Businesses offered interest free loans for energy efficiency

Small businesses feeling the pinch during the credit crunch are being offered interest-free loans of up to £200,000 to improve their energy efficiency.

Until recently, the largest loan an SME could apply for from the Carbon Trust was £100,000 but that figure has now doubled - and the size of the overall pot available for loans has also shot up by 45% to £31 million.

Hugh Jones, solutions director at the Carbon Trust, said: "We know that SMEs want to play their part in tackling climate change, and reduce their energy costs at the same time.

"But in the current economic climate, the tighter credit conditions are making it harder for small businesses to find alternative sources of funding.

"We know that some companies found that the £100,000 limit made it hard for them to finance the more ambitious projects they wanted to invest in, such as large lighting installations, boilers projects, or multiple equipment purchases such as variable speed drives with compressors and heat recovery equipment.

"£200,000 loans pave the way for companies to take on such projects and significantly reduce both their carbon emissions and their energy bills, which in turn will enable them to reduce operational costs and become more competitive."

The Carbon Trust predicts that the new scheme will generate 20% more carbon and energy savings this year than would have been possible under the previous limit.

The loans, which are unsecured, interest-free and repayable over a period of up to four years, provide a cost effective way for small businesses to upgrade equipment with a more energy efficient version - thereby reducing energy bills and cutting their carbon footprint.

Loans are often offered on a partial basis, but the economic climate has made availability of alternative sources of financing more difficult. Large projects that can deliver the necessary carbon savings will now be eligible for loans that fund a greater proportion or total project cost.

Since its inception, the Carbon Trust has helped business save around 17 million tonnes of carbon dioxide, with associated financial savings of around £1 billion.

Sam Bond



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