100 Energy Project Financing: Resources and Strategies for Success
chamber” of difficult questions and paperwork. This type of attitude is
certainly not going to make a lot of friends in the lending community.
A lender relationship is well worth cultivating. The best way to
create a foundation for a long-term lending relationship is to offer accu-
rate information about the project and the financial status of the parties
involved, in addition to presenting your references and project history.
Lenders have what is called a “due diligence period.” This is a
time when, even though a loan approval may have been issued, they are
looking for ways to verify everything disclosed in the initial application
package. They want to expose all the weaknesses of the project in order
to properly evaluate the risks of the loan.
Never try to hide or manipulate information, as this will land
you in court or bankruptcy proceedings. Lenders should have all the
relevant information, both good and bad. You should make the effort
to meet face-to-face with the bankers and, if possible, make a presenta-
tion to one or more members of the loan committee. This “relationship”
aspect of the loan decision-making process is an opportunity for you to
turn what could be a marginal loan application into an approval.
If you are preparing a package of information about your energy
project to send to a lender, this is what you should include:- Your company’s financial statements (two years, audited)
- ESCO financial statements (two years, audited)
- Project pro formas (revenue and expense projections)
- Energy services agreement between your company and the ESCO
- Contract between your company (or the ESCO) and the utility (if a
rebate program is available) - Description of equipment to be installed
- Energy audit results summary
- Measurment and verification plan
- Construction schedule
- Management team summary
- References from suppliers and customers