What evidence of savings, ROI or carbon reduction will lenders typically ask for?
Short answer — the quick, direct reply
Lenders typically ask for verifiable, quantifiable evidence showing historical or projected cost savings, a clear ROI/payback calculation, and measurable carbon reduction claims.
Documents usually include energy audits or technical appraisals, supplier quotes and invoices, cashflow forecasts or NPV/IRR calculations, and post-installation monitoring or certification.
Evidence must be credible, auditable and aligned with the loan term so lenders can assess risk and repayment capacity accurately.
Why lenders demand this evidence
Lenders need to reduce uncertainty about whether an investment will produce the savings or emissions reductions claimed.
If savings are overstated, the borrower may struggle to repay, increasing lender credit risk.
Clear, standardised evidence lets lenders compare projects, price risk, and decide if the asset or cashflow supports the requested finance.
What lenders want to know at first glance
Typical initial questions are: How much will you save each year? When will the investment pay back? How are those savings measured and verified?
Answers supported by documented assumptions, third‑party reports and historical meter data are far more persuasive than unaudited estimates.
Lenders will also ask whether savings are guaranteed by suppliers or protected by maintenance agreements.
Standard documents and proof lenders typically request
Energy audits or technical feasibility studies prepared by qualified assessors are common requirements.
These reports should include baseline consumption, proposed measures, modelled savings and assumptions.
Lenders often expect to see supplier quotations, equipment specifications, and installation timelines alongside those studies.
Financial and accounting evidence
Prepare profit & loss projections, cashflow statements and a focused ROI/payback schedule for the project.
Common lender metrics include payback period, net present value (NPV) and internal rate of return (IRR) over the loan term.
Historic financials for the business (typically 2–3 years) are also requested to confirm overall affordability.
Carbon and sustainability documentation
Lenders will want conversion of energy saved into carbon saved using recognised UK conversion factors (for example BEIS/UK Government factors).
Certifications such as ISO 50001, BREEAM ratings, Display Energy Certificates or renewable energy guarantees add credibility.
For larger projects, verification by an independent body or post‑installation Measurement & Verification (M&V) report is often required.
How to calculate and present ROI and savings so lenders accept them
Start with a clear baseline: historic energy or operating costs for at least 12 months, ideally 24–36 months.
Model expected changes using conservative assumptions and show sensitivity (best, base, worst cases) to reveal downside risk.
Include business rates, maintenance, downtime and avoided disposal costs where relevant so lenders see the full benefit picture.
Common, lender-friendly calculation formats
Payback period: simple years-to-payback calculation showing how quickly capital is recovered through savings.
NPV and IRR: discounted cashflow analyses that show value over the loan term and allow comparison across projects.
Annual cashflow showing gross and net savings, with stressed scenarios to demonstrate resilience under lower-than-expected savings.
Carbon reduction quantification
Translate energy savings into CO2e reductions using official conversion factors and show the calculation step by step.
Document boundaries (what’s included/excluded) and the time period used, so lenders can understand scope and permanence.
When possible, include pre- and post-installation meter readings or verified generation data for renewables to substantiate claims.
Technical verification, guarantees and monitoring lenders expect
Measurement & Verification (M&V) plans using an accepted protocol such as IPMVP increase lender confidence in projected savings.
Either a third-party M&V specialist or an accredited installer can provide reports that lenders accept as evidence.
Ongoing monitoring contracts and service-level agreements reduce performance risk and are viewed favourably.
Warranties, performance guarantees and insurance
Performance guarantees from suppliers, manufacturer warranties and insurance for underperformance are strong supporting evidence.
Where guarantees exist, lenders will inspect the terms, duration and remedies available if targets are missed.
For larger loans, lenders may require assignment or notification clauses so they can step in if necessary.
Typical lender thresholds and preferences
Savings that cover a clear portion of loan repayments are more likely to be funded; lenders prefer shorter payback on higher-risk projects.
As a rule of thumb, many commercial lenders look for paybacks within the expected useful life of the asset and a debt service coverage ratio that shows repayment ability.
Different lenders vary: specialist green funds may accept longer paybacks if carbon outcomes are robust, while mainstream banks usually expect stricter financial metrics.
Practical checklist for applicants and next steps
Compile a concise evidence pack: baseline energy data, technical audit, supplier quotes, financial model and any warranties or certificates.
Make calculations transparent and include conservative sensitivity tests to demonstrate realistic outcomes.
Where available, add third‑party verification such as an M&V report, ISO or BEIS conversion factors to back carbon claims.
Quick checklist (short, actionable)
- Historical utility bills or meter data (12–36 months).
- Detailed supplier quotes and equipment specs.
- Energy/sustainability audit or feasibility study.
- ROI/payback, NPV and cashflow tables with sensitivity analysis.
- M&V plan or post-installation verification and any warranties.
How Best Business Loans can help you prepare
We don’t lend directly, but our AI-driven platform connects UK businesses to lenders and brokers who specialise in sustainability and asset finance.
We can help match your project to lenders that accept the type of evidence you have and advise which additional documents will strengthen your application.
For projects focused on energy efficiency or green upgrades see our sustainability loans page for more detail: sustainability loans.
Next steps — get a Quick Quote or Decision in Principle
If you’re preparing an application, start by completing our Quick Quote form to check eligibility and be matched to suitable providers.
We’ll guide you on the specific evidence lenders in our network typically require for your sector and project size.
Submit your details now for an obligation-free Decision in Principle and a practical checklist to strengthen your case.
Key takeaways
Lenders expect documented, auditable evidence of savings, a clear ROI/payback case and credible carbon reduction calculations.
Use baseline data, energy audits, supplier quotes, conservative financial models and independent M&V where possible.
Well-prepared evidence improves approval chances and helps match your project to lenders who understand sustainability finance.
Remember: Best Business Loans is an independent introducer that helps UK businesses find the right lenders and brokers; we do not provide loans directly. Completing a Quick Quote is a free, no-obligation next step to get tailored advice and improve your application’s success.
About the author and Best Business Loans
Best Business Loans combines AI matching with an established UK network of lenders and brokers to help businesses find suitable finance.
We focus on established companies needing asset, equipment, sustainability or working capital finance, and we provide clear next steps to prepare lender-ready documentation.
For help preparing evidence or to get matched to lenders, complete a Quick Quote on our site or contact hello@bestbusinessloans.ai.