On-Bill Financing Helps Small Firms Get Efficient
Sep 21st, 2009 | By Dawn Rivers Baker | Category: TechnologyCongress has not yet finished with health care reform, of course, but that hasn’t stopped them from starting to fashion what will no doubt be the next huge policy debate: energy and the environment. Which makes a new report released last week by the National Small Business Association (NSBA) not just interesting and informative, but timely. The report, entitled On-Bill Financing: Helping Small Businesses Reduce Emissions and Energy Use While Improving Profitability, finds that small businesses as a group could have a tremendous impact on the nation’s carbon footprint and suggests that what they call on-bill financing is a good method for paying for it.
So, how does on-bill financing work? Basically, utility companies (once they have located a capital source to fund the loans) find contractors who can find small business candidates. The contractors conduct audits, the utility fronts the money and creates a new “energy service charge” on their bill. Since the service charge should be less than the cost savings immediately realized through more efficient energy use, the net energy bill is still lower. According to the report, small firms could realize average savings of $4,932 annually. So, why is this excellent solutions offered in only eight, soon-to-be ten, states? Barriers to adoption identified by the report’s authors include credit and default risk issues and, in some states, inflexible lending laws.
