Green Colorado Credit Reserve
The Green Colorado Credit Reserve (GCCR) is a loan loss reserve that was created by the Colorado Energy Office (CEO) to incentivize private lenders throughout Colorado to make small commercial loans up to $100,000 for capital improvements that promote energy efficiency and renewable energy. The GCCR is administered by the Colorado Housing Finance Authority (CHFA) on behalf of the CEO.
How Does the GCCR Work?
- Lenders interested in participating in the GCCR Program should submit an application to GEO/CHFA (please use the contact information at the bottom of this page if you have any questions).
- For each loan made by a participating lender, the GCCR will provide a loan loss reserve equal to 15% of the amount of the loan. For example, if a participating lender makes a loan for $100,000, the lender will have $15,000 available to cover any losses in case of loan default.
- The loan loss reserve encourages banks to close multiple loans, because the reserve aggregates as the lender makes more loans. For example, if a lender makes ten loans for $100,000, the lender will have aggregated $150,000 for any possible loan losses.
- A 15% loan loss reserve should, in theory, increase lenders’ risk thresholds which will enable them to offer lower interest rates for loans that promote energy efficiency and renewable energy.
Why Will the GCCR Promote More Loans for Energy Efficiency and Renewable Energy?
- Most conventional commercial loans are used to invest in capital that will increase a business’ revenue. In contrast, energy efficiency retrofits are generally paid through identified utility savings. Because of this difference, some banks have yet to effectively grasp the concept of loan repayment through operational cost savings.
- Many traditional lenders misunderstand the value proposition of energy efficiency and renewable energy, through no fault of their own. Therefore, the perceived risks associated with these loans are often overstated. By providing a risk sharing mechanism, the GCCR will invite lenders to make more of these loans which will provide the experience necessary for them to feel more comfortable with these products in the future.
I think my Business can Benefit from the GCCR. Who do I Contact to Find out More Information?
Please contact the CEO Finance Manager (contact info below), CHFA, or the participating lenders directly. Also, if you have a lender in mind who you would like to work with but they’re not currently registered in the GCCR, please encourage them to do so.
For further questions, please contact the CEO Finance Manager.