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Category: Lender Insights

Utility Costs Are Rising & PACE Funding Can Help

PACE Funding – Stonehill PACE
Did you know that you can use PACE funding to upgrade your lighting systems to save your business money in electricity bills?

Overhead costs are a fact of life for your company. However, utility costs could be causing your overhead to be exceptionally high. Luckily, PACE funding offers you low-cost financing for improvements that can help save you in electricity costs. Learn more about why your utility costs are so high and how you can reduce them easily and inexpensively.

Rising Utility Costs Can Hurt Your Business

You’ve likely noticed that your company’s utility bills are going up. In fact, utility costs are on the rise and are likely going to continue to increase. Over time, this can cost you a lot in overhead and impact your profits. Therefore, you may need PACE funding to cut utility costs and stay in business.

In the commercial sector, the current national price for one kilowatt hour (the amount of electricity you would use running a 1,000-watt appliance for one hour) is $10.60. However, the U.S. Energy Information Administration forecasts a 15-cent increase from that price in 2021. In the industrial sector, the price is expected to jump from $6.86 to $6.98. While a twelve or fifteen cent increase doesn’t seem like much, it can really add up. The U.S. Department of Energy, the average commercial facility uses about 22.5 kilowatt hours for every square foot of space. Therefore, long-term costs can become quite high.

Save With PACE Funding for Your Improvement Projects

PACE funding is a low-cost financing option that you pay each year as a special assessment on your property tax bill. The loan requirements for CPACE financing include projects that provide lasting value to your building. Additionally, the savings from your project should not only last longer than the loan term, but also exceed the cost of the loan. Therefore, PACE funding is a great way to invest in improvements that can help you save on utility bills.

However, there are some restrictions for PACE funding. Just as the loan stays with the building, the improvements also must be permanent to the building. Therefore, you can’t use PACE loans for appliances. Some examples of projects that you might be able to use CPACE financing for include:

  • Installing more efficient lighting
  • Upgrading your HVAC systems
  • Installing high efficiency chillers
  • Replacing fixtures with low flow water fixtures

To determine if the improvements you want to perform are PACE approved, talk to your PACE lenders about the particulars of your project. They can help you through the qualification project without increasing the cost or scope of your plans.

At Stonehill PACE, we specialize in providing PACE financing for commercial properties. We have unparalleled experience in the PACE lending industry and can help streamline the process for your approval and application. Our team of professionals maintain close relationships with PACE program administrators to stay up to date with each state’s PACE programs. Contact us today to start the approval process. We look forward to working with you.

How CPACE Financing Helps You Make Improvements

CPACE financing - Stonehill PACE
You can make your building look and function like it’s brand new again using CPACE financing.

Businesses often have a list of improvements they mean to take care of, but don’t have capital available to make these improvements. Luckily, CPACE financing can help your company make these changes without negatively affecting your cash flow. While many people know that they can use CPACE financing for major renovations or new construction projects, businesses can also use PACE loans for smaller upgrades and even to finance resiliency projects.

There are many advantages to using CPACE financing for your improvements. For example, you can use this funding to increase your building’s value and marketability. Additionally, PACE loans can fund 100% of the hard and soft costs for PACE approved projects. Therefore, if you have a list of changes you wish to make, consider talking to your PACE lenders about how they can help.

Using CPACE Financing for Interior Systems

CPACE financing isn’t just for major projects. In fact, you can use this loan program for systems like HVAC upgrades or new lighting systems. You can even use PACE loans for roof replacement projects. The CPACE program allows business owners to make upgrades to their buildings that are cost-efficient and help you save in the long-term. Therefore, if you have older lighting systems, HVAC units, or a failing roof, CPACE may be able to help. Using CPACE financing, you can make improvements to your building that you simply didn’t think you could before. Additionally, this financing option allows you to pay off the loan over a long period of time as a line on your property tax bill. Therefore, this low-cost financing option is great for small and large projects that will improve your building and your business.

PACE Loans Can Be Used for Structure Hardening

Resiliency projects designed to help your building withstand disasters are also a great way to protect your livelihood. Unfortunately, many companies put these improvements on the back burner, as they often require a fair amount of up-front capital. Luckily, under PACE programs, many states allow you to receive PACE loans to help fund these structure hardening improvements. These alterations help reduce damage, injuries, and outages during disasters. Therefore, CPACE financing helps protect your company from unpredictable and devastating events without hurting your bottom line.

Therefore, there are many ways you can use CPACE loans for your business. At Stonehill PACE, we are a leading PACE lender that works with commercial property owners to help fund new construction, recapitalization, and value-add projects. As a leading provider of PACE loans, we understand how to help you finance these enhancing projects. Our experts will handle all the aspects of the PACE qualification process so you can focus on your daily operations. Call us today at (678) 823-9313 to discuss your options with our team and learn more about the PACE program. We are here to serve you.

How PACE Funding Differs from Mezzanine Financing

Since PACE funding is a relatively new financing option, you may wonder how it is different from mezzanine financing. They are similar in some ways, however there are some major differences between mezzanine financing and PACE funding. Because of this, it may make more sense to use one or the other to finance your project. Knowing what each entails will help you make a wise decision regarding how you finance your projects.

Mezzanine Financing

Mezzanine financing is typically used to expand established institutions. They are generally not utilized during the early stages of a company’s founding. This type of financing bases funding on property equity. If the borrower defaults on the loan, the lender can convert to an equity interest after senior lenders are paid.

For borrowers, mezzanine loan interest is tax deductible. If need be, the interest on the loan can generally be deferred should the company not be able to pay it.  However, for these perks, the borrower gives up some control because they sacrifice equity to receive this type of financing.

PACE Funding

On the other hand, PACE funding can be used for new construction or for major renovations. PACE loans are based on the total project value and can finance as much as 25% of the value of the building you are constructing or renovating. However, repayment is done through property tax assessments. They offer a fixed rate, which is different than mezzanine financing. Additionally, should you sell your property, your PACE funding can transfer to the new owner. Overall, CPACE offers fewer risks than traditional mezzanine funding.

As your PACE lenders, Stonehill PACE can help you maximize your PACE proceeds without changing the scope of your project or adding on costly features. Our team has unparalleled experience in PACE financing, with knowledge of each state’s legislation and programs. We also work with you to help you through your new construction or major renovation projects. We simplify the process for you and maximize your returns. Call Stonehill PACE today at (678) 823-9313 to learn how we can help you finance your construction project. We look forward to the opportunity to work with you.

The Advantages to Using CPACE Financing

You may be wondering if CPACE financing is right for your company. It can be difficult to decide whether this financing solution is attainable or attractive for you. As you are weighing the options, keep in mind that there are many advantages to using PACE funding for your commercial construction or redevelopment projects.

Easier Loan Approval

CPACE financing, or C-PACE, can be easily obtainable. This type of loan is less about your FICO score than many other financing options. Typically, PACE qualification is a fairly straightforward process. For example, some requirements include being up to date on any property taxes, getting an appraisal, and ensuring that you have financial statements or projections.

PACE Loans Can Be Sold with the Property

Because PACE loans are tied to the property, you won’t necessarily have to pay off the loan. If you sell your property, the loan goes to the buyer. This is a great advantage to PACE funding, as it means that you aren’t on the hook for the loan after selling your newly constructed or redeveloped property.

Repayment Is Spread Over Years

Additionally, another benefit of using CPACE financing for your project is that you can pay it off over several years. Therefore, you can make relatively small payments toward the loan if you need to. Repayment is typically in a time period between 10 to 20 years, so it will not be a huge burden on your business to quickly pay back the loan.

So, as you look at different financing options, you shouldn’t rule out PACE funding. It can be beneficial for your commercial construction projects, as qualification and repayment can be simpler than other types of loans.

If you are considering a commercial PACE loan, Stonehill Pace can help. We are a direct PACE lender and specialize in commercial funding. Our focus is on new construction and major redevelopment projects for businesses. We work with many different property types, like hotels, senior housing, and offices. Call us today at (678) 823-9313 for more information or to get started on your PACE financing approval. We are always here to answer any questions and look forward to the opportunity to serve you.