Can I get finance for sustainability and energy-efficiency upgrades?

The short answer and what counts as a ‘sustainability upgrade’

Yes — many UK businesses can finance sustainability and energy-efficiency upgrades through a mix of asset finance, leasing, unsecured loans, and government-backed facilities. Funding is typically available for projects like LED retrofits, solar PV, heat pumps, building fabric improvements, EVs, and energy management systems. Approval depends on your trading history, affordability, and the strength of your project case.

In simple terms, lenders want to see that your planned upgrade is a sensible investment that can cut costs, reduce emissions, or improve resilience. That means demonstrating expected energy savings, a viable payback period, and reliable equipment or installers. If your numbers stack up and your business is established, options are usually available.

Best Business Loans does not lend directly or provide financial advice. We use smart matching to connect you with relevant UK lenders and brokers who are active in your sector and may support green investments.

What projects typically qualify as ‘sustainability and energy-efficiency’?

• LED lighting upgrades, controls, and smart building sensors.
• Solar PV, battery storage, and power factor correction equipment.
• Heat pumps, modern HVAC plant, and heat recovery systems.
• Insulation, glazing, and fabric efficiency improvements.
• High-efficiency machinery, compressors, motors, and variable speed drives.
• EVs, charging infrastructure, and cleaner fleet solutions.
• Energy management software and sub-metering for monitoring and optimisation.

Who is this best suited for?

• Established SMEs and mid-market companies with at least 12 months’ trading.
• Capital-intensive sectors such as manufacturing, logistics, food production, retail, hospitality, and healthcare.
• Businesses seeking cost reduction, compliance with ESG targets, or improved EPC ratings.

Updated: October 2025. Information is general in nature and may change. Always confirm details with your chosen provider.

Finance options that can fund green upgrades

There is no single “green loan” that fits every case. The right route depends on your asset type, budget, timescales, and security position. Below are the most common options UK businesses use to fund sustainability upgrades.

Asset finance and leasing for equipment

• Hire Purchase (HP): Spread the cost of assets like solar panels, heat pumps, or high-efficiency machinery over fixed terms, with ownership at the end.
• Finance Lease: Rent the equipment for most of its useful life, preserving capital and often allowing off-balance-sheet benefits depending on your accounting treatment.
• Operating Lease: Pay to use the asset for a shorter period, typically where residual value is significant and you may not need to own it.

Asset finance is popular for green projects because repayments can be offset by energy bill reductions. Lenders often favour assets with strong residual values and proven performance track records.

Unsecured business loans and sustainability loans

• Unsecured term loans: Fixed-term borrowing without security over specific assets, subject to credit assessment and affordability.
• Sustainability-linked loans (SLLs): Offered by select providers to businesses that commit to measurable ESG targets, sometimes with pricing linked to performance.

Unsecured options can suit projects with lower equipment value or where speed and simplicity are priorities. Expect lenders to assess cash flow, profitability, and purpose.

Invoice finance and cash flow solutions

• Invoice discounting or factoring: Unlock working capital tied up in unpaid invoices to fund upgrades without a traditional loan.
• Revolving credit or flexible lines: Useful for staged works and retrofit programmes where drawdowns need to match project milestones.

These solutions help align funding with project cash flows, especially when upgrades are phased or when you want to avoid tying up capital.

Growth Guarantee Scheme (GGS) via participating lenders

Some lenders participate in the British Business Bank’s Growth Guarantee Scheme, designed to support access to finance for UK SMEs. Eligibility, availability, and terms are set by individual lenders. This can sometimes support investment in approved sustainability assets where your business meets the criteria.

Best Business Loans can introduce you to providers who consider green investments under such frameworks. Availability varies and is subject to change and status.

Grants, incentives, and tax reliefs to consider

• Tax treatment: UK full expensing and the Annual Investment Allowance (AIA) may provide reliefs on qualifying plant and machinery. Speak to your accountant for advice.
• Sector or regional grants: Periodic schemes may support decarbonisation, energy audits, or equipment upgrades, especially for manufacturing and energy-intensive businesses.
• Export and energy schemes: Depending on technology and scale, there may be support routes to explore via UK Government or devolved administrations.

Grants are limited and competitive. Use them to complement finance, not replace it, and verify any incentives before committing to a project.

Eligibility, documents, and improving approval odds

Lenders look for a clear purpose, affordability, and evidence that the upgrade makes commercial sense. Robust preparation increases your chances of approval and better terms. Here’s what usually matters.

Typical lender criteria for green upgrades

• Trading history: 12–24 months minimum is common, with filed accounts or strong management information.
• Affordability: Healthy cash flow and reasonable debt service coverage after the upgrade.
• Project quality: Credible suppliers, warranties, performance data, and realistic savings assumptions.
• Asset profile: Equipment that is reliable, insurable, and retains value enhances funding options.

What to prepare before you apply

• Energy baseline and expected savings: Provide bills, usage data, and an installer or consultant’s forecast of consumption reduction.
• Quotes and scope: Firm proposals with itemised costs, lead times, and warranties help lenders underwrite faster.
• Financials: Latest accounts, bank statements, and any existing debt schedules to evidence capacity to repay.
• Contingencies: Consider maintenance, performance risk, and business continuity plans.

How Best Business Loans helps

We do not provide loans or advice. We help you explore funding routes by matching your profile and project purpose with lenders or brokers who are active in your sector. Our network includes providers experienced in green asset finance, retrofit projects, and energy-saving technology.

If your business operates in a regulated environment such as care homes, clinics, or dental practices, you may also find our sector resources helpful, for example our page on healthcare business loans. Sector context can influence which providers are the best fit.

Important compliance information

• Best Business Loans is an independent introducer. We do not lend, and we do not guarantee acceptance or the lowest rates.
• Any finance is subject to status, affordability checks, credit assessment, and the lender’s criteria. Fees and terms vary.
• Information on schemes, tax, or incentives is general and may change. Always seek professional advice and confirm details with your chosen provider.

Costs, ROI, and making the business case

Green upgrades should pay for themselves over time through energy savings, maintenance reduction, and resilience. Your business case should be clear, conservative, and backed by data. Lenders favour projects where repayments are offset by quantifiable savings.

Estimating return on investment (illustrative only)

• Example: A £100,000 LED and controls retrofit projects an annual bill saving of £28,000 based on current tariffs. If asset finance repayments are £2,200 per month over 5 years, annual repayments total £26,400.
• Result: The project may be broadly cash-flow neutral or modestly positive before maintenance savings, subject to rates and actual performance.
• Note: These figures are illustrative, not advice. Rates, terms, and energy prices vary, and savings are not guaranteed.

How to strengthen your proposal

• Use measured site data where possible, not just generic vendor benchmarks.
• Include sensitivity analysis with high and low energy-price scenarios.
• Show maintenance savings, warranty details, and installer credentials.
• Explain operational impact, including installation phasing to minimise disruption.

Practical examples by sector

• Manufacturing: Replacing legacy compressors with variable speed drives and heat recovery, financed via HP, reduces electricity use and provides process heat, improving payback.
• Logistics: LED warehouse lighting with motion sensors on a finance lease reduces kWh, improves safety, and aligns with customer ESG requirements.
• Hospitality: High-efficiency kitchen equipment and HVAC upgrades cut energy use and enhance comfort, funded with a blend of asset finance and a small unsecured loan for building fabric improvements.

Each project’s economics differ. Focus on total cost of ownership, lifetime savings, and resilience benefits rather than headline price alone.

Next steps, FAQs, and your Quick Quote

With the right preparation, funding sustainability upgrades can be fast and straightforward. The key is aligning your project scope with a finance product that matches your cash flow and asset profile. Our platform helps you start that process in minutes.

Step-by-step: from enquiry to funding

1. Complete a Quick Quote: Share your business profile, project purpose, and funding need. It takes a couple of minutes.
2. AI matching: We match your details to lenders or brokers who are active in green asset funding for your sector.
3. Introduction: You’re introduced to suitable providers to discuss terms, documents, and next steps.
4. Decision in principle: Subject to credit and underwriting, you’ll receive an initial view before full approval.
5. Funding: On acceptance and completion of formalities, your provider arranges drawdown or supplier payment.

There’s no obligation to proceed. Submitting an enquiry is free, secure, and handled confidentially.

Frequently asked questions

Do I need to provide security? It depends on the product. Asset finance is secured against the equipment, while unsecured loans are assessed on affordability and credit strength.

Can I fund building fabric works as well as equipment? Yes, but lenders may prefer a mix of asset-backed and unsecured solutions. Clear scopes and credible contractors help.

How fast can I get funding? Straightforward asset finance can complete in days once documents are provided. Complex retrofits with multiple suppliers may take longer.

Are green-specific discounts available? Some providers offer sustainability-linked terms, but availability varies. The strongest lever is usually a robust, savings-led business case.

What if energy prices change? Build in sensitivity. Demonstrate the project still makes sense under conservative tariff assumptions.

Ready to explore your options? Get your Free Quick Quote for sustainability and energy-efficiency finance today. You’ll see which providers are most relevant for your project and sector.

Key takeaways

• Finance is available for a wide range of sustainability upgrades, from LEDs and solar to HVAC and EVs.
• Asset finance, leasing, unsecured loans, and government-backed facilities may all be suitable.
• Approval depends on affordability and a credible, savings-backed business case.
• Best Business Loans introduces you to relevant providers; we do not lend or offer advice.
• Start with a Quick Quote to check eligibility with no obligation.