What do upgrading drafty windows, improving aging HVAC systems, replacing old light fixtures, sealing air leaks and adding more insulation have in common? They’re all good ways for owners of multifamily dwellings to create a more comfortable living environment for their tenants. Those efforts can also lower energy expenditures, give residential proprietors a competitive edge and keep out pesky bugs and rodents.
Securing financing to make such improvements hasn’t always been easy, but that’s about to change. Michigan Saves recently brought on a second lender — Team Financial Group, an independently owned financial service company headquartered in Grand Rapids, Michigan — to boost its commercial financing capacity.
“Since early 2014, we’ve had one partner — Ascentium Capital — serving the business, multifamily and public sector markets,” says Michigan Saves program coordinator Todd O’Grady. “While they’ve done an excellent job, there is a growing need for more financing options, particularly in the affordable housing and solar markets. We want to be on the forefront of meeting that need.”
To that end, in January 2016, Michigan Saves issued a request for information (RFI) to see if it could find a Michigan-based lending partner with competitive interest rates that could, among other things:
- Better serve the affordable housing market by reducing or removing security requirements
- Offer extended terms for solar investments
- Commit to fast approval times and strong approval rates
“We received six responses to the RFI, met with four potential lenders and happily selected Team Financial as our newest partner,” says O’Grady.
One of the biggest challenges related to making financing easy and accessible in the affordable housing market is the Uniform Commercial Code (UCC)-1 form, which is used to protect a creditor’s security interest and establish priority in case of default or bankruptcy. Because of the way many lenders borrow money and structure financing, they have to use this form when serving commercial markets. But Team Financial, which operates independently and has its own cash reserves, does not. As a result, the company can complete more deals than other lenders, close those deals more quickly and generally increase the affordability of energy upgrades.
“Team Financial offers unsecured financing at its finest,” explains O’Grady. “Their flexibility and responsiveness will allow us to reach more audiences and help them make energy improvements at a much faster pace.”
The addition of a new lender to the Michigan Saves family also demonstrates the organization’s ongoing commitment to listening and responding to commercial contractors.
“For quite some time, our authorized contractors have told us that they could do more solar work — another underserved market — if their customers could get longer-term financing,” O’Grady says.
Longer terms are necessary because most solar projects are comparatively expensive and, consequently, take longer to pay off. For example, in 2015, the average amount financed for a renewable energy project funded through Michigan Saves was approximately $84,700.
Team Financial offers 84-month terms for solar, compared to most other lenders, which only offer 60–month terms.
“This is a really important step for our organization,” says O’Grady. “We’re always trying to find new ways to help different markets access sound financing options for the improvements they want to make.”
If all goes well during the first six months of the partnership, Team Financial will expand its service beyond multifamily and solar into the commercial business and public sector markets — two areas where Michigan Saves and its current commercial lender have already established a solid foothold for financing innovative energy improvements.