Small Business Pollution Prevention Revolving Loans
Purpose: The Small Business Pollution Prevention (P2) Loan Program was established to provide eligible small businesses with low-interest loans to implement P2 projects. Projects may either be identified through a waste reduction assessment under the Retired Engineers Technical Assistance Program (RETAP) or by the loan applicant.
Goals of the Program: To remove financing barriers for small businesses in Michigan by offering low-interest loans for projects that reduce waste, or conserve water or energy. The program provides an incentive for small businesses to initiate or expand on P2 activities in order to reduce waste, energy, and water usage and save money.
Criteria: This financial assistance is available to any business that is independently owned and operated, is not dominant in its field, and employs 500 or fewer individuals. Projects considered for funding must meet the regulatory criteria for P2 (see "Eligibility" below). In addition, the applicant's lending institution must be willing to finance the project and participate with the DEQ in the loan. The maximum loan amount is $400,000 with the DEQ contributing a maximum of $200,000.
Eligibility: To be eligible, a P2 project must reduce waste generated by the facility, reuse or recycle that waste in an environmentally sound way, or reduce water or energy usage. Although P2 recommendations from a RETAP assessment are considered eligible, a RETAP assessment is not a prerequisite; any business may apply directly for P2 project funding. Types of projects that may be funded include:
- Equipment or technology modifications.
- Process or procedure modifications.
- Redesign of products and substitution of raw materials.
- Improvement in housekeeping, maintenance, training, or inventory control.
- Certain energy efficiency or water conservation improvements.
- Agricultural energy production systems.
Application and Loan Disbursement Process:
- A qualifying small business (500 employees or less) applies for a loan directly to the lending institution.
- The lending institution makes a determination as to whether the business is creditworthy, in accordance with that institution's lending policies.
- The DEQ reviews the application (which is either submitted by the small business or lending institution) to determine whether it meets the loan program and eligibility requirements criteria.
- After the DEQ approves the project, it works closely with the lending institution to prepare the loan documents. The DEQ relies on the lending institution to structure the loan within the program's parameters: maximum loan amount of $400,000, with interest rate not to exceed five percent.
- The total amount of the loan is shared equally by the lending institution and the P2 Loan Fund.
- The lending institution and DEQ sign a Lender Agreement that specifies responsibilities with regard to the loan participation; the borrower signs a Supplemental Agreement with the DEQ.
- The DEQ disburses its portion of the loan proceeds to the lending institution after an executed loan agreement between the lender and borrower is received by the DEQ. The lending institution receives loan repayments and remits DEQ's portion either monthly or quarterly.
- The lending institution remits principal payments back to the loan fund as it is repaid from the business.
Filing Fees: None charged by the DEQ. (There may be loan processing fees, as applicable, charged by the lending institutions, as part of processing the loans. These processing fees can be rolled into the loan if desired.)
Nominating Procedures: Not applicable. (Loans are processed on a first come/first serve basis.) Loans are made to small businesses through an application process, based on eligibility and funding available.
Deadline(s): Loans are available on a first come, first serve basis.
Timeline(s): Projects are reviewed by the DEQ within 30 days of receipt, and the applicant is notified of the DEQ's determination within 14 days of completing the project eligibility review. Lending institutions must review applications for creditworthiness. The business must enter into a loan agreement with the lending institution within 90 days of the project eligibility determination, and the project must be initiated within 180 days after the loan agreement documents are signed. Within 90 days of project completion, the borrower submits a final report to the DEQ describing the P2 benefits attained, including a demonstration of the expected reduction in environmental waste, water, or energy usage.
Dollar Amount(s) Available (Min or Max): The loan fund has an initial allocation of $5 million dollars. Additional funds will be available as repayments are received.
Required Match: No match money is required from applicants (small businesses) in order to obtain loan funds. Participating lending institutions will provide 50 percent of the funds for each loan. The DEQ Small Business P2 Assistance Revolving Loan Fund will provide the other 50 percent of loan funds.
Source(s) of Funds: State of Michigan, Clean Michigan Initiative Bond Fund - P2.
Authority: Part 145, Act 451 of the Public Acts of 1994, as amended.
Responsible Division/Contact(s): Office of Environmental Assistance, Chad Rogers, 517-284-6872.
Phase-out/Expansion/Changes for Next Fiscal Year: None.
Related Grants: None.
Recent Awards/Example Project: Pollution Prevention Loan Recipients
Request for Proposals: Most recent or active relevant forms are located at: P2 Loan Documents and Publications.