New York Energy $martSM Loan Fund Program Frequently Asked Questions
What is the New York Energy $martSM Loan Fund (Loan Fund)?
The NY Energy $martSM Loan Fund is a simple, low-cost way to finance energy-efficient and renewable technologies projects for individual or business use. The program provides an interest rate reduction off of a Participating Lender/Lessor's normal interest rate for a term up to 10 years. The interest rate reduction for most of the State is up to 4.0% (400 basis points). Con Edison customers may be eligible to receive an interest rate reduction up to 6.5% (650 basis points) less than a Participating Lender/Lessor's normal market rate.
What types of projects qualify for the Loan Fund?
Loans may be used to finance eligible improvements for businesses, homes, or virtually any other building. Existing 1-4 Family Home projects may include heating, insulation, windows, and appliances. All other sectors may include renovation or new construction projects that install energy-efficient measures such as lighting, air conditioning, motors, and renewable energy technologies.
Can I purchase or lease a fuel efficient vehicle and be eligible for the Loan Fund interest rate reduction?
No, vehicles of any sort are not eligible for the Loan Fund rate reduction.
Are labor costs considered eligible expenses for the loan fund?
Yes. The Loan Fund will approve a project based on the cost to purchase and install the eligible equipment and any ancillary costs associated with the approved measure (e.g. new HVAC system requires ductwork; the cost for the ductwork and its installation are eligible).
Does every area of New York State qualify for Loan Fund benefits?
No, only those areas where utilities assess a System Benefits Charge (SBC) or the Renewable Portfolio Standard (RPS) which funds the New York Energy $martSM portfolio of programs. Projects can qualify for the Loan Fund if they are customers of the following utility companies: ConEdison, Orange and Rockland, Central Hudson Gas and Electric, New York State Electric and Gas, National Grid, or Rochester Gas & Electric. Excluded areas include Long Island and customers of the New York Power Authority and municipal utility districts.
Can KeySpan (now National Grid) gas customers on Long Island access NYSERDA benefits?
No, National Grid customers on Long Island do not pay into the SBC or RPS and are therefore not eligible for benefits through NYSERDA's programs. National Grid does have incentive programs to assist their Long Island customers run their business’ more efficiently. View National Grid's Web site for more information. Generally, a borrower is not eligible for NYSERDA benefits if their electric bill does not have an SBC assessment.
What are the loan amounts available from the Loan Fund?
Existing Commercial Buildings: Up to $1,000,000 per borrower
Multi-Family & Commercial Buildings (New Construction): Up to $1,000,000 per borrower plus an additional maximum of $500,000 for “green building” improvements where the building is registered LEED® - NC
Existing Multifamily Buildings: $5,000 per unit up to $2,500,000 plus an additional maximum of $2,500,000 for projects that include advanced meters (see program materials for details)
1-4 Family: Up to $20,000 per Borrower. Up to $30,000 for Con Edison customers.
Are the limits on the Loan Fund per applicant or per project?
The loan limit is per the life of the Borrower. If a Borrower has maximized the Loan Fund limit they are unable to access additional low interest financing through the Loan Fund.
How does the New York Energy $martSM Loan Fund work for the lending institution?
The bank or lending institution receives an up-front lump sum payment of the subsidy (at net present value) from NYSERDA within 30 days after NYSERDA’s receipt of closing documents -- for the full term of the loan (up to 10 years).
The program is beneficial for the lending institution for a number of reasons. First, the lump sum payment now belongs to the lending institution to invest as they wish. Second, the lending institution can use the program as a value-added service for clients. Third, the lending institution may be eligible for Community Reinvestment Act credits for certain loans.
The benefits extend beyond these tangible goals. Lending institutions who participate in the program know they are doing their share not only to better serve their client, but to improve energy efficiency in New York State.
How is the Lump Sum Interest Reduction Payment calculated?
The Lump Sum Interest Reduction Payment is determined by calculating the net present value (NPV), discounted at the Base Interest Rate, of the difference between the monthly payment of the Approved Loan Amount at the Base Interest Rate and the monthly payment at the Reduced Interest Rate over the term of the Loan not to exceed 10 years.
Can part of the loan be used for non-energy related improvements?
Yes. The lending institution uses its regular interest rate for any portion of the project that is non-energy related.
Can a project be financed for greater than 10 years?
Of course. A project can be financed for longer than 10 years, but the interest rate reduction will only be provided for 10 years.
How lengthy or difficult is the application process?
The application process is straightforward and relatively simple. However, it is extremely important that the applicant have his/her architect or engineer involved at the outset. If the submitted application is deemed complete, then it generally takes NYSERDA two to four weeks to approve.
If the loan has already been processed by the lending institution, can the client still apply for benefits through the Loan Fund?
No, existing loans cannot be refinanced through the Loan Fund.
Can the bank consolidate a client’s existing loans and be eligible for the Loan Fund interest rate reduction?
There is no refinancing allowed. A new loan must be created for improvements being implemented through the Loan Fund program.
A commercial client places a deposit down on equipment more than 30 days prior to signing the Loan Fund application. Can the costs of the equipment still be financed through the Loan Fund?
No, a deposit made on equipment more than 30 days prior to the Loan Fund date of application renders the equipment ineligible. (see Policy and Procedures Manual Section 6.3)
Can a client receive a reduced interest rate loan and apply for other incentives as well?
Yes, a customer can receive an incentive for a project through another NYSERDA program and still finance the cost of that project through the Loan Fund. For example, a borrower recently received a NYSERDA incentive for the purchase of a new chiller. The customer was then able to finance the cost to purchase and install the chiller through the Loan Fund without deducting the cost of the incentive. Some restrictions apply.
Can a client get New York Energy $martSM funds and still receive benefits from local, state and federal incentive programs?
Yes, however the source of funds and what the funds are being used for needs to be identified to NYSERDA for consideration as to the impact of the amount that may be financed through the Loan Fund.
Is a technical study of the energy project required by the Loan Fund?
It depends on the type of project. A technical study is required for commercial custom equipment and multi-family projects. The study can be completed up to six months prior to the initiation of the loan application.
Does each branch of a major bank need to sign up as a participating lender in the program?
No, once either the branch or main office of the bank is signed on as a participating lender, the bank is considered a participating lender. In many instances, it is not uncommon to initiate participation from the branch bank. NYSERDA representatives are available to meet with bankers across the state.
If a lender signs on with the program, does that mean the leasing arm of the lending institution is automatically participating?
No, a leasing company that is a subsidiary of a lender must independently sign a Lessor Participation Agreement.
Is the interest rate reduction based on a fixed or variable rate?
The interest can be a variable or fixed rate but the subsidy will be based on the interest rate at the closing of the loan. NYSERDA will not adjust the subsidy payment based on any changes in the rate over the life of the loan.
Can the Loan Fund reduce the interest rate on bonds?
No, the Loan Fund is not meant to be used with bond issuances.
What is the process for booking the loan?
The process is up to the lender. Some methods have been to recognize the subsidy as prepaid income, to carry the subsidy as a liability on the balance sheet, or to return the subsidy into a general fund to be loaned to other customers.
How do you represent the reduced interest rate in the bank note?
There are two ways: Either the lender can include the reduced rate in the body of the note or the lender can indicate the base rate in the note and attach a rider, provided by NYSERDA, indicating the reduced rate. The rider can be located on NYSERDA’s Loan Fund Web site
Does the bank have any responsibility to NYSERDA to track whether or not the loan payments are being used for energy-efficiency improvements?
No, the lender is only responsible to follow the loan for prepayments or default and to notify NYSERDA if either event occurs. In either of these instances, the lender would be required to pay back a pro rata amount of the subsidy payment.
Is the bank liable if the borrower did not use the loan for energy efficiency improvements?
No, the bank is not liable. However, in this case, the customer would be in default of the loan and the lender would be required to pay back the full subsidy amount.
If a customer defaults on the loan, when is the bank responsible for paying a pro rata amount of the lump sum back to NYSERDA? Is it the day of default or the day of collection?
The day of default. Under terms of the program, the bank must inform NYSERDA of the date they considered the loan in default and uncollectible. NYSERDA would consult with legal counsel to determine the pro rata amount of subsidy the bank must return on a case by case basis. Please note: currently there is a 0% default rate on Energy $martSM Loans.
If a lending institution books a personal loan to an individual that is involved in a commercial business and plans to use the proceeds from the personal loan to make energy-efficient renovations to the commercial business building, will that client be eligible to apply for the Loan Fund and use the proceeds from the loan to make energy-efficient renovations to the commercial building?
If the borrower is related to, or involved in, the company, the client can apply for a loan through the Loan Fund and the loan would be considered a commercial loan since the energy-efficient improvements are being done on a commercial building. NYSERDA would review and approve these situations on a case by case basis to evaluate the relationship between the borrower and commercial company based on the rules and regulations of the Loan Fund program.
Can a residential borrower who is taking a home equity loan out on his primary residence and is using the funds for energy-efficient improvements on his secondary residence be eligible for the Loan Fund?
Yes, assuming the borrower is making qualified improvements through an approved BPI-HPwES contractor, he can apply for the Loan Fund. Maximum eligible loan amounts and interest rate reductions are determined by the location of the property being improved.
After the project is finished is there a completion document certifying the work was done?
Yes, a Certificate of Project Completion must be filled out and submitted to NYSERDA by the customer and contractor upon completion of the installation of eligible improvements. The certificate of completion can be downloaded on the NYSERDA Loan Fund Web site.
Can the Loan Fund reduce the interest rate on home equity lines of credit?
The Loan Fund can be used with home equity loans and non-revolving lines of credit. Most home equity lines of credit are considered revolving and are therefore ineligible.
In the case where a lender assigns a loan or lease transaction with a NYSERDA component to another NYSERDA approved lender, are there any continuing obligations on the part of the original lender?
NYSERDA allows assignments and sales of loans/leases to be transferred under certain conditions. First, the terms of the original note or lease can not be changed. Second, NYSERDA requires that the original Lender be responsible for any and all obligations under the Loan Fund, for example, reporting the pre-payment of a loan or remittance of any return payment.
Are there restrictions if the owner of the project is not a US citizen?
No. However, please speak with a NYSERDA representative if the business is not incorporated in New York State.
When applications are approved by NYSERDA, are they committed dollars?
Once an application is approved, the dollars are set aside for the lender to apply to the borrower’s loan.
Do changes in the Terms and Conditions apply to funds already distributed other than default or termination issues?
Changes in terms and conditions would not impact funds already distributed.
Is their an anticipated end date on the program?
The program is set to close in July of 2009.
Why should my bank participate in the New York Energy $martSM Loan Fund program?
There are a number of reasons why it is important for your bank to participate in this program:
- Your clients will ask for it. The program is highly publicized across the state; your
clients will come to the bank asking if you participate in the program and if they can get an interest reduction for an energy-efficiency project.
- If your client wants a loan through the program and you are not a participating
lender, they will simply take their business to another bank that is a participating lender.
- It’s simply the right thing to do. Do your part to help the environment.
Where can I find a list of the Participating Lenders and Lessors?
A list of Participating Lenders and Lessors are located on our Loan Fund Web site
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