California Alternative Energy and Advanced Transportation Financing Authority

Small Business Energy Efficiency Financing Program

Helping small businesses save energy and money

Energy Efficiency Leases, Loans and Service Agreements

The Small Business Energy Efficiency Financing (SBF) Program helps California’s small businesses and nonprofits access attractive financing for energy efficiency retrofits. Like other Hub programs, SBF offers participating finance companies access to a loss reserve fund that can cover up to 90% of losses on outstanding principal in the event of default. In exchange for this credit enhancement, finance companies are able to offer improved terms for energy efficiency upgrades and approve a broader range of small businesses for credit than they otherwise could.

SBF chart

The California Energy Commission predicts that by 2030, commercial buildings will use 37% of the state’s electricity, more than any other sector. Reducing commercial building energy use is key to reaching California’s goal of doubling energy efficiency by 2030. Within the commercial sector, small businesses are an especially hard-to-reach segment because owners face many competing priorities, are often operating on slim margins and can be perceived as risky borrowers. The SBF Program is intended to make it easier for small business owners to invest in the energy efficiency improvements that will save energy and reduce their operating costs while helping California meet its energy goals.

SBF enrolled its first project in July 2019, entering a two-year pilot phase that will lead to an evaluation by the California Public Utilities Commission. On-bill repayment functionality is scheduled to be added to SBF in 2020. For detailed information on SBF program activity, visit the Quarterly Reports page.

Who Benefits And How?

photo of a small businesses

SBF is available to businesses and nonprofits that receive energy from an investor-owned utility (PG&E, SCE, SCG and/or SDG&E) or Community Choice Aggregator and meet at least one of the following criteria: 100 or fewer employees, less than $15 million in annual revenue, or conformity with Small Business Administration size guidelines for their industry. Because of the credit enhancement, SBF is available to businesses that face challenges securing traditional financing, including newer businesses, those leasing their spaces, and those in the cannabis industry.

Through SBF, California’s 4 million small businesses can finance energy efficiency measures like heat pumps, cool roofs, HVAC units, LED lighting and efficient appliances. Participants can finance as much as $5 million in improvements through SBF; a portion may consist of non-energy projects and property improvements.

SBF’s earliest customers have included grocery stores, dairies, office buildings and bakeries. Businesses from virtually any industry (including market-rate multifamily housing) may participate as long as they meet the eligibility requirements above.

SBF Finance Companies

CAEATFA works with SBF-enrolled finance companies to determine how the credit enhancement can benefit California’s small business owners. The SBF Participating Finance Companies features chart lists up-to-date details on financing products offered through the program. The SBF Program allows finance companies to offer traditional equipment leases and loans as well as several variations of service agreements, in which customers either receive guaranteed functionality or savings for a fixed monthly price or make payments based on actual energy savings. The U.S. Department of Energy website hosts this primer on energy service agreements.

Finance companies interested in partnering with SBF should visit the Finance companies page on GoGreenFinancing.com or contact CHEEF at cheef@treasurer.ca.gov.

SBF Contractors and Project Developers

All SBF projects must be installed by an enrolled SBF contractor. Enrolled project developers can help businesses design projects. Current listings of enrolled contractors and project developers are updated weekly and may be found through the Find a Contractor tool on GoGreenFinancing.com.

Contractors or other energy professionals who are interested in partnering with SBF should visit the Contractor partners page on GoGreenFinancing.com or contact the Contractor Manager at gogreen@frontierenergy.com. Information on the project developer role may be found here.

Regulations

The regulations for the SBF Program received approval from the Office of Administrative Law (OAL) and took effect on January 21, 2020. This formalized the program rules that were initially authorized under emergency regulations (which can be implemented in a shorter time period) and completed the regular rulemaking process. Visit the SBF Regulations webpage for links to the current regulations.

Learn more

Find more information about SBF at GoGreenFinancing.com, the Hub’s consumer-facing website.