Bridge Financing
Ready to accelerate your clean energy transition without breaking the bank? The Inflation Reduction Act (IRA) of 2022 offers significant new tax credits for governmental organizations and nonprofits for clean energy projects like solar, batteries and geothermal heat pumps, covering up to 30-70% of the project cost. But the timing can be a challenge. Nonprofits, tribal, and other government organizations often face the dilemma of funding up-front costs for projects while waiting for tax credit refunds. Michigan Saves is piloting a financing program that provides affordable short-term bridge funding for qualifying clean energy improvements under the IRA. This financing prefunds the estimated investment tax credit for eligible upgrades, with the funding paid back in full when the credit is received from the Internal Revenue Service.
This means you can start and complete your clean energy project without the financial burden of up-front costs.
How Does it Work?
- Proof of 501(c)(3) status
- Project scope of work, cost estimate, and schedule
- Description of tax credits being sought (contact Michigan Saves or Team Financial Group for more information)
- Copy of application to utility to interconnect solar facility
Upon review of these materials, Michigan Saves or Team Financial Group may follow up for additional underwriting documentation, including, but not limited to:
- Two years of financials (audited, compiled, or reviewed)
- Approval from governing body
- Applicable permits
- Evidence of borrower’s contribution
- Articles of incorporation and/or bylaws
Bridge Financing Facts
Eligible properties and entities: Facilities owned or operated by nonprofit organizations and governmental entities (e.g., local, state, and tribal governments and public school districts) eligible for direct pay tax credits under the IRA.
Eligible measures: Solar (less than 1 megawatt in nameplate capacity), geothermal heat pumps and battery storage that are eligible for the ITC. No minimum utility bill savings required unless needed for specific low-income tax credit bonuses.
Financing amount and term: $20,000–$250,000
Term: Upon receipt of direct pay credits with maximum term of 24 months
Interest rate: 3.99% APR
Fees and expenses: 1% origination fee and $250 documentation fee
Collateral: Proceeds from direct pay tax credits for financed project as set forth in financing agreement and a UCC filing on the equipment
Please note: Michigan Saves will not make a determination of your organization’s eligibility to earn the ITC or direct pay and recommends seeking input from a qualified tax expert to navigate the available tax credits.
