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person stacking coins to show how PACE loans fund efficiency projects for buildings
PACE loans are a great financing option for many types of projects.

As interest grows in PACE loans, many people wonder what the difference is between commercial and residential PACE. Currently, there are 37 states with PACE legislation, most of them offering CPACE options. California, Missouri, and Florida are currently the only states offering residential options. In this article, we’ll discuss some of the differences between these two types of financing. 

What are PACE Loans?

PACE financing is a unique loan option to help property owners make key upgrades and improvements. Specifically, qualified upgrades generally include those that increase energy efficiency, adopt renewable energy, reduce water consumption, or improve resiliency. Some of the main benefits of Property Assessed Clean Energy loans is that they offer a low cost, long-term financing option for upgrades that increase the value of the property (and likely decrease everyday costs for things like electricity use). There are two main types of PACE loans: residential and commercial. 

CPACE Financing for Commercial Buildings

Commercial PACE, also known as CPACE financing, is where commercial property owners use PACE loans to fund eligible projects. Qualifications vary from state to state. However, generally if a project will improve the efficiency or sustainability of your property, it may be eligible. Some states also allow projects to improve resiliency.

PACE loans can fund up to 100% of hard and soft costs for a project. Projects must involve a permanent fixture to the building.  For instance, upgraded HVAC systems or LED lighting. Also, it must provide cost-savings over time to cover the costs of the loan. 

CPACE loans are paid back as an assessment on the property tax bill and typically last between 10 and 30 years. This financing option also features low interest rates, making it an incredibly attractive option for many property owners. The loan also stays with the property if you decide to sell, which many people see as an added advantage. 

PACE Financing for Residential Borrowers

Now, we should mention that we don’t lend to consumers. We are a direct commercial PACE lender, so we don’t provide residential PACE loans even in the states where there are active programs. However, it may be helpful for you to know the differences between these programs. 

Like CPACE financing, you can use these PACE loans for eligible upgrades to a residential property. The payment options are the same, as are most of the details of the loan. The main difference between commercial and residential PACE financing is that residential programs typically have more stringent consumer protection rules, like detailed income verifications, verbal confirmations for low income borrowers, and credit score review. However, as more states will likely adopt these PACE programs, time will tell what other differences may arise for commercial and residential customers interested in PACE loans.

Stonehill – Your Source for Flexible Commercial PACE Loans

When you need low cost, flexible financing options for upgrades for your commercial property, our team at Stonehill PACE is here to help. We work with commercial property owners and developers to provide PACE funding for construction and renovation projects of all kinds in participating PACE states. Contact us today to set up a consultation with our team and learn more about our PACE lending solutions.