Record Growth in Business Energy Financing Program

Michigan Saves' Business Energy Financing Loan Volume

Michigan Saves’ Business Energy Financing Program gained steam in 2014, exceeding our goals with tremendous growth starting in the first quarter. Our success was fueled by a combination of better communication, a new lending partner and a successful utility partnership.

Satisfied customers in 2014 included a Detroit grocery store, a suburban Detroit fine wine and liquor store, a hotel, a country club and an art boutique. Energy and cash savings were just some of the great benefits realized by these businesses.

“The new lighting has been wonderful,” says Sue Brunet, general manager of Baraga Lakeside Inn. “It’s a better quality light that doesn’t cost nearly as much to operate.”

“We had twice as many customers in 2014 as we had in the entire preceding two years,” says Laura Palombi, operations manager for Michigan Saves.

The Business Energy Financing program, which launched with a pilot in 2011 and expanded statewide in 2012, has seen steady growth since its inception. Two years in, however, a deeper understanding of the commercial energy-efficiency market drove growth to a whole new level.

“We got better at communicating our value to our contractors,” says Palombi. “At Michigan Saves, we’re barrier busters; we go to places where the market is currently being underserved, and we figure out how to serve that market. That was the case with the small commercial market; we had to figure out what was most important to our contractors and their customers. Most importantly, we had to make sure that the lending community understood how important a segment this particular demographic really is.”

And those efforts resulted in real benefits for participating businesses.

“In the end, we were convinced by the numbers,” says Sam Bahoura, co-owner of Liberty Food Center. “We did this project to save money, and we’ve been really happy with the project.”

“We needed a ‘wow’ effect, and we got it,” says Amy Zane, owner of Amy Zane: Store & Studio.

Zane worked with Michigan Saves to obtain financing for a lighting upgrade in her downtown Kalamazoo jewelry boutique.

“There is no comparison between the lights we had before and the lights we have now. The new lighting shows how gorgeous the art is.”

A New Lending Partner

In 2014, Michigan Saves partnered with Ascentium Capital for its business lending program. Through its loan-loss reserve fund, Michigan Saves provides protection against defaults for the energy loans made by its lending partners.

“This is our bread-and-butter work,” says Palombi. “We find lenders who are willing to put up capital in this area. They see value in the services we offer through our loan-loss reserve, and feel emboldened to become strong allies and more involved in this market.”

Jeff Abdelnour, owner of Meadow’s Fine Wine and Liquor, agrees.

“At the end of the day, it’s got to be about the bottom line. But, in addition to that, the new LED lights and cooling fans are great products.”

Having a lending partner that is committed to Michigan Saves’ mission is critical. Since Ascentium Capital became Michigan Saves’ commercial lender, application approvals have surged to 85 percent.

“Michigan Saves is a great organization that helps businesses finance equipment and measures to help them save energy,” says Josh Patton, vice president of sales for Ascentium Capital. “We saw an opportunity to provide our unique finance platform, which allows us to deliver flexible financing, to help the Michigan Saves program grow and accomplish their goals in energy savings for businesses across the state.”

Group of three people standing on a balcony“It just made sense,” says John Matway, energy manager of Dearborn Country Club. “When we factored in the rebates from the utility companies and how much energy we would save, the board knew it was a good decision.

Michigan Saves partnered with utilities to offer an interest rate buydown program in 2014. Utilities participated to buy down the interest rates on Michigan Saves’ Business Energy Loans, achieving rates as low as 2.99% APR. Utility partners in this program included Consumers Energy, DTE Energy and Lansing Board of Water and Light.

“This buydown lit a fire under our commercial program by making the financing very affordable for our business clients, many of whom operate under extremely tight margins,” says Palombi. “This assistance made the payback period even more attractive. It made the difference between people thinking about energy efficiency and actually doing it.”