The short version
- Green business loans fund solar, batteries, efficient equipment and electric vehicles, often at a discount.
- Some lenders offer lower rates backed by government programs.
- Check grants and tax incentives first.
What green business loans cover
Electric and hybrid vehicles, solar panels, batteries and other upgrades that cut energy use. Lenders set their own rules on what qualifies, and many offer a lower rate than on their standard loan.
Check for government grants and rebates too, which can cover part of the cost.
Pros
- Lower rates on qualifying equipment.
- Lower running costs help repay the loan.
- May come with tax incentives, depending on the year and the asset.
Cons
- Only for qualifying items.
- Savings depend on your usage and energy prices.
- The equipment usually secures the loan.
Alternatives
- Government grants and programs. Federal and state schemes help with some costs, from energy upgrades to exporting, and don't need repaying.
- Equipment finance or a chattel mortgage, for vehicles and machinery. The item secures the loan, so the rate is usually lower.
- A power purchase agreement, where a provider installs solar and you buy the power it makes.
How to apply
Lenders want to see that the business can repay a green business loan from its cash flow.
- Have your numbers ready. Usually two years of business tax returns and financial statements, recent BAS and business bank statements.
- Know your ABN details. Most lenders want the business to have traded for at least six to twelve months.
- Expect a director's guarantee. Many lenders ask the owners to guarantee the loan personally, even when it's secured.
- Ask about the total cost. Business loans aren't covered by the same credit laws as personal loans, so check every fee and the repayment schedule in writing.
What to compare
Business loans don't have to show a comparison rate, so add up the costs yourself: the interest rate, any establishment and ongoing fees, and what it costs to repay early.
Business lending isn't covered by the responsible lending rules that apply to personal loans and home loans, so a lender won't necessarily check the loan suits you. Work out what you can afford before you apply.