Loan Program (AERLP) Details

The AERLP provides low interest financing to individuals and organizations who want to build alternate energy production facilities in Iowa. The energy production facility must be located in Iowa. The loans are not available for refinancing existing loans.

After consulting with representatives of the investor-owned utilities, Iowa Department of Natural Resources, and Iowa’s lending institutions along with several energy experts in the state, a cooperative loan program was developed. This structure takes advantage of the Iowa Energy Center’s technical expertise and the loan qualification expertise of lenders and eliminates the need for the Energy Center to hire additional staff, at the expense of loan funds. In addition to maximizing available funds, the requirement for lender participation brings financial legitimacy to the program, distributes the risk, and demonstrates commitment on the part of applicants.

As structured, interested parties submit a technical application to the Iowa Energy Center which provides specific technical, operational, and cost details about the planned alternate energy production facility. All responsive submissions received during a given application cycle are reviewed and ranked. Those applications receiving the highest ranking are selected to receive loans, subject to the amount of funds currently available in the program.

After the Energy Center technically qualifies a project the lending institution, chosen by the applicant, financially qualifies the applicant. While the Energy Center has tried to provide general information to all lenders in Iowa, your local lender may not be fully aware of program details. If this is the case, urge your lender to contact the Iowa Energy Center (515-294-3832) to find out more information.

Successful applicants receive a low-interest loan that consists of a combination of AERLP and lender-provided funds. The AERLP provides 50% of the total financing, up to a maximum of $1 million, through a participation agreement with the applicant’s lender. This practice maximizes available funds and generates a high degree of commitment to the proposed projects on the part of the applicants. Requiring applicants to obtain at least half of the funds from a lender brings financial legitimacy to the program and distributes the risk. The AERLP funds bear no interest. The remainder of the financing is provided by the lender at an interest rate negotiated between the applicant and the lender. The loan term is determined as a function of the simple payback for the project, but the maximum term allowed for the AERLP funds is 20 years. The lender originates and services the entire loan and arranges repayment of the AERLP share of the loan to the Iowa Energy Center. As the loans are paid back to the Energy Center, those funds revolve back to the program and are made available to new applicants.

Where Do Program Funds Come From?
The program was originally funded by Iowa’s investor-owned utilities through a three-year assessment against their total gross intrastate operating revenues, derived from their intrastate public utility operations, totaling eighty-five one-thousandths of one percent of the total gross operating revenues during calendar years 1995 through 1997. The Energy Center received about $5.9 million for the program over the three year period.

In 2009 as part of the I-JOBS bill, new funds totaling $5 million were added and the program received an additional $5 million in 2010.

Absent any new funding added to the program, the amount of money available for loans at any given time is a function of the rate of loan repayment.

Eligibility
The loan program is open to all individuals and groups who want to build renewable energy production facilities in Iowa. AERLP loan funds may not be used to refinance an existing loan or to be applied to existing alternate energy facilities.

Application Deadlines
Technical applications for projects seeking $25,000 or less from the AERLP will be accepted and reviewed on a continuous basis. All other application cycles run on a quarterly basis and will close on, or the first business day following, October 31, January 31, April 30 and July 31. Applications must be postmarked or e-mailed by the closing date of a cycle to be considered during that round. All applications received during a given cycle will be reviewed at the close of that cycle.

*Rural electric cooperatives and municipal utilities may borrow up to $500,000 of AERLP funds once every two years.