What is a green bank?
A green bank is a lending institution that accelerates the deployment of clean energy using a combination of public funding and private capital investment. In doing so, green banks make affordable financing of clean energy more accessible to consumers.
Green banks are often established through a city or county enacting an ordinance. The locality determines whether the green bank is a public entity, quasi-public entity, depository bank, or nonprofit entity. Best practices from successful green banks suggest a nonprofit structure is often preferable.
Green banks exist in many locations around the US, but not all states have enacted enabling legislation for green banks. Some green banks operate in multiple states.
How does it work?
Many low- and middle-income homeowners lack the necessary credit scores to qualify for loans. Green banks are sometimes able to underwrite loans based on a homeowner’s utility bill history rather than their full credit history.
Homeowners will be required to complete an application process similar to other small-loan applications. Because green banks embrace the mission to serve low- and middle-income households, there are fewer barriers to successfully taking out a loan.
Depending on the structure of a Habitat affiliate’s mortgage program, it may be possible for the affiliate to partner with a green bank in order to finance solar systems as well as other energy-efficiency measures.