FOR IMMEDIATE RELEASE
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Lateshia Parker
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LANSING, Mich. —A new loan program from Michigan Saves will help low- to moderate-income Detroiters and nonprofit organizations more easily access financing to update buildings and electrical systems to greener, cleaner and more cost-effective technologies. The new loan program will launch on Wednesday, June 1, 2022.
Funded through a $2.5 million program-related investment from The Kresge Foundation, Michigan Saves’ loan program will address a long-standing financing gap that results in some property owners being unable to invest in needed upgrades that would reduce electrical bills and further climate change mitigation efforts.
Through this program, Michigan Saves will make loans directly to home, property or business owners and community organizations. This is a shift in its typical operating model, which to date has involved working with outside lenders to supply financing products for energy efficiency and renewable energy systems for homes, businesses and nonprofits throughout Michigan.
Many of those traditional lenders emphasize credit scores in loan approval processes, one reason so many Detroiters have been locked out of the clean energy market.
“By lending directly to these consumers and organizations, we want to demonstrate that there is both demand and the ability to repay from residents and organizations in Detroit,” said Mary Templeton, Michigan Saves’ president and CEO. “Traditionally, lenders have used credit scores in their decision making. We believe we can build the case that loan approval processes can be more equity-focused and less dependent on these scores, which reflect the reality of systemic racism.”
A Michigan Saves study conducted in 2018 found loan applications from individuals and businesses for energy retrofitting or energy-efficient equipment purchases (such as efficient HVAC systems or solar panels) were denied at about twice the rate in Detroit as compared to other residents of Wayne County. Templeton said that similar issues exist in other Black-majority cities and for minority-business owners across the state.
The Kresge loan comes from the foundation’s Social Investment Practice, which uses nongrant forms of funding to advance the foundation’s mission of expanding opportunity in America’s cities. To date, the foundation has used these impactful investing tools to infuse more than $140 million in Detroit projects and more than $30 million nationally in projects connected to its climate change adaptation and mitigation strategy.
“Credit scores are inherently flawed, particularly for borrowers who are Black, Indigenous, and People of Color, and a barrier to equitable access to financial products not just in energy retrofitting but in many areas of traditional finance,” said Joe Evans, a Kresge social investment officer and portfolio director. “This investment will further the evidence base showing other ways to distribute lending more equitably. We also believe green banks like Michigan Saves play a key role nationally as federal funds come into the climate infrastructure space. We hope this investment will position Michigan Saves and other organizations like it to be go-to partners to implement those federal dollars.”
The program will recruit Detroit-based contractors to manage the installations and create partnerships with community-based organizations to help build trust and market the program to targeted Detroit neighborhoods. The majority of the funds will be lent to Detroit-based residents and organizations, while up to 30% will be available for projects across the state.
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About Michigan Saves
Michigan Saves is a nonprofit dedicated to making energy improvements easier for all Michigan energy consumers. To accomplish this, Michigan Saves makes affordable financing and other incentives available through partnerships with private-sector lenders. We also authorize and monitor a network of contractors and recognize those with advanced training. Our current portfolio includes programs for residential, commercial, multifamily and municipal customers, and supports energy-efficiency, geothermal and solar photovoltaic projects. For more information, visit www.MichiganSaves.org.
About The Kresge Foundation
The Kresge Foundation was founded in 1924 to promote human progress. Today, Kresge fulfills that mission by building and strengthening pathways to opportunity for low-income people in America’s cities, seeking to dismantle structural and systemic barriers to equality and justice. Using a full array of grant, loan, and other investment tools, Kresge invests more than $160 million annually to foster economic and social change. For more information, visit www.Kresge.org.
