NSBA on Small Business Energy Efficiency

Posted by: Mark Marich on September 21, 2009 Source: Policy Dialogue on Entrepreneurship

The National Small Business Association (NSBA) released a new report on energy efficiency, “On-Bill Financing:  Helping Small Business Reduce Emissions and Energy Use While Improving Profitability.” The report argues that small business could collectively reduce greenhouse gas emissions by 259 million tons each year if they improved their energy efficiency by 25 percent. The NSBA highlights the possibilities that on-bill financing offers to achieve such reduction.

Currently implemented in several states, on-bill financing is a mechanism that enables collaboration with utility companies to deal with the upfront costs of energy efficiency improvements. This how it works: A local utility company extends a low- or no-interest loan to a financially stable small business to make energy-efficient upgrades. The small-business owner repays the loan by continuing to pay the average monthly bill. Any money paid in excess of the small business’ actual costs will go directly to pay down the loan.
 
The savings on energy bills for small business could amount to $4,932 or more every year. “According to an April 2009 NSBA survey, the number one reason small-business owners cite for their inability to make their firms more energy efficient is cash-flow,” states the report. NSBA chair Keith Ashmus said that “programs such as on-bill financing can eliminate this very significant barrier.”

The NASB suggests two legislative measures to further develop on-bill financing: make a pool of capital available to utilities that agree to match federal funds with their own loan capital, and create a guarantee of new on-bill loans that meet specific requirements. For further discussion of how the federal government can support this program, access the full report here.
 

Category:  Energy  General