Can I use finance for energy-efficiency upgrades or sustainability projects?
The short answer, what’s eligible, and why it matters
Yes — UK businesses can use commercial finance to fund energy-efficiency upgrades and wider sustainability projects, from LED lighting and solar PV to heat pumps, EVs, insulation, and waste-reduction technology. Lenders routinely support projects that reduce operating costs, cut carbon, and improve resilience. The right facility depends on your asset type, budget, and cash flow.
Energy-efficiency finance typically covers tangible equipment and installations with a clear return on investment. That includes plant and machinery, building services (HVAC, BMS, efficient boilers), refrigeration, kitchen equipment, and smarter controls. Many providers will also fund EVs, eLCVs, and charging infrastructure where the business case stacks up.
Sustainability projects can extend to electrification, process optimisation, water-saving systems, and onsite generation and storage. Some lenders offer “green” products with eligibility criteria tied to CO₂ reduction or energy performance. Others will fund the same upgrades under standard asset finance or term loan agreements, provided the fundamentals are sound.
Finance can help you act now rather than waiting for budget cycles, locking in savings sooner. By matching repayments to projected energy savings, many firms maintain neutral or positive monthly cash flow. Over the asset life, the accumulated savings often exceed the total finance cost.
Best Business Loans helps you explore suitable options and providers, then connects you with lenders or brokers who understand your sector. We don’t offer loans directly or provide financial advice. Your enquiry is free, with no obligation to proceed.
What counts as an “energy-efficiency” or “green” project?
Typical eligible projects include solar PV, battery storage, LED and smart lighting, heat pumps, HVAC upgrades, insulation, doors and glazing, air compressors, and variable speed drives. Kitchens and cold stores often qualify for high-efficiency fryers, ovens, dishwashers, fridges, and freezers. Fleet electrification and workplace charging can also be considered.
Some providers also support waste heat recovery, process controls, power factor correction, and EMS/BMS software and sensors. If the upgrade improves energy performance, reduces emissions, or cuts resource consumption, it may be fundable. The asset’s expected life and resale value can influence terms.
Important: fair, clear, not misleading
Finance availability, rates, and terms depend on your business profile, credit status, and the nature of the asset. Any potential savings are estimates and not guaranteed, and you should consider independent advice where appropriate. We’ll always aim to present options in a fair, clear, and not misleading way.
Common finance options for sustainability upgrades
Different projects suit different finance products. Understanding how each works helps you choose a route that fits your goals and cash flow. Below are widely used options for UK SMEs and mid-sized firms.
Asset finance and hire purchase
Asset finance and hire purchase spread the cost of equipment over an agreed term, often with fixed repayments. They’re widely used for solar, lighting, HVAC, catering kit, and production machinery. In many cases, the asset acts as primary security.
Hire purchase ends with ownership at the final payment, which can support long asset lives. Asset finance can align repayments with energy savings, helping stabilise cash flow. Maintenance can be bundled by suppliers in some arrangements.
Equipment leasing
Leasing offers use of the asset without immediate ownership, typically through an operating or finance lease. It can suit fast-advancing tech such as LED and controls. End-of-term options vary, including renewal, return, or purchase subject to provider rules.
Leasing can keep upfront costs low and preserve working capital. It may also support periodic refreshes of energy-efficient equipment as technology improves. Terms and residual assumptions vary by provider.
Unsecured and secured term loans
Term loans can fund capex that’s not easily ring-fenced as an asset, such as fabric upgrades or multi-measure retrofits. Unsecured loans rely on business strength and affordability. Secured loans may achieve lower rates or higher limits, but require acceptable security.
Some lenders brand “green loans” where funds must be used for defined sustainability outcomes. Others allow you to fund multiple measures under one agreement. Repayment profiles can be tailored to expected payback.
Invoice finance and working capital support
Businesses funding upgrades during seasonal peaks may prefer invoice discounting or factoring. Unlocking cash from receivables can bridge supplier deposits or staged payments. This is especially useful where installation phases need flexible timing.
Revolving facilities like overdrafts may complement a project funded by asset finance or a loan. Blended approaches can de-risk timelines and manage unforeseen costs. Suitability depends on turnover and debtor quality.
Government-backed schemes
Selected accredited lenders offer facilities supported by government guarantee schemes for eligible borrowers, such as the Growth Guarantee Scheme. Funds are typically usable for investment, growth, and working capital, subject to lender rules. Availability, eligibility, and terms vary and can change.
These routes do not replace due diligence on affordability and project viability. You remain responsible for repayment, and approval is not guaranteed. Always review scheme criteria and provider documentation carefully.
Business case, ROI, grants, and practical savings
Energy-efficiency finance works when savings are credible, measured, and tied to usage. A simple payback calculation helps frame feasibility, but consider lifetime cash flows, maintenance, and potential energy price volatility. Many providers will expect a clear business case or supplier proposal.
Why the numbers add up
Upgrades can reduce electricity and gas consumption immediately, lowering operating expenses. When repayments roughly match savings, you can upgrade with limited net cash impact. After the finance term, ongoing savings typically flow straight to profit.
For equipment with long useful life, ownership models like hire purchase can maximise long-term benefit. Software and controls can yield quick wins with short paybacks. Combining measures can unlock deeper savings across your site.
Grants, incentives, and tax treatment
UK businesses may be able to combine finance with grants, local funding, or supplier rebates, subject to eligibility. Availability varies by region, industry, and project type, and it changes over time. Check GOV.UK, your local authority, devolved administration, or the UK Business Climate Hub for current schemes.
The Workplace Charging Scheme administered by OZEV may contribute towards eligible EV charge point costs, subject to criteria. Businesses should verify current rules, caps, and application steps. Energy network operators sometimes support flexibility or demand-reduction initiatives.
From a tax perspective, capital allowances may apply to qualifying plant and machinery. Full expensing and the Annual Investment Allowance can improve the after-tax case for eligible purchases. Always seek professional tax advice based on your circumstances.
Supplier assessments and M&V
Request performance estimates, warranties, and maintenance plans from your supplier. Consider basic measurement and verification to track savings against projections. Lenders may ask for quotes, specifications, and installer credentials.
Well-documented proposals can support faster credit decisions. For solar PV, include yield analysis and inverter replacement assumptions. For HVAC, include seasonal COPs, controls strategies, and setpoint policies.
Compliance reminder
We do not guarantee savings or eligibility for grants or tax reliefs. External incentive programmes can change, and qualification depends on your specific situation. Consider independent professional advice before committing.
Eligibility, sectors we help, and how our AI matching works
Eligibility varies by lender and product, but most will look at trading history, accounts, affordability, and credit profile. Asset type, installation quality, and supplier reputation also matter. For larger projects, lenders may request extra detail or security.
What lenders often ask for
Be prepared with filed accounts, recent management information, bank statements, VAT and PAYE status, and details of existing finance. Provide supplier quotes, specifications, warranties, and installation timelines. If grants are involved, include award letters or applications.
Directors’ information and ID/AML checks are standard. Where forecasts underpin the case, include assumptions and sensitivity analysis. Clear documentation can reduce delays.
Sectors commonly funded
We commonly see demand from manufacturing, engineering, logistics, retail, healthcare, education, hospitality, and agriculture. Energy-intensive sites often prioritise lighting, motors, drives, compressors, and heat recovery. Hospitality invests in efficient cooking, ventilation, refrigeration, and hot water systems.
If you run a hospitality venue and want to explore sector-specific options, see our guide to restaurant and hospitality finance here: restaurant and hospitality business finance. Sector focus can help match you with providers used to your equipment and seasonal patterns. This can support a smoother journey from enquiry to installation.
How Best Business Loans helps
Step 1: Tell us your goals via a short Quick Quote — funding need, project type, and timescales. Step 2: Our AI analyses your profile and matches you with suitable providers in our network. Step 3: We introduce you to lenders or brokers who can assess your case.
Step 4: You compare options, ask questions, and decide what fits best. There’s no obligation to proceed, and your enquiry is free. We aim to save you time while keeping everything fair, clear, and not misleading.
Timelines and expectations
Smaller asset finance cases can move quickly once documents are complete. Larger or multi-measure retrofits may take longer due to surveys and approvals. Build realistic installation windows into your plan.
Ensure coordination between finance approval and supplier lead times. Avoid starting works before finance is in place unless you’re comfortable funding upfront. Communication between all parties helps avoid delays.
What we are — and are not
Best Business Loans is an independent introducer, not a lender. We do not provide financial, tax, or legal advice. Finance is subject to status, affordability checks, and provider terms.
FAQs, key takeaways, and your next step
FAQs
Can I finance solar panels, batteries, and EV charge points? Yes, many providers will consider these assets where they’re commercially justified and installed by qualified suppliers. Terms depend on your profile, asset life, and installation specifics.
What security do I need? For asset finance, the equipment often serves as primary security. Unsecured loans rely on affordability and credit profile, while secured loans may require additional collateral.
How quickly can funds be available? Straightforward asset finance can complete in days once information is ready. Complex projects may take longer due to surveys, grants, or planning steps.
Can I combine a grant with finance? Often yes, subject to provider rules and grant conditions. Inform your lender early and document any awards.
Will my energy savings cover repayments? That’s the goal, but it depends on usage, tariffs, and performance. Work with your supplier on realistic projections and consider sensitivity scenarios.
Key benefits at a glance
- Fund energy-saving upgrades now, spread the cost over time.
- Match repayments to projected savings to stabilise cash flow.
- Choose from asset finance, leasing, hire purchase, or term loans.
- Potential to combine grants or incentives where available.
- Improve resilience, reduce carbon, and enhance ESG credentials.
How to get started
Gather your project details, quotes, and business information. Consider your preferred repayment horizon and ownership vs leasing. Then submit your Quick Quote to see which options may suit you.
We’ll connect you with finance providers who understand sustainability funding. You stay in control and decide what’s right for your business. It’s fast, secure, and free to enquire.
Ready to explore energy-efficiency finance? Start your journey here: Get Your Free Quick Quote. Our AI-powered matching helps you find relevant providers without the legwork. No obligation, and no hidden fees for submitting an enquiry.
Important information and compliance
Best Business Loans (bestbusinessloans.ai) is an independent introducer and does not offer loans or credit decisions. Any finance is provided by third-party lenders or brokers, subject to status, eligibility, and their terms. This article is for general information only and is not financial, tax, or legal advice.
We aim for promotions that are fair, clear, and not misleading, in line with FCA, ASA, and Google policies. Product availability, eligibility criteria, and incentives can change. Always review provider documentation and consider independent advice where appropriate.
Updated October 2025. Information believed accurate at time of publication, but subject to change. External links and references are provided for convenience and do not constitute endorsement.