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On-Bill Recovery Financing Program Frequently Asked Questions

On-Bill Recovery Financing Program Frequently Asked Questions for Small Businesses and Not-for-Profits

Q: What is the On-Bill Recovery Financing Program?
A: On-Bill Recovery Financing is a low-interest loan that eligible customers can use to finance the cost of recommended energy efficiency improvements to their facilities. Customers repay their On-Bill Recovery loan through a charge on their electric and/or gas utility bill.

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Q: How do I apply for an On-Bill Recovery Financing loan?
A: Before applying for an On-Bill Recovery loan, small businesses and not-for-profit organizations must obtain a Qualified Energy Assessment through a NYSERDA program, a utility program or from a Qualified Energy Consultant that meets NYSERDA standards. NYSERDA’s Small Commercial Energy Efficiency Program offers free Qualified Energy Assessments to eligible small businesses and not-for-profit organizations.

The Qualified Energy Assessment will recommend energy efficiency improvements the organization can make to lower its energy bills and reduce its environmental impact. The organization must then decide which recommended improvements it would like to finance.

Once the organization chooses the improvements it wants to finance, it must obtain contractor quotes on the cost of doing the work and submit a complete and signed Request for a Financing package to NYSERDA by email at gjgnysbnfp@nyserda.ny.gov or mail to:

Small Commercial Energy Efficiency Financing
Attention: Kathryn Fantauzzi
17 Columbia Circle
Albany, NY 12203-6399

Required forms and application instructions can be found on NYSERDA’s Small Commercial Energy Efficiency Financing webpage.

If NYSERDA approves the organization’s Request for Financing package, the organization can take the NYSERDA-approved Request for Financing package and approval letter to a lender of its choice to apply for an On-Bill Recovery loan.

Any of the following lending institutions are eligible to issue On-Bill Recovery loans once they have signed a Loan Originator Agreement with NYSERDA.

  • Community Development Financial Institutions
  • Credit unions insured by the National Credit Union Association
  • Commercial banks
  • Trust companies
  • Savings banks
  • Savings and loan associations
  • Mortgage Lenders

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Q: What Lending Institutions issue On-Bill Recovery loans?
A: A list of lending institutions that have already signed up to offer On-Bill Recovery Loans can be found on NYSERDA’s Small Commercial Energy Efficiency Financing Webpage.

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Q: What if my lender is not signed up to offer On-Bill Recovery loans?
A: If the organization’s preferred lender is not already signed up to offer On-Bill Recovery loans, the customer can ask the lender to sign and complete the Loan Originator Agreement [PDF] and send it to NYSERDA for approval. Once NYSERDA receives and signs the Loan Originator Agreement, the lender can issue On-Bill Recovery loans.

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Q: How do lenders approve On-Bill Recovery loan applications?
A: Participating lenders will issue On-Bill Recovery loans to organizations with NYSERDA-approved Request for Financing Packages that meet NYSERDA’s underwriting criteria.

NYSERDA’s underwriting criteria:

  • Credit score (for principals of small business) of 650 or better
  • Organization in existence for at least 2 years.
  • No bankruptcy in last 5 years
  • No current judgments or liens in excess of $5,000
  • Debt service coverage ratio of 1.2 or greater

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Q: What small businesses are eligible for the program?
A: Small businesses with 100 employees or fewer are eligible if they 1) own their building or 2) lease or manage all or part of the building and have a release from the building owner to apply for financing through the program. In addition, the applicant or co-applicant must have a Qualified Energy Assessment from NYSERDA, a utility or a Qualified Energy Consultant and must be named on the utility account of one of the participating utilities.

Participating Utilities:

  • Central Hudson
  • Con Edison
  • Long Island Power Authority
  • National Grid (upstate NY customers only)
  • New York State Electric and Gas Corporation
  • Orange & Rockland
  • Rochester Gas and Electric

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Q: What not-for-profit organizations are eligible for the Program?
A: Not-for-profit organizations are eligible if they 1) own their building or 2) lease or manage all or part of the building and have a release from the building owner to apply for financing through the program. In addition, the applicant or co-applicant must have a Qualified Energy Assessment from NYSERDA, a utility, or a Qualified Energy Consultant and must be named on the utility account of one of the participating utilities.

Participating Utilities:

  • Central Hudson
  • Con Edison
  • Long Island Power Authority
  • National Grid (upstate NY customers only)
  • New York State Electric and Gas Corporation
  • Orange & Rockland
  • Rochester Gas and Electric

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Q: Why does the business or not-for-profit have to sign a Declaration?
A: The borrower signs a Declaration to provide notice of the obligations under the loan to any subsequent purchaser of the property. If the borrower is not the owner of the property, the owner must sign the Declaration and have it notarized. The Declaration does not represent a lien on the property, but is recorded in a similar way as a mortgage.

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Q: When did the On-Bill Recovery Financing Program for businesses and not-for-profits start?
A: It began on May 30, 2012 for small businesses and not-for-profits.

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Q: What energy improvements this program cover?
A: On-Bill Recovery Financing covers energy efficiency improvements identified in a Qualified Energy Assessment provided by NYSERDA, a utility program or a Qualified Energy Consultant to be installed in a building or space occupied by a small business with 100 employees or less, or by a not-for-profit organization. To qualify for an On-Bill Recovery loan, the amount of money the organization is expected to save on its utility bills each year as a result of the project must exceed the organization’s annual loan payments. In addition, the estimated energy savings from the project must be sufficient to pay off the upfront cost of the project within 15 years.

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Q: Is there a maximum revenue level to participate?
A: No.

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Q: Will businesses and not-for-profits really see no increase in their energy bills because the financing of energy improvements will be offset by their energy savings?
A: The loan will be designed so that projected annual energy cost savings will exceed annual loan payments. However, an organization’s monthly utility bills may not always be lower as a result of the project if, for example, the organization stays open for more hours, increases its energy use or if energy prices vary.

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Q: How much is the maximum amount of the loan?
A: The maximum amount of the loan is $50,000.

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Q: What are the financing terms?
A: The interest rate currently is 3.0%. The loan term cannot exceed 10 years.

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Q: Will participation loans through Green Jobs-Green NY still be available or do businesses and not-for-profits have to use On-Bill Recovery to get a loan from NYSERDA?
A: Participation loans will still be available. The On-Bill Recovery loan is an additional financing option.

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Q: What are the credit standards?
A: Credit score of 650 or higher. No bankruptcies within the last five years. No judgments or liens in excess of $5,000. Debt service coverage ratio of greater than 1.2. In addition, the organization must have been in existence for at least two years.

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Q: Will NYSERDA have a list of participating lenders on the NYSERDA web site?
A: Yes. A list of Participating Lenders can be found on NYSERDA’s Small Commercial Energy Efficiency Financing Web page.

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Q: What utilities are participating in On-Bill Recovery?
A: The law requires that the following utilities participate: Central Hudson, Con Edison, Long Island Power Authority, National Grid (upstate New York customers only), New York State Electric and Gas Corporation, Orange & Rockland, Rochester Gas and Electric.

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Q: Does the business or not-for-profit have to use certain contractors to participate in On-Bill Recovery?
A: A small business or not-for-profit owner may use any contractor to do the energy efficiency work. For assistance in choosing a contractor, NYSERDA maintains a list of NYSERDA-trained Business Partners in lighting, heating/cooling and air conditioning (HVAC), and motors. These Business Partners can assist an organization in choosing the right energy efficiency equipment for its building and business, and guide it through the NYSERDA incentive application process. The list of NYSERDA Business Partners can be found on the NYSERDA website.

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Q: When does the business or not-for-profit need to start paying back the loan?
A: Payments begin within one or two utility billings after the contractor has completed work. If the project is not completed within 90 days of receipt of the loan proceeds, then the loan will be payable directly to NYSERDA in full.

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Q: Who pays the contractor?
A: Loan proceeds are paid to the borrower, who pays the contractor.

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Q: What happens if the business or not-for-profit doesn’t pay this portion of his/her utility bill?
A: A late payment charge will be incurred during any timeframe in which the customer is no longer receiving a bill from the utility (if the utility terminates the customer’s service for nonpayment; if the customer requests the utility terminate the service; and if the customer requests temporary service suspension). During this timeframe, the customer will receive a direct statement billing from NYSERDA’s Loan Servicer. If the customer does not pay that bill when due, the account will be subject to a late payment fee of 1.5% of the unpaid principal and interest charges.

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Q: Is there a penalty for pre-payment?
A: No.

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Q: Is there a minimum loan amount for an On-Bill Recovery Loan?
A: No.

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Q: Does the business or not-for-profit have to pay off the loan if it sells the building?
A: No. The loan is transferable to the new owner unless the parties agree that it will be fully paid prior to transfer. Likewise, a business or not-for-profit that leases a space need not pay off a loan at the end of its lease unless the parties agree that it will be fully paid off prior to the end of the lease.

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Q: How will the On-Bill Recovery Financing Program affect oil and propane customers?
A: Oil and propane customers who implement recommendations from a Qualified Energy Assessment are eligible for the On-Bill Recovery Financing Program. The cost of energy improvements will be on their electric bill. Their electric bill will, therefore, increase and savings will be found on their oil or propane bill.

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Q: Can a customer who purchases electricity and/or natural gas from an Energy Services Company (ESCO) with billing provided by a participating utility receive an On-Bill Recovery Loan?
A: Yes, a customer who purchases their electricity and/or natural gas from an ESCO, but is billed by a participating utility, is eligible for an On-Bill Recovery Loan.

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Q: When did the On-Bill Recovery Financing Program law pass and what was its purpose?
A: The bill was passed by the New York State legislature in June 2011 and signed into law by Gov. Andrew Cuomo on August 4, 2011. Its purpose is to provide a mechanism to encourage New York homeowners, businesses, not-for-profits, and multifamily building owners to make energy-efficiency improvements to reduce energy consumption and carbon emissions.

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Last Updated: 08/27/2014