Are there finance options for sustainability and energy‑efficiency projects?
The short answer and what counts as a “sustainability” project
Yes — UK businesses can access a range of finance options for sustainability and energy‑efficiency projects, including green loans, asset finance, leases, Power Purchase Agreements (PPAs), and Energy‑as‑a‑Service models. Grants and tax incentives may also reduce upfront costs, while schemes like the Growth Guarantee Scheme can support eligible borrowing. Best Business Loans does not lend directly, but we match you with suitable lenders and brokers who finance these projects.
Typical projects include solar PV, battery storage, LED lighting, building insulation, heat pumps, EVs and charging, high‑efficiency plant or machinery, and smart Building Management Systems. Many lenders now offer “green use‑of‑proceeds” facilities or sustainability‑linked loans with pricing tied to measurable ESG targets. The right route depends on your asset mix, cash flow, tax position, and speed to install.
Financing your upgrade can help reduce energy bills, cut carbon emissions, and improve resilience against price volatility. It may also support compliance with standards and frameworks such as ESOS, SECR, PAS 2060, and supply‑chain emissions reporting. With the correct structuring, many projects can be cash‑positive from month one.
Which businesses can apply?
Established SMEs and mid‑market companies across sectors such as manufacturing, logistics, construction, hospitality, healthcare, and professional services. Public‑sector and not‑for‑profit projects may access specialist programmes, but our platform focuses on trading businesses.
Common funding goals
- Cut energy costs via efficiency and on‑site generation.
- Replace end‑of‑life kit with high‑efficiency alternatives.
- Electrify fleets and add EV charging to sites.
- Refit or expand premises with low‑carbon technologies.
Updated: October 2025
Information is general guidance only and may change. Always confirm details with your chosen finance provider before committing.
Finance options for green and energy‑efficiency upgrades
1) Green business loans (use‑of‑proceeds)
Unsecured or secured term loans where funds must be used for eligible sustainability projects. Some facilities offer enhanced terms if your project meets defined criteria and reporting standards.
Works well for
Multi‑asset upgrades and mixed CAPEX where speed and flexibility are key.
2) Asset finance: hire purchase and leasing
Spread the cost of equipment such as solar arrays, LEDs, HVAC, CHP, compressors, CNC machinery, and EVs over 2–7 years. Ownership (HP) or off‑balance‑sheet style treatment (certain leases) may be possible subject to accounting advice.
Works well for
Projects with identifiable assets, clear suppliers, and long usable life.
3) Energy‑as‑a‑Service and PPAs
A third party funds, owns, and maintains the system (often solar PV or heat pumps), and you pay a per‑kWh or service fee. This reduces or removes upfront CAPEX and can hedge energy costs.
Works well for
Energy‑intensive sites and businesses seeking off‑balance‑sheet solutions.
4) Asset refinance and release of equity
Refinance existing machinery or vehicles to release capital for green upgrades. This can be paired with new asset finance for a blended solution.
Works well for
Companies with strong asset bases but constrained cash flow.
5) VAT and stage‑payment solutions
Specialist facilities can cover VAT or staged installations, easing cash flow during large refits. This can be bundled alongside asset finance.
Works well for
Projects with significant up‑front VAT or long installation phases.
6) Sustainability‑linked loans (SLLs)
Loan pricing is linked to your performance against KPIs such as energy intensity or emissions. Independent verification and regular reporting are typically required.
Works well for
Businesses with mature ESG data and defined decarbonisation plans.
7) Working capital, RCFs and invoice finance
Revolving credit or invoice finance can bridge timing gaps between project costs and realised savings. This is useful for phased works or when grants are paid in arrears.
Works well for
Short‑term liquidity to keep projects moving without disrupting operations.
8) Grants, incentives and allowances
UK incentives evolve, but may include regional grants, innovation funding, and capital allowances. Always check current eligibility and timing with official sources or your adviser.
Works well for
Reducing total project cost when combined with commercial finance.
9) Government‑backed support (e.g., Growth Guarantee Scheme)
The Growth Guarantee Scheme can support eligible UK businesses via participating lenders. It may be used for sustainability projects where the lender considers the purpose viable.
Works well for
Companies that meet scheme criteria and want mainstream loan structures.
If you’re in manufacturing or engineering, you can also explore sector‑fit funding routes here: engineering business loans for UK firms investing in efficiency and automation.
How to secure green finance in practice
Step 1: Define the project, savings and payback
Scope the technology, supplier quotes, CAPEX, expected energy savings, and maintenance. Build a simple model with payback, IRR, and sensitivity to energy price changes.
Step 2: Choose the right structure
Match the finance to asset life, cash‑flow profile, and balance‑sheet goals. Consider asset finance for equipment, PPAs for solar, or a green loan for mixed projects.
Step 3: Prepare documentation
Have your last two years’ accounts, management information, bank statements, and any ESG reporting ready. Add technical spec sheets, installer credentials, and a delivery plan.
Step 4: Apply, compare and stress‑test
Use Best Business Loans to be matched with suitable providers, then compare terms, fees, covenants, and M&V obligations. Stress‑test cash flows for delays or lower‑than‑expected savings.
Tip: Decision in Principle
A Decision in Principle can help you reserve installation slots and negotiate with suppliers. It is not a guarantee of funding and is subject to full underwriting.
Step 5: Installation, drawdown and verification
Agree milestone payments, delivery timelines, and commissioning criteria. Ensure measurement and verification aligns with lender requirements and your ESG reporting.
Ready to explore options for your project? Submit your details for a Quick Quote, Eligibility Check, or Decision in Principle — it’s fast, secure, and no‑obligation.
Eligibility, costs, timelines and FAQs
Typical eligibility checkpoints
- UK‑registered trading business with 12–24 months’ trading history.
- Demonstrable affordability and stable cash flow.
- Project with credible savings, reputable supplier, and clear specification.
- For asset finance, assets are identifiable, insurable, and fit‑for‑purpose.
Costs and terms to expect
Pricing depends on your credit profile, asset type, security, and term. Watch for arrangement fees, documentation fees, performance reporting costs, and early settlement terms.
Where pricing is linked to KPIs, understand how outcomes are measured and what happens if targets are missed. Ask about maintenance, warranties, and uptime obligations for PPAs or service models.
Typical timelines
Unsecured loans can be faster, sometimes days from approval to funding. Asset finance usually takes longer to accommodate supplier checks and asset verification.
PPAs and complex retrofits require site surveys, legal reviews, and grid permissions, so plan for a longer lead time. Build contingency into your schedule for procurement and commissioning.
Key risks and how to manage them
- Performance gap: mitigate with robust M&V and supplier warranties.
- Supply‑chain delays: use staged drawdowns and flexible timelines.
- Energy price volatility: stress‑test savings at different price levels.
- Balance‑sheet impact: get accounting and tax advice before you commit.
FAQs
Are there finance options for sustainability and energy‑efficiency projects?
Yes, including green loans, asset finance, leases, PPAs, service contracts, and government‑backed loans via participating lenders. The best option depends on your assets, cash flow, and project scale.
What projects are commonly financed?
Solar PV, battery storage, LEDs, HVAC upgrades, insulation, EVs and charging, high‑efficiency machinery, compressors, and digital energy controls. Multi‑site rollouts can be structured with stage payments.
Do I need to provide security or guarantees?
Asset finance often secures against the equipment itself. Unsecured loans may require director guarantees and stronger affordability; requirements vary by lender.
Can projects be cash‑positive from day one?
Yes, where monthly savings exceed finance costs, particularly for LEDs and solar at high‑usage sites. Always model conservative scenarios before you commit.
Are grants or tax incentives available?
Incentives change over time and may be regional or sector‑specific. Check current UK Government and devolved‑administration schemes, and discuss capital allowances with your accountant.
How quickly can I get a Decision in Principle?
Timeframes vary by product and profile. Our AI‑enabled matching aims to introduce you to relevant providers quickly so you can progress to an in‑principle view sooner.
Why use Best Business Loans for green finance?
Independent matching, not lending
We do not provide loans directly. We use AI to analyse your project and business profile, then introduce you to lenders and brokers aligned to sustainability and energy‑efficiency goals.
Sector‑aware options and time saved
You avoid calling dozens of providers with different criteria and appetite. We focus on commercial funding for established UK businesses across industries where decarbonisation and efficiency pay back.
Transparent, people‑first guidance
We don’t promise the lowest rate, and approvals are never guaranteed. We aim to help you make informed, confident choices with providers who can genuinely support your project.
Next steps
Tell us what you want to fund, your estimated budget, and expected savings. We will connect you to suitable providers for a Quick Quote, Eligibility Check, or Decision in Principle.
Important information and compliance
Best Business Loans is an independent introducer, not a lender, and does not provide financial advice. All finance is subject to status, affordability checks, and the lender’s terms; fees and interest apply, and personal guarantees or security may be required.
Information on this page is for UK businesses only and is general in nature. It should not be relied upon as legal, tax, or accounting advice; please seek professional advice to assess suitability for your circumstances.
We aim for promotions to be clear, fair and not misleading. We do not currently support start‑ups, sole traders, franchises, property finance, or commercial mortgages.