Environmental Upgrade Finance is a loan for environmental, sustainable and climate upgrade projects on existing buildings. It’s a secure way of paying for sustainability improvements to your building.

The finance can be used for a wide range of projects including installing renewable energy systems, initiatives to improve energy and water efficiency, or projects that minimise waste – there just needs to be a measurable improvement over time. Some of the projects we have funded include:

• • Solar panels and batteries
  • Electric vehicle charging stations
  • Roof replacements with a cool roof or green roof
  • Replacing HVAC (heating, ventilation and air conditioning) units
  • Upgrading lights to LEDs and lighting control systems
  • Water efficiency and treatment systems
  • Waste management
  • Heritage upgrades (South Australia only)

If you don’t see your project on the list, get in touch with us and we’ll be able to discuss whether it qualifies for Environmental Upgrade Finance.

Environmental Upgrade Finance (sometimes called Building Upgrade Finance) is a simple loan used to pay for works that improve the energy, water or environmental efficiency and overall sustainability of the building that is then repaid through the council rates over an agreed time period.

Environmental Upgrade Finance is a way that businesses can access affordable finance to make sustainability upgrades, improve efficiency and reduce bills. It has long term repayment options that meet businesses’ cashflow requirements through low interest rates fixed for five-year periods, predicable repayments, and the upgrade is usually cashflow positive from the first year.

The benefits and the repayments can also be shared with tenants, unlike other capital works restrictions.

Yes, Environmental Upgrade Finance is a type of loan. It’s unique from the types of loans you might get from a bank for a number of reasons.

• • Unlike a loan from the bank, you will enter into an agreement with both the lender and your local council, the loan is then repaid through your council rates
  • You don’t have to provide collateral for the loan, in the form of real estate or similar property
  • As the loan is tied to the building and not the owner, it can be transferred to a new owner if the property is sold

Even though local councils are included in the agreement, no government monies are used to lend. Government allows the repayments to occur through the rates bill and forwards the repayment to the Sustainable Australia Fund which is the lender.

There are a number of key differences:

• No other finance options provide loans for up to 20 years at low interest rates, fixed for five-year periods 
• The loan can be passed on to the new owner if the building is sold before the loan is fully repaid
• The benefits and the repayments can be shared with tenants, unlike other capital works restrictions

Legislation for Environmental Upgrade Finance is currently enabled in New South Wales, South Australia and Victoria. However, not all councils are currently offering Environmental Upgrade Finance. You can find a full list of councils currently offering Environmental Upgrade Finance here.

The Sustainable Australia Fund is working hard to get more councils offering Environmental Upgrade Finance. If you have a project but your council is not currently offering Environmental Upgrade Finance, you can get in touch with us via this form. We can then discuss your project with the relevant council to see if Environmental Upgrade Finance will be possible in the future for your project.

The Sustainable Australia Fund is a leading provider of Environmental and Building Upgrade Finance with nearly two decades experience helping Aussie businesses unlock savings and sustainability. Originally created out of local government, the Sustainable Australia Fund now partners with more than 40 local governments across the country to deliver building upgrades to our clients. You can read more about us here.

The Sustainable Australia Fund partners with local councils, government organisations such as ARENA, finance providers and installers to help Australian businesses realise their dream of generating their own energy.

• • You can find a list of our council partners here.
  • You can find a list of our installation partners here.

You can find a list of installation partners here.

Don’t see an installation partner that works for your project or area? Email us and we’ll put you in touch with a trusted installation partner in your local area.

Environmental Upgrade Finance can be used for any upgrades to an existing building that improves efficiency or reduces waste. This includes, but isn’t limited to:

• Solar systems, solar PV (photovoltaic) panels and battery solutions
• Energy efficiency upgrades
• Heating, ventilation and air conditioning (HVAC) systems
• Lighting technology and control upgrades
• Green and cool roof installations
• Water efficiency and treatment systems
• Waste management
• Electric vehicle charging stations
• Heritage upgrades (South Australia only)

Basically, if the upgrade has a measurable environmental benefit, it will likely qualify for Environmental Upgrade Finance.

Have a project in mind that’s not on the list? Get in touch with us and we’ll help you determine if Environmental Upgrade Finance is right for your project.

Yes, there are examples of projects with funding from $15,000 to over $10 million. 

Under current legislation Environmental Upgrade Finance is available for most property with buildings primarily used for non-residential purposes of 50% or greater such as commercial offices, retail, industrial, manufacturing, agriculture and hospitality premises. If there are changes to the legislation in the future, Environmental Upgrade Finance could become available for residential and strata projects.

Before applying, you will need to ensure your business meets the eligibility criteria below:

1. Council offers Environmental Upgrade Finance / Building Upgrade Finance
2. The property is rateable land
3. The property use is primarily non-residential
4. The upgrade project has a measurable environmental benefit
5. The property and/or property owner meets our ESG criteria, and is not in the business of fossil fuels, live animal export, intensive livestock farming, gambling, tobacco, or the arms industry

You may also be contacted by phone for additional information required as part of our Covid Impact Questionnaire

You can apply online using this form.

Before you get started on your application, make sure you meet the eligibility requirements below.

Eligibility criteria:

• Council offers Environmental Upgrade Finance / Building Upgrade Finance
• Property is rateable land
• Property use is primarily non-residential
• Upgrade project has a measurable environmental benefit
• Property and/or property owner meets our ESG criteria, and is not in the business of fossil fuels, live animal export, intensive livestock farming, gambling, tobacco, or the arms industry
• The Applicant’s business/main trading business should be trading for a minimum of 2 years or must have traded in a similar industry for many years
• For businesses in Victoria and South Australia, the property owner meets the Overleverage Test requirement

You can download a PDF copy of the eligibility criteria and application process here.

There are some additional eligibility requirements that may be relevant to you listed below.

The additional eligibility criteria may be relevant to your business depending on a number of factors. The team at Sustainable Australia Fund will supply you with any relevant information and/or forms specified below as part of the application process if they are applicable to your business.

Additional eligibility criteria:

• The applicant will need to disclose and provide a written notification to Council about all their existing debt secured against the property for which they are seeking an Environmental Upgrade Agreement. This will be collected as part of the online application form.
• Once the Finance has been conditionally approved, the property owner is required to notify all of their existing mortgagees (registered or unregistered) of:

1. 1. their intention of entering into an Environmental Upgrade Agreement, and
   2. the details of all the total Environmental Upgrade Charges (EUC) repayments over the term of the Environmental Upgrade Agreement loan.

The Sustainable Australia Fund will provide you with a template letter to be sent to your existing mortgagee once your Finance has been conditionally approved. This is a requirement that is required to be fulfilled as part of the property owner’s obligation under section 181B of the Local Government Act.

If the property owner intends to pass any charges onto the tenant, you will need to obtain a tenant consent form once the finance has been conditionally approved. The Sustainable Australia Fund will provide you with a template letter to send to tenants following conditional approval.

You can download a PDF copy of the eligibility criteria and application process here.

As a responsible lender, the Sustainable Australia Fund needs to assess each application for finance for the ability of the borrower to make the repayments. That’s why we need to collect some important information before we can provide finance.

Have these documents on hand for your application:

• Details about the upgrade project and the business that is pursuing the project
• Property ownership information, including ABN/ACN if applicable, and authorised signatories
• Information about existing mortgages, loans or leases that are secured against the property
• Project proposal (from the contractor or installer)
• Council rates notice
• Copy of the property owner’s/Company Director’s (authorized signatories) ID
• A copy of the trust deed if the property is under a trust

Depending on the nature of the application, we may also need to see some financial documents (in accordance with our Credit Policy) to be satisfied that the business will be able to meet the repayments.

We will require these documents if:

• The finance amount is more than $200k, or
• The annual repayments exceed the project savings by 10% or more.

For applications under $200k, we may contact you to provide financials after application submission as part of our Covid Impact Questionnaire.

We will require these documents for projects of more than $200k:

• Two years historical accountant prepared accounts (including Profit and Loss and balance sheet)
• Year to date (YTD) Management Accounts and Balance Sheet
• Tax portal for the last 12 months
• Lease Agreement (if in place)

In case the owner entity and the occupier/trading entity are related but separate legal entities, the financials for both the owner entity and occupier/trading entity will be required as part of the credit assessment.

We will require these documents for applications of $200k and under:

• Estimated financial savings of the upgrade to exceed the repayment by at least 10%, making the project cashflow positive (note: if all credit checks pass we will not require financial documents)

As a responsible lender, we require this information to be satisfied that the business will be able to meet the repayments in accordance with our credit policy.

We have included some information below about why we require this financial information to process your application.

1. Last two years of accountant-prepared annual financial statements.

This provides evidence that the business has been in the same sort of business for two years and allows us to assess its ability to make the repayments

2. Unless the last financial statements are for a period ended less than 3 months ago, we will also need to see the current year to date (YTD) management accounts (P&L and Balance sheet).

This is to check for any recent material changes in the business that we may need to understand more about

3. 12 months of itemised account from your ATO Tax Agent Portal.

We need to see if payments to the ATO are being made late as this may indicate difficulties in meeting payment obligations on time, and therefore ability to meet the repayments

The fees are Local Government Area specific and are adjusted to the amount of financing being requested. Please refer to your Sustainable Australia Fund Finance Quote for fees related to your specific project. If you would like more information on the fees associated with your project, please contact us.

If you have all of the documents and information above ready to go, the application will take up to 20 minutes to complete.

Below are the typical steps before we can finance the project:

1. Online application form

The property owner or authorised representative completes the online application form. Your council will be alerted of your intention to enter into an Environmental Upgrade Agreement (EUA).

2. Additional documents and proof

We will be in touch with information about additional documentation or proof we need to progress your application

3. Credit assessment

Your application goes into credit assessment

4. Conditional approval

The Sustainable Australia Fund issues a letter of offer along with any remaining documentation that requires signatures from the client and/or tenant, and any remaining outstanding miscellaneous conditions

5. Unconditional approval

Property owner, the Sustainable Australia Fund and your Council sign Environmental Upgrade Agreement and installation can proceed

As a legislative requirement, properties in South Australia and Victoria must meet the Over-Leverage Test.

If you are applying for Environmental Upgrade Finance, you are not required to perform this test yourself. The team at Sustainable Australia Fund will use information from your application to perform this test, and contact you if there are any questions once the application is received.

We have included more information below on what the test is and how we will conduct the test.

About the Over-Leverage Test

The Over-Leverage Test (OLT) is to ensure the total value of the Environmental Upgrade Charges (EUC) when added to any taxes, rates, charges or monies secured by mortgages owing on the rateable land don’t exceed the Capital Improved Value (CIV) of the land prior to the project being undertaken.

• Over-Leverage test for Victoria shouldn’t exceed 100%
• Over-Leverage test for South Australia shouldn’t exceed 80%

OLT= (Total EUC+ existing mortgage secured against the property)/Capital improved value of the property

You will need the following information to check your Over-Leverage test:

1. Total value of the EUC in Finance Quote provided by the Sustainable Australia Fund
2. Total value of the existing mortgage secured against the property.

Note: If a relevant mortgage is held against two or more properties including the Rateable Land, the total amount owing on the mortgage is deemed to be the proportion of the debt secured by the mortgage that applies to the Rateable Land. The relevant proportion of debt should be calculated by distributing the debt between all the properties against which the mortgage is held in proportion to the relative capital improved values of the properties. For example, if a debt of $1m is secured by a mortgage registered against two properties and the first property has a capital improved value of $2.5m and the second property has a capital improved value of $7.5m, the total amount owing on the mortgage in respect of the first property would be $250,000 and in respect of the second property $750,000.

3. You can find the Capital Improved Value of your property on your Council’s rates notice. Alternatively, we accept a current market valuation of the property that is no older than 2 years.

We may need to ask you some questions about the impact COVID-19 has had on your business to ensure we are able to process your loan. The COVID-19 Impact Questionnaire will be conducted over a phone call with a member of our customer service team.

For properties in South Australia, the property owner will need to provide a signed Statutory Declaration to meet their obligation under Clause 2(6) and 2(6)(b) Schedule 1B of the Local Government Act 1999 (SA).

Sustainable Australia Fund will provide you with a “Statutory Declaration template” to be completed and signed once your Finance has been conditionally approved.

If you are seeking to pass repayments onto your tenant, you will need to supply us with a Tenant Consent Form.

To comply with SECTION 181B (1A) and 181C(2A) LOCAL GOVERNMENT ACT 1989, you will need to get written consent from your tenant/occupier that they will be paying quarterly Environmental Upgrade Charges (EUC) repayments as set out in Annexure A of the EUA.

We will provide you with a Tenant Consent Form to be sent to the occupier/tenant once your Finance has been conditionally approved.

You can access the Application Terms of Use here.

If you would like more information on our Credit Policy, please contact us.

You can access our privacy policy here.

Below are the typical steps before we can finance the project:

1. Online application form: The property owner or authorised representative completes the online application form. Your council will be alerted of your intention to enter into an Environmental Upgrade Agreement (EUA)
2. Additional documents and proof: We will be in touch with information about additional documentation or proof we need to progress your application
3. Credit assessment: Your application goes into credit assessment
4. Conditional approval: The Sustainable Australia Fund issues a Letter of Offer and any conditions of approval to be resolved
5. Unconditional approval: The property owner, the Sustainable Australia Fund and Council sign the Environmental Upgrade Agreement
6. Settlement and Drawdown: The Sustainable Australia Fund will advise on drawdown dates and next steps

We are always looking to expand our network of trusted installation partners!

Every week we run a webinar that goes through our finance and how it works, how it helps businesses unlock savings, and how you can generate your own Environmental Upgrade Agreement quotes. Once you’ve attended the webinar, we can create a login for you for our online quote tool so you can start generating your own finance quotes.

Email Christine Gross for more information and for details on how to join the next webinar.

Environmental Upgrade Finance is a great finance solution for both businesses and installers. Businesses can often unlock larger projects and get started sooner, as no capital or upfront payment is required. This can help you close more deals as businesses can commit to projects with no impact on cashflow.

Installers can rely on fast payment and a customer service team that will manage the details of the loan directly with the client.

You can login to the quote tool on our Partners page.

Contact us with your issue and we’ll sort it out as quickly as possible.