period is limited to
€100,000 (currently approximately £70,000). We ask applicants to complete a declaration
that they are not receiving other aid that would take them over this limit.
Applicants must fall within the EU definition of a small and medium size enterprise in the
case of England and Wales applicants: an organisation having no more than 250 full time
employees, an annual turnover of no more than €50 million (approximately £35m), or an
annual balance sheet total not exceeding €43 million (approximately £30m), and not more
than 25% of the capital or voting rights owned by an enterprise which is not itself an SME.
In Northern Ireland all businesses maybe eligible.
To qualify, the cumulative value of energy savings estimated for the project in its first 5
years must be greater than the value of the loan. Other savings, e.g. maintenance, are not
taken into account for this calculation. For example, for the minimum loan amount of
£5,000 the project would require a saving of at least £1,000 a year.
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Energy-Efficiency Loans are primarily intended for projects to replace inefficient existing
equipment with a more efficient alternative which uses less energy. However other
projects may be considered providing they achieve a reduction in carbon dioxide emissions.
A minimum hurdle for emission reductions per £ loaned can be obtained from the Advice
Line. This is only likely to be an issue for projects that involve switching from one fuel to
another, where cost savings derive from differing fuel tariffs without actually reducing
energy consumption.
Energy-Efficiency Loans are primarily aimed at trading, profit-making companies. Other
organisations (e.g. partnerships, not-for-profit companies, charities) are encouraged to
apply, however they must still pass a credit check and may need to provide additional
information.
Each application will be assessed on a case by case basis, taking into account the credit
rating of the company, the suitability of the proposed project and its potential for energy
saving. A project that qualifies for a loan for one company is not guaranteed to qualify for
any other company.
Loan availability
The Carbon Trust reserves the right to manage a balanced portfolio of loans by limiting
applications from certain sectors, or through loans of certain sizes, or based on other
criteria. We will endeavour to let applicants know at the earliest opportunity if their
application is unlikely to be successful on these grounds.
The Energy-Efficiency Loans are available in England, Wales and Northern Ireland. A similar
scheme, Loan Action Scotland, is available in Scotland. For more information visit
www.energy-efficiency.org
Application process
An adviser (usually a Carbon Trust consultant) will be assigned to validate each application
and may also assist the applicant with identification of suitable energy saving projects.
However, the adviser cannot recommend individual equipment suppliers or specific items
of equipment. During technical assessment the adviser’s primary role is to verify the
suitability of the project to the Carbon Trust, and not to the applicant. The Carbon Trust
cannot ‘guarantee’ energy savings.
Following completion of the project the applicant must send us a copy of a commissioning
certificate from the supplier to confirm the work has been undertaken.
Terms and Conditions
Loans are repayable over a period of up to 4 years in equal instalments by monthly direct
debit. Repayments must be made, even if the project does not achieve the savings
projected in the loan application.
A full set of terms and conditions for the Loan agreement are available on request.
The Carbon Trust is a company limited by guarantee. Registered in England and Wales Number 4190230.
Registered at: 8th Floor, 3 Clement’s Inn, London WC2A 2AZ© The Carbon Trust 2005. All rights reserved.
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What is the Carbon Trust?
• The Carbon Trust aims to work with business and public sector organisations to cut energy
costs by increasing energy efficiency through professional and impartial advice and support. In
addition to interest-free Energy-Efficiency Loans, the Carbon Trust’s services include:
• Free Advice Line: 0800 085 2005 providing practical energy saving advice
• Online information: www.carbontrust.co.uk/energy
• Publications across a wide spectrum of industries on energy saving measures
• Free onsite energy surveys to identify opportunities for energy savings
• Events providing general advice as well as specific technical knowledge
• Energy efficient and environmentally conscious building design through Design Advice
Further support from the Carbon Trust
• Energy-Efficiency Loans are available for small and medium sized enterprises in England and
Wales of between £5,000 and £100,000. And all businesses in Northern Ireland up to £200,000.
They are aimed at businesses wanting to upgrade or replace equipment with more energy
efficient model(s) as part of an energy saving project. The loans are unsecured and interestfree.
They are repaid over 12, 24, 36 or 48 months dependent upon the value of energy
savings associated with the project. Terms and conditions apply.
• Further information and advice is available free from the Carbon Trust, call 0800 085 2005 or
visit the website at www.carbontrust.co.uk/loans
Whilst reasonable steps have been taken to ensure that the information contained within this document is correct, neither
the Carbon Trust nor the Government give any warranty or make any representation as to its accuracy or accept any liability
for any errors or omissions.
The Carbon Trust works with business and the public sector to cut carbon emissions and capture the commercial potential of
low carbon technologies. The Carbon Trust is an independent company funded by the Department for Environment,
Food and Rural Affairs, the Department of Trade and Industry, the Scottish Executive, the Welsh Assembly Government and
Invest Northern Ireland. |