More loans for SMEs to help save energy and survive recession

The Carbon Trust claims thousands of SMEs have already slashed their annual energy bills – some by as much as 75 per cent – by installing new energy-saving equipment paid for by its Government-funded loans.

It has now extended the range of loans available, offering loans as small as £3,000 to bring funding within the reach of micro businesses. The previous minimum was £5,000.

According to the Carbon Trust, a loan of this size might fund a new energy efficient boiler, refrigeration, lighting or cooking equipment for businesses such as independent retailers, franchisees and caterers.

At the same time it has doubled the maximum loan available to £400,000, meaning it can give more help to SMEs with high energy spends – such as those in the manufacturing sector – wanting to switch to more modern, less power-hungry equipment.

“Small and medium businesses are the backbone of the UK economy and key to the move to the low carbon world,” said Carbon Trust ceo Tom Delay announcing the new loan terms today. “We are extending a helping hand to them by offering more than £100 million in interest-free, unsecured loans at a time when bank funding is hard to come by.

“Our zero per cent loan offer is as close to free money as a business can get, and is flexible enough to help almost any small or medium business, from the corner fish and chip shop to a factory.”

The Carbon Trust says most businesses taking one of its loans find that the savings made on their energy bills more than cover the cost of the loan repayments.

The Cavan Bakery in Hampton Hill, Middlesex took out a £31,000 loan in 2008 to replace its aging oven and electric boilers with a new energy efficient gas powered steam oven. Since then, its gas consumption has dropped by 75 per cent and it is also saving 500 units of electricity each month.

The Carbon Trust expects to deliver more than £100 million in loan funding to UK SMEs over the next two years, including almost £84 million allocated by the Government in its Budget in April.

Also fulfilling a Budget pledge, the Carbon Trust announced earlier this month that, in partnership with the Government and Salix Finance, it would be making £51.5 million of interest free loans available to help public sector organisations take advantage of energy efficiency technology.

Minister for Energy and Climate Change, Joan Ruddock said at the time: “We estimate this fund could help public sector bodies save around £14 million per year in fuel bills [...] I hope that schools, hospitals, and fire stations will look into projects they can undertake, and use this funding opportunity.”

In all, the 2009 Budget promised a £375 million package of support for energy and resource efficiency initiatives in the public and private sectors.