Pollution Prevention (P2)
Finance Forum
A Project of EPA's EFAB and P2 Program
RESOURCE PACKET
ACCESSING CAPITAL: CHALLENGES FOR P2 FINANCING
P2 FINANCE FORUM WORKSHOP AGENDAS
Workshop 1: Setting the P2 Stage and Exploring Financial Structures
Workshop 2: Tools and Loan Structuring Strategies
Workshop 3: Partnership Models and Distribution Networks
*Note: Workshop recordings and written summaries are posted here:
https://www.epa.aov/waterfinancecenter/environmental-financial-advisory-board-
efab-pollution-prevention-finance-forum
WORKSHOP PRESENTERS
Environmental Financial Advisory Board (EFAB) P2 Workgroup
EPA
Workshop 1 Speakers
Workshop 2 Speakers
Workshop 3 Speakers
WORKSHOP SERIES RESOURCES
Resources and Case Studies
P2 Financing: Definition of Terms
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ACCESSING CAPITAL: CHALLENGES FOR P2 FINANCING
What is P2?
Pollution prevention (P2), also called "source reduction/' is any practice that reduces, eliminates, or prevents pollution
at its source and prior to recycling, treatment, or disposal. Some examples of P2 are shifting to use less hazardous
materials, implementing process changes to more efficiently use materials, and reducing the use of energy or water.
The Benefits of P2
Reducing the amount of pollution produced means less waste to control, treat, ordispose of. Less pollution means fewer
hazards posed to human health and the environment. P2 can help promote innovation and resource use efficiency, which in
turn can provide enduring benefits and help businesses save money. In addition, for businesses, it's often cheaper to prevent
pollution than to clean it up afterwards or pay for control, treatment, and disposal of waste products. If a business can reduce
or eliminate such expenditures, that translates to its bottom linereducing operating, regulatory, and liability costs.
However, many projects that would help businesses implement P2 practices can have capital costs that require upfront
expenditures to purchase equipment or make physical process changes. For example, in the manufacturing sector, P2
projects can include:
Modifying a production process to use fewer materials orto produce less waste
Installing a solvent refill system that reduces overflow or captures overflow for reuse without contamination
Investing in technology to improve process efficiency, which saves water and energy
Switching out product packaging to reduce the amount of packing-related waste
Sometimes businesses can cover costs of P2 modifications by coordinating them with other large-scale capital projects. In
other cases, businesses fund improvements from the cost-savings generated by low-cost P2 projects. Some businesses seek to
fund the projects through government grants. Many businesses, however, may not have accesstofundsneededtoplan and
implement P2 projects, particularly those requiring upfront purchases of new equipment or more expensive outlays for
altering production processes, which can be a barrierto implementation.
Tools for Financing P2 Projects
As noted above, P2 projects often have costs (e.g., new equipment, contractor services) that require cash disbursements
upfront, with potential savings (avoided costs) accruing overtime. For small and medium-sized enterprises (SMEs), these
projects often compete for limited resources with other internal business priorities that are essential for revenue generation.
SMEs may not be used to borrowing money from external sources or may not realize that it's possible to do so at affordable
terms. To determine whether an SME qualifies for financing, traditional lenders review factors such as cash on hand,
credit history and outstanding debts, and past and anticipated revenue. SMEs that are not able to demonstrate sufficient
collateral assets and prospects for on-going revenue generation may be regarded as risky investments and either be denied
financing or offered less attractive loan terms (e.g., higher interest rates).
Lenders can make loans for P2 investment more accessible to SMEs by using a variety of techniques to lower or spread
financial risk in ways that enable them to reduce the borrower's cost of financing (e.g., with lower interest rates and/or longer
payback periods to reducethesizeof regular loan payments). P2 financing tools can make small business loans more
attractive to lenders.
For more information on P2, visit www.epa.aov/P2
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Financing Options
There are a variety of financing options for businesses seeking funding for P2 projects.
Commercial financing: traditional lending (i.e., commercial banks), Community Development Finance
Institutions (CDFIs), and impact investing.
Government resources and programs: state P2 programs and state government financial incentives and
resources (e.g., P2 loans or grants).
Green Banks: these entities work with private sector investors to crate low-cost, long-term financing to
maximize the use of public funds.
Utilizing these financing options can helpSMEs overcome barriers typical to financing P2 projects, helping reduce pollution
at its source and increase efficiency from a waste, disposal, and resource perspective.
P2 Financing Tips
Clearly assess operations and maintenance (O&M) costs, project financial savings, and calculate return on
investment (ROI) to establish for lenders it is a wise investment.
Be prepared to clearly outline the environmental benefits of the pollution reduction that wouid result.
Talk with your state's P2 program, as they may be able to provide examples of how others have approached the
P2 improvement. This can be used to establish to potential lenders that the approach has been implemented by
others and that it works. This can help to reduce uncertainty and answer lenders' questions.
For more information on P2, visit www.epa.aov/P2
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P2 FINANCE FORUM WORKSHOP AGENDAS
U.S. Environmental Protection Agency
Environmental Financial Advisory Board (EFAB)
Pollution Prevention (P2) Workgroup
P2 Finance Forum - Workshop#1 Public Meeting
Location: Virtual via Zoom
Wednesday, March 9, 2022 | 12:00-1:30 pm Eastern Time
The P2 Finance Forum is a series of webinars that explore opportunities and challenges in financing sustainability, with
an initial focus on advancing opportunities for small and-medium-sized manufacturing businesses.
The purpose of this first Forum webinar is to define the common types of P2 projects relevant to small businesses and
manufacturers, characterize the barriers and risks facing businesses and lenders for P2 projects, and explore financing
mechanisms and structures that are well-suited to overcome these barriers and risks to enhance financing for P2
projects.
P2, also known as source reduction, is any practice that reduces, eliminates, or prevents pollution at its source prior to
recycling, treatment, or disposal. For more information, visit https://www.epa.gov/p2.
Agenda
12:00 pm
Welcome and Member Roll Call
Edward H. Chu - EFAB Designated Federal Officer; Deputy Regional Administrator, EPA
Region 7
12:05 pm
Workshop Purpose and Agenda
Ashley Allen Jones - Chair, EFAB Pollution Prevention Workgroup; Founder and CEO, i2
Capital
12:10 pm
Setting the P2 Stage
David Widawsky - Division Director, EPA Office of Chemical Safety and Pollution
Prevention
12:20 pm
Financial Structures Panel
Moderator: Craig Hrinkevich - Member, EFAB Pollution Prevention Workgroup;
Managing Director, Baird
Kelsie Bouchard - Portfolio Manager, Coastal Enterprises, Inc.
Jeremy Gilpin - Executive Vice President, Greater Commercial Lending
Matt McKenna - Executive in Residence, Rural Opportunity Initiative
Aldric Seguin - Managing Partner, Global Sustainable Futures
1:10 pm
Q&A with EFAB
1:25 pm
Wrap Up
Kerry O'Neill - Chair, EFAB; CEO, Inclusive Prosperity Capital
1:30 pm
Adjourn
For more information on P2, visit www.epa.gov/P2
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U.S. Environmental Protection Agency
Environmental Financial Advisory Board (EFAB)
Pollution Prevention (P2) Workgroup
P2 Finance Forum - Workshop#2 Public Meeting
Location: Virtual via Zoom
Tuesday, May 10, 2022 | 12:00-1:30 pm Eastern Time
The P2 Finance Forum is a series of webinars that explore opportunities and challenges in financing sustainability, with
an initial focus on advancing opportunities for small and-medium-sized manufacturing businesses.
This Forum is designed to build on the first Forum to explore various tools and loan structuring strategies that may be
well-suited to support P2 projects at SMEs or which could inform development or adaptation of other successful models
for expanding financing capacity to SMEs. The session will also explore potential opportunities to "piggyback" on existing
and innovative models (eg. ESCOs) to enhance financial support for P2. Our participants are well versed in standards &
certification, energy- as-a-service contracts and organizations, and C-Pace financing models, among other broad areas of
expertise.
Agenda
12:00 pm
Welcome and Member Roll Call
Edward H. Chu - EFAB Designated Federal Officer; Deputy Regional Administrator, EPA
Region 7
12:05 pm
Introduction and Setting the Context
Moderator: Stacy Brown - President and CEO, Freberg Environmental
EFAB Charge: Ashley Allen Jones - Chair, EFAB Pollution Prevention Workgroup;
Founder and CEO, i2 Capital
EPA P2 Program: David Widawsky - Division Director, EPA Office of Chemical Safety
and Pollution Prevention
12:15 pm
Panelist Remarks
Catherine Sheehy - Global Lead of Sustainability Partnerships, UL
Brad Fletcher - Vice President & Treasurer, Illinois Finance Authority
Bert Hunter - Executive Vice President and Chief Investment Officer, CT Green Bank
1:00 pm
Discussion
Moderator: Stacy Brown
1:25 pm
Wrap Up
1:30 pm
Adjourn
For more information on P2, visit www.epa.gov/P2
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U.S. Environmental Protection Agency
Environmental Financial Advisory Board (EFAB)
Pollution Prevention (P2) Workgroup
P2 Finance Forum - Workshop#3 Public Meeting
Location: Virtual via Zoom
Tuesday, August 23, 2022 | 12:00-1:30 pm Eastern Time
The P2 Finance Forum is a series of webinars that explore opportunities and challenges in financing sustainability, with
an initial focus on advancing opportunities for small and-medium-sized manufacturing enterprises (SMEs).
This Forum is designed to build on the first two Forums to explore partnership models and distribution networks that
EPA could leverage to support expanded access to financing for P2 projects at SMEs. The session will delve into how
various state, community development financial institution (CDFI), and original equipment manufacturer (OEM)
programs are working to address small and medium-sized business financing needs that could be relevant to capital
equipment and process improvement projects.
Our guest speakers will represent four typologies of partnership models and distribution networks. They will come to
the discussion with years of experience working with state programs, trade associations, CDFIs and OEMs representing a
variety of industrial sectors.
Agenda
12:00 pm
Welcome and Member Roll Call
Edward H. Chu - EFAB Designated Federal Officer; Deputy Regional Administrator, EPA
Region 7
12:05 pm
Introduction and Setting the Context
EFAB Charge: Ashley Allen Jones - Chair, EFAB Pollution Prevention Workgroup;
Founder and CEO, i2 Capital
EPA P2 Program: David Widawsky- Division Director, EPA Office of Chemical Safety
and Pollution Prevention
12:15 pm
Panelist Remarks
Martin Chilcott - CEO and Founder, Manufacture 2030
John Cox - Principal, John Cox Consulting
Sarah Lee - Project Director, Advanced Manufacturing Sector Integration, Washington
State Department of Commerce
Frank Altman - CEO, CRF USA
1:00 pm
Discussion
Moderator: Ashley Allen Jones
1:25 pm
Wrap Up
1:30 pm
Adjourn
For more information on P2, visit www.epa.gov/P2
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P2 FINANCE FORUM WORKSHOP SERIES PRESENTERS
EFAB
Kerry O'Neill - Chair, EFAB; CEO, Inclusive Prosperity Capital
Kerry E. O'Neill is the Chief Executive Officer of Inclusive Prosperity Capital Inc., a nonprofit
investment fund that was spun out of the Connecticut Green Bank in 2018 to scale up impact for
underserved communities and underinvested markets across the country. Inclusive Prosperity
Capital operates at the intersection of community development, clean energy finance, and
climate impact using a collection of products and strategies that match capital supply with project
demand through partners on the ground. Prior to joining IPC, O'Neill led the residential energy
financing programs at the Connecticut Green Bank, a state entity that works with private-sector
investors to create low-cost, long-term sustainable financing for clean energy to maximize the use of public funds. Her
work at the Connecticut Green Bank has given her insight into the institutional challenges - and opportunities -
associated with clean energy investing for underserved communities. O'Neill earned a B.S. in computer science and
engineering from MIT and a M.S. from NYU Tisch School of the Arts' Interactive Telecommunications Program.
Ashley Allen Jones - Chair, EFAB Pollution Prevention Workgroup; Founder and CEO, \2 Capital
Ashley Allen Jones is a business and investment executive leading environmental finance
innovation across the water and agricultural sectors. She specializes in bridging the gap between
public, private, and philanthropic approaches to conservation, with the distinct goal of
dramatically expanding sustained funding for conservation. Ms. Allen Jones is a dynamic finance
professional with expertise across private equity, venture capital, and investment banking, and
has a proven track record of working at the dynamic intersection of finance and social change.
Prior to founding i2 Capital, she co-founded the Endeavor Group, a global consultancy that
manages the priority business and philanthropic investments of multiple family office principals. She also was a Principal
at Women's Growth Capital Fund, a gender-lens venture fund. Her corporate finance experience includes mergers &
acquisitions, private financings, and initial public offerings with Alex. Brown & Sons (Deutsche Bank), Coopers & Lybrand
(Price Waterhouse Coopers), and Quarterdeck Investment Partners (Jeffries). Ms. Allen Jones has a B.A. in American
Studies from the University of Colorado and a M.B.A. in finance from the McDonough School of Business at Georgetown
University.
Craig Hrinkevich - Managing Director, Baird
Craig Hrinkevich joined Baird in 2019 with more than 25 years of municipal finance experience.
He has a broad range of experience and diverse banking, credit, sales, and structuring
expertise, including working with a variety of issuer and debt types (e.g., states, state agencies,
bond banks, state revolving funds, general obligation, appropriation, moral obligation, asset
securitizations, public and private higher education and not-for-profits, healthcare, municipal
and investor-owned electric and water/sewer utilities, local towns, cities and school districts
and transportation entities). He has developed creative financing solutions for a variety of
high-profile and local issuers in the Northeast region and throughout the country. Prior to
joining Baird, Hrinkevich served in various public finance investment banking roles at Wells Fargo Securities, Wachovia
Securities, A.G. Edwards & Sons, Inc., and First Albany Corporation. Hrinkevich earned a bachelor's degree in political
science from Rutgers College, and a master's degree in governmental administration from the University of Pennsylvania.
For more information on P2, visit www.epa.aov/P2.
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Stacy Brown - President & CEO, Freberg Environmental
Stacy brings almost 30 years of experience in the insurance and environmental consulting industry
to his tole as President & CEO of FEI. He joined Freberg in 1998 and has served as president for
the past nine years. Stacy was hired to develop FEI's site-specific pollution (EIL) program. Since
program inception in 2001, the EIL program has developed into one of FEI's most profitable
programs. Additionally, Stacy has developed and brought to market several new insurance
programs, including architects and engineers' professional liability, site specific pollution,
petroleum storage tank, products pollution, and excess auto liability. Stacy is the co- author of an
award- winning loss control book, Understanding and Managing Risk: A Handbook for Environmental Consultants and
Contractors. He brings a wide range of insurance, environmental and construction experiences to FEI. Stacy's career
includes work with a NYSE- listed engineering firm, the U.S. Forest Service, and a municipal waste authority. Prior to
joining FEI in 1998, he spent eight years as an environmental scientist and project manager for Dames & Moore (now
URS), a large multi-national environmental and engineering firm.
EPA Leadership
Chris Meister- Executive Director, Illinois Finance Authority (Former EFAB P2 Workgroup Member)
Chris has served as Executive Director of the Illinois Finance Authority, Illinois' infrastructure bank, since 2009. Chris
serves as the Authority's chief executive officer and has overseen the presentation, approval and closing of over 390
individual transactions, mainly federally tax-exempt conduit bonds involving privately-owned capital projects and
publicly owned infrastructure with an estimated dollar value of over $13.7 billion. Significant achievements include the
Triple-A rated (S&P/Fitch) Illinois State Revolving Fun ("SRF") Bonds, Series 2013, which restructured the SRF Program to
enable increased leveraging while also representing the first SRF issue in Illinois in nearly 10 yeas (December 2013);
removing nearly $40 million in contingent State Moral Obligation Bonds through the redemption and cash defeasance of
the Authority's Rural Bonk Bank Local Government Bond Program (August 2014); and various Recovery Zone Facilities
Bonds, including importantly, the Navistar International Corporation conduit transaction (2010).
EPA
Edward H. Chu - EFAB Designated Federal Officer; Deputy Regional Administrator, EPA
Region 7
Edward H. Chu is the Deputy Regional Administrator for the Environmental Protection
Agency's Region 7 in Lenexa, Kansas. Since arriving at EPA in 1995, Ed has held several key
leadership positions, including Designated Federal Officer for the EFAB since 2018. He was the
Assistant Regional Administrator for both EPA's Pacific Northwest and Alaska Region (Region
10) and Southeast Region (Region 4), and the Acting Director of EPA's Indoor Air Division,
where he developed the Federal Radon Action Plan and championed EPA's asthma programs.
As the Director of the Office of Solid Waste and Emergency Response's Center for Program
Analysis and the Director of the Land Revitalization Office, he created the Re-Powering
America's Land Program to encourage generation of renewable energy on Brownfield properties. Ed was also a founding
member of EPA's Office of Children's Health Protection in 1997, where he developed the first Federal Asthma Strategy
for the President's Task Force on Environmental Health Risks and Safety Risks to Children, the first international report
on children's health indicators, and the first research program on children's health valuation. Ed served as the Deputy
Associate Director for Green Jobs, Community Protection, and Climate Solutions at the White House Council on
Environmental Quality, where he led an interagency task force to develop and implement the Recovery Through Retrofit
Action Plan for the Vice President and the Middle-Class Task Force. He has degrees from the University of Michigan and
Michigan State University.
For more information on P2, visit www.epa.aov/P2
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David Widawsky, Ph.D. - Division Director, EPA Office of Chemical Safety and Pollution
Prevention
Dr. Widawsky is the Director of the Data Gathering and Analysis Division, in the Office of
Chemical Safety and Pollution Prevention at EPA. He provides leadership for the EPA's mission
focus on chemical safety and sustainability in the implementation of the Toxic Substances
Control Act, the Pollution Prevention Act, and the Emergency Planning and Community Right to
Know Act. The multi-disciplinary staff under his leadership provide expertise, analysis, method
development, and innovation for several pollution prevention programs at EPA, including grants
to states and tribes for working with businesses to promote source reduction and an
environmentally preferable purchasing program for federal procurement. He also leads
programs in sustainability through safer and sustainable chemistry and chemical products,
including EPA's Green Chemistry Challenge Awards and EPA's Safer Choice labeling program for safer chemical products.
Dr. Widawsky is a graduate of the University of California with B.Sc. degrees in Political Economy of Natural Resources
and in Plant and Soil Biology, received his M.S. in Agricultural Economics from Colorado State University, and earned his
Ph.D. in Applied Economics at Stanford University. He has worked at the U.S. EPA since 1998, where he has served in a
number of leadership roles across the Agency.
WORKSHOP 1 SPEAKERS
Kelsie Bouchard - Portfolio Manager, Coastal Enterprises, Inc.
Kelsie Bouchard is the Portfolio and Credit Manager at CEI, a CDFI focused on creating good
jobs, environmentally sustainable enterprises, and more broadly shared prosperity in Maine
and rural regions throughout the U.S. Her role within the lending department includes deal
underwriting, portfolio analysis and strategy, risk management, and oversight of lending
operations. Prior to joining CEI in the fall of 2019, Kelsie worked as a risk manager at Morgan
Stanley in New York City, focusing primarily on counterparty, operational, and new product risk
in the equity derivative and secured financing businesses. Growing up in rural northern Maine,
Kelsie established a passion for community and economic development. She is deeply proud of
her Maine roots. Kelsie graduated from Syracuse University, where she majored in Entrepreneurship and Emerging
Enterprises, and the Maxwell School of Citizenship and Public Affairs' undergraduate Policy Studies program.
Jeremy Gilpin - Executive Vice President, Greater Commercial Lending
With a background that includes more than two decades in the banking industry, Jeremy has
extensive experience delivering guaranteed lending through the USDA B&l, REAP, FSA, USDA
9003, IRP, RLF, and SBA programs. Throughout the past 20 years, he has closed and serviced
more than $900 million in loans. As head of the Greater Commercial Lending team, Jeremy
directs all aspects of this division in providing lending solutions to companies. Previously, he
led the development and implementation of all commercial services for Greater Nevada Credit
Union, the largest USDA business lender in the U.S. Jeremy was also a credit administrator for
Washington's oldest community bank and provided USDA and SBA loan services for financial
institutions throughout the Midwest. A veteran of the U.S. Army, he served as a personnel
officer for the Kansas Army National Guard. Jeremy sits as chairperson of the National Rural Lenders Association, which
partners with USDA national directors and political leaders to ensure rural communities maintain access to viable
financing options. He is also an active volunteer and serves on the Nevada Advisory Board for the Special Olympics.
Jeremy holds a bachelor's degree in finance and military science from Pittsburg State University and is a graduate of the
Western States School of Banking Commercial Lending Program.
For more information on P2, visit www.epa.aov/P2.
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Matt McKenna - Executive in Residence, Rural Opportunity Initiative
As an Executive in Residence with McDonough School of Business, Mr. McKenna leads the
Rural Opportunity Initiative - an effort to foster rural economic development through
partnerships between the public and private sectors. He previously served as a Senior Advisor
to Secretary of Agriculture Tom Vilsack at USDA, responsible for launching a variety of public-
private partnerships focused on bringing capital to rural America, including the Rural
Infrastructure Opportunity Fund and the Rural Business Investment Opportunity Initiative. In
conjunction with his work at the USDA, he was named a Presidential Executive Fellow. During
a 15-year career with PepsiCo, Mr. McKenna held several executive roles, including Sr. Vice
President of Finance and Treasurer. He was also a Director for PepsiAmericas. As President and Chief Executive Officer of
Keep America Beautiful, he helped grow the nation's leading non-profit working with affiliates and over 2 million
volunteers to build and sustain vibrant communities across America. Previously, Mr. McKenna was a Partner at
Winthrop, Stimson, Putnam, and Robert, focusing primarily on federal income tax issues. Mr. McKenna presently serves
as a Partner with Open Prairie, a Rural Business Investment Corporation, an Adjunct Lecturer at Fordham University, and
an independent member of the Board of Directors for Foot Locker (NYSE: FL) where he serves as the Financial Expert for
the Audit Committee and Chairman of the Finance and Strategic Planning committees. He received a Juris Doctorate and
Master of Laws from Georgetown University Law Center and a Bachelor of Arts from Hamilton College.
Aldric Seguin - Managing Partner, Global Sustainable Future
Aldric is a Co-Founder and Managing Partner of Global Sustainable Future (GSF), a middle market
finance firm that advances a collaborative approach to sustainability by bringing entrepreneurs,
capital, and market access together to address global challenges in Energy, Air, and Water. In
addition to his role with GSF, Aldric currently serves as Managing Partner of the Safer World
Group and Verde Impact Advisors (VIA). Within the Safer World group member companies, Aldric
actively supports the outstanding team of management professionals in achieving corporate
growth objectives while overseeing M&A/Sales activities and technology & manufacturing
transfers between North America and Europe. Aldric established VIA to centralize the environmental, social, and
governance activities of the group and family office, actively participating in key operating companies including Fesco
Energy as well as strategic investments with a focus on clean energy, carbon reduction, air, and water. Prior to co-
founding the Safer World Group, Aldric worked the IT and Financial industries, including roles at TechTarget and
Thomson Reuters.
WORKSHOP 2 SPEAKERS
Catherine Sheehy - Head of Advisory Solutions, Environment & Furniture, UL Consumer
Catherine Sheehy is based in the US and has twenty years of project and program management
experience. As the Head of Advisory Solutions with UL Environment, she and her team manage a
range of projects that contribute to circular economy thinking both related to standards and
certifications that UL offers in the marketplace - such as UL 2799 Zero Waste to Landfill - and in
support of other sustainability objectives. Services offered include sustainability training, risk
assessments, innovative claim research and protocol development, and greener market
positioning support. Before joining UL Environment, Catherine was a Manager with Accenture
where she led organization design and change enablement teams. Catherine's other work experience includes the
Human Rights Campaign where she helped update and grow the Corporate Equality Index, a tool that rates
organizations on diversity related concerns. Prior to that, Catherine worked at the Investor Responsibility Research
Center as director of the Corporate Benchmarking Services, where she was director of a research department that
provided social and environmental screening data on companies to institutional investors. Catherine has spoken as a
panelist or key speaker on NPR's Marketplace and conferences on corporate social responsibility, socially responsible
investing, and sustainability issues. Catherine was also a key author of the UL 880 Standard for Sustainability for
Manufacturing Companies, which addresses key enterprise-level sustainable supply chain issues.
For more information on P2, visit www.epa.aov/P2
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Bert Hunter - Executive Vice President and Chief Investment Officer, CT Green Bank
As Chief Investment Officer of the Connecticut Green Bank, Bert leads the finance team's
development of new and innovative financing programs that attract more private capital to scale-
up the state's clean energy investments, including energy efficiency, renewables and alternative
fuel vehicles and associated infrastructure. Bert was Vice President of Finance and Chief Financial
Officer of Spectrum Capital, Ltd, an investment bank focused on commercial aircraft finance and
investment in U.S. electric power generation. He was accountable for all financial control and
served as the company's senior risk officer, overseeing all extensions of credit and investment of
the firm's capital. Prior to Spectrum, Bert was the treasurer of the international leasing company of Chemical Bank,
where he managed the funding for a billion-dollar portfolio of aircraft and equipment loans and leases outside the
United States. Bert is an alumnus, a former Trustee and former member of the Board of Visitors of Wake Forest
University (BS) and received his MBA from the Wharton School at the University of Pennsylvania.
Brad Fletcher-Vice President & Treasurer, Illinois Finance Authority
Brad has over a decade of experience managing traditional tax-exempt project financings from
application to closing, effectively leading nonprofit, local government, and certain for-profit
borrowers and their respective lenders or underwriters to successful conduit bond issuance
outcomes. His work encompasses development and implementation of the Illinois Finance
Authority's Commercial Property Assessed Clean Energy ("C-PACE") conduit financing initiative as an
essential agency effort to expand its commercial, industrial, and multi-family portfolio. Additionally,
he regularly discusses C-PACE project opportunities and best practices with industry stakeholders
and economic development officials of cities, villages, and incorporated towns throughout Illinois. In 2019, Brad directed
the drafting of a technical rewrite to the Illinois Property Assessed Clean Energy Act to bring the statute up to standard
with comparable Illinois special assessment laws and provide assurance to the market that C-PACE transactions can by
capably executed and properly enforced. Since receiving unanimous approval of the legislation in the Illinois General
Assembly, the Illinois Finance Authority has issued bonds or notes in the aggregate principal amount of $57,925 million
to fund qualifying C-PACE projects without relying on any appropriation of taxpayer or ratepayer dollars to support the
State agency's mission or operations. Additionally, the Illinois Finance Authority has entered short- term warehouse
lending facilities with capital providers to interim finance C-PACE projects in the aggregate principal amount of $12,300
million.
WORKSHOP 3 SPEAKERS
Martin Chilcott - CEO & Founder, Manufacture 2030
Martin Chilcott is a British entrepreneur specializing in environment and education, best known as
the founder and CEO of 2degrees, the world's largest community for sustainable business. Chilcott's
experience in launching and running successful internet businesses in the late 1990s, convinced him
that the global community was once more at the brink of systemic change, this time, driven by the
need to become sustainable. Having witnessed the power of enterprise and digital technology to
drive change, Chilcott was convinced business had to be at the heart of the sustainability revolution,
and that web technologies would play a major role in accelerating the process. As a result, 2degrees
- an Oxford based technology company specializing in resource efficiency software solutions - was born. Chilcott's
current focus is the company's Manufacture 2030 platform and its unique cloud-based tool the Bee. M2030 enables
large corporations to reduce the carbon emissions in their global manufacturing supply chains by helping suppliers to
use resources more sustainably, cutting operational costs and environmental impacts.
For more information on P2, visit www.epa.aov/P2. n
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_ _ John Cox-Principal, John Cox Consulting
* John Cox is Chairman of the Board of Turkey Hill Dairy, having retired as President and CEO in 2019
| "^ after almost 35 years with Turkey Hill and its parent company, Kroger Co. At Turkey Hill, John
championed the company's sustainability initiatives including a multitude of operational
improvements and supply chain sustainability efforts. He presently serves as Senior Advisor to
Lancaster Clean Water Partners, an organization he helped to found in 2019 to achieve clean water
at an accelerated pace in Lancaster County, a priority agricultural geography in the Chesapeake Bay
jIT
Watershed. He was a board member of the International Ice Cream Association and on the
Governor's Food Safety Council from 2008 - 2011, and also has served on the Boards of the Lancaster County Economic
Development Company (past Chair), Lancaster Farmland Trust (past Chair), and Lancaster Workforce Investment Board.
Sarah Lee - Project Director, Advanced Manufacturing Sector Integration, Washington State
Department of Commerce
Sarah Lee manages a national program that helps small- and medium-sized manufacturers find and
secure the resources they need to be more competitive and productive. Before joining the WA State
Dept. of Commerce, she worked for the Puget Sound Regional Council, and previously served as press
secretary to a U.S. Congressman, director of public affairs at EPA Region 10, deputy executive director
of a housing authority, and as senior vice president of an international multimedia firm. She holds a
BA in Journalism from Western Washington University and a Master of Public Affairs degree from the
University of Washington, and several executive certificates from Harvard Business School. She goes sailing whenever
she has time.
Frank Altman - CEO, CRF USA
Frank Altman is founder and CEO of Community Reinvestment Fund, USA (CRF), an innovative
national CDFI that is committed to collaborating with others to fill gaps in access to capital and
grow the capacity and capability of the industry. Altman pioneered the development of a
secondary market for community and economic development loans when he established the
organization. Since 1988, CRF has grown from a small Minneapolis firm to a national
organization serving community-based lenders across the country. In partnership with a
network of local community partners, CRF has funded $2.4 billion in loans to job-creating small businesses, community
facilities, charter schools and affordable housing projects in 49 states plus Washington, D.C. and in nearly one thousand
communities across the United States. Under Altman's leadership, the organization has an ambitious ten-year goal of
delivering more than $1 billion in additional capital to communities in need and helping create or retain 1 million jobs.
Altman earned his Bachelor of Arts degree from Brown University and his Master of Arts degree from the University of
Minnesota.
For more information on P2, visit www.epa.aov/P2. 12
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P2 FINANCE FORUM WORKSHOP SERIES RESOURCES
RESOURCES AND CASE STUDIES
GENERAL P2 FINANCING RESOURCES
Green Banks, such as Green Bank Network members, work with private-sector investors to create low-cost,
long-term financing to maximize the use of public funds.
Community Development Financial Institutions (CDFIs) are private institutions that deliver affordable lending. By
financing community businesses, CDFIs spark job growth and retention in hard-to serve markets.
The CDFA State Financing Program Directory catalogs over 350 development finance programs offered by states.
Sustainable supply chain financing programs reward suppliers that meet certain environmental and/or social
criteria by offering them a reduced interest rate on a type of credit known as supply chain finance (SCF). SCF has
no restrictions on how suppliers use the proceeds, but the hope is that they are used for sustainability-linked
improvements. Some examples include:
o International Finance Corp. (IFC) provides short-term financing to Levi Strauss & Co. suppliers through
web-based financial platforms and financial institutions,
o PVH (a clothing company) has recently launched an SCF program with HSBC Bank. The PVH VP of
Corporate Sustainability says that the program is a motivator for their suppliers to improve social and
environmental performance.
TRADE ASSOCIATION RESOURCE
Suppliers Partnership for the Environment (SP) is an innovative collaboration between automakers and their suppliers.
They bring together companies in the automotive value chain, in partnership with US EPA, to advance projects with
positive environmental, economic, and community impact.
STATE PROGRAMS
Indiana
DERA Funding: DERA funds grants and rebates that protect human health and improve air quality by reducing
harmful emissions from diesel engines. EPA offers funding for projects that reduce diesel emissions from existing
engines. DERA funding is available on a federal, tribal, and state level. The Indiana Department of Environmental
Management (IDEM) office manages Indiana's allocation. IDEM administers DERA funding through the
DieselWise grant program.
Indiana Medium- and Heavy-Duty Grant Program: IDEM allocates a portion of the VW Environmental Mitigation
Trust funds for the replacement or repower of eligible vehicles and equipment, in partnership with schools,
municipal and public entities, and the private sector.
CIFI Small Business Loan: CIFI makes small business loans to new and existing small businesses, providing loans
to entrepreneurs who lack access to bank credit. They finance businesses with plans to create or sustain jobs for
low- to moderate-income individuals, provide access to crucial goods and services, and foster economic
development. A CIFI loan request can range from $25,000 to $250,000 and the proceeds can be used for a
variety of needs, such as: real estate acquisition, equipment purchases, inventory purchases, improvements, and
working capital.
Bankable Business Loans: Bankable is a non-profit lender based in Anderson, IN that makes reduced rate loans
to small businesses for capital equipment purchases and other business needs. Bankable offers three different
loan products: Credit Builder Loans, Microloans, and Community Advantage Loans. Loans range from $500 up to
$250,000.
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Massachusetts
Administered by BDC Capital, and funded by the Massachusetts Department of Environmental Protection, the
Massachusetts Recycling Loan Fund offers loans ranging from $50,000 to $500,000 to help Massachusetts businesses
active in recycling-related activities obtain the capital needed for any reasonable business purpose. As of 2019, the
Massachusetts Recycling Loan Fund had issued 74 loans, totaling over $16 million, in the past 20 years. The fund has
assisted 54 businesses, including anaerobic digestion facilities, a composting facility, a converter of recycled paper, an
electronics recycler, a scrap metal recycler, a recycling hauler, and more.
Michigan
Michigan Department of Environmental Quality's (MDEQ) Small Business P2 Loan Program provides Michigan- based small
businesses with low-interest loans to fund eligible P2 projects. Loans are available to any independently owned business with
less than 500 employees and can be up to $400,000 at an interest rate of 5 percent or less and rates of as low as 2 percent
were realized by businesses overthe past two decades. The program finances projects that reduce or eliminate waste and
associated public health hazards, increase energy efficiency, reduce water use, modify equipment or processes, research raw
material substitutions, or train employees on howto implement associated P2 improvements. Ineligible expenditures
include those with prior incurred costs, refinancing, labor or operating costs, land acquisitions, or any other project that
would not reduce or prevent pollution associated with production. Recent P2 projects financed through the program
include the transitioning numerous medical facilities from traditional film x-ray systems to computed radiology, constructing
a closed loop wash water recycling system for concrete mix-truck washing, and the purchase a downdraft paint booth with
an air makeup system for an autobody shop. MDEQ partners with lending institutions by providing half of the financing.
Lending institutions can charge a competitive interest rate for their share of the loan, effectively blending the interest rate
with the MDEQ's share notto exceed 5 percent. MDEQ's share of the loan is limited to a maximum contribution of
$200,000 from the P2 loan fund. Loans exceeding $400,000 may be negotiated separately by the lenderto finance larger P2
projects. The applicant must also have a satisfactory credit rating and agree to the terms and conditions of the loan
established by the participating lender.
Minnesota
The Minnesota Pollution Control Agency (MPCA) provides small business environmental improvement loans at zero
percent interest to small businesses for capital equipment purchases that help the company meet or exceed
environmental regulations, and costs associated with the investigation and cleanup of contaminated sites. Common
benefits include a healthier workplace, lower waste disposal bills, and reduced regulatory obligations. Projects that to
beyond compliance may result in simpler permits and cost savings. To qualify, a borrower must be an existing small
business corporation, sole proprietorship, partnership, or association with less than 100 full-time employees. Loans
range from $1,000 to $75,000.
Ohio
The Toledo-Lucas County Port Authority has developed a national reputation for innovative business financing,
assisting over 600 economic development projects representing a total investment of more than $2 billion while
helping to create and retain nearly 20,000 jobs. The Port Authority has a history of providing a range of loan
products to businesses to support productivity and environmental improvements. Under DOE's Better Buildings
initiative, the Port expanded its energy efficiency and environmental improvement lending to businesses.
Leveraging its experience in managing various financing programs throughout the state, the Port Authority will
create the Revolving Loan Fund for eligible businesses throughout Lucas, Ottawa and Wood Counties in Ohio as
a gap financing tool for eligible non-profit and for-profit businesses. The Revolving Loan Fund would help to
address a regional weakness in access to capital and support the overall goals of the Comprehensive Economic
Development Strategy (CEDS) for the region.
The Northwest Ohio Bond Fund provides small and medium-sized companies access to the national capital
market as if they were A- Investment Grade companies.
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The Ohio Department of Development Regional 166 Loan Program provides a low interest rate financing for
fixed assets purchases such as land, building and equipment for manufacturing, distribution and wholesalers
throughout Ohio. A typical transaction consists of 50% bank financing; 40% Ohio 166 loan; and 10% owner
equity.
The U.S. Small Business Administration 504 Loan provides fixed asset financing to for-profit businesses with a
net worth not exceeding $15 million and net after-tax profit of not more than $5 million. A typical transaction
consists of 50% bank financing; 40% SBA; and only 10% owner equity injection. The SBA 504 takes a second lien
position. This program is available to companies throughout Ohio.
Pennsylvania
The Pennsylvania Department of Environmental Protection's (PEP) Small Business Pollution Prevention Assistance Account
(PPAA) provides low-interest loans to small businesses for P2 projects that aim to reduce waste, prevent pollution,
businesses comply with environmental regulations, or increase energy efficiency. P2 loans may be used to purchase
equipment or implement process changes that reduce or reuse raw materials on site, reduce the production of waste at the
source, reduce the use of volatile organic compounds (VOCs)or other chemicals, decrease packaging use, or significantly
reduce energy consumption. Examples of P2 projects that qualify for loans include the purchase of digital x-ray
equipment, implementing HVAC upgrades, installing chillers or motors, and making process improvements or investing in
manufacturing equipment. The interest rate for the loan is fixed at 2 percent for the duration of the term, with a maximum
loan term of 10 years. The maximum loan amount is $100,000. Loans may be used to fund up to 75 percent of the total eligible
project cost. Grants or other loans may be used to finance the remaining 25 percent of the project cost.
CASE STUDIES
Below are case studies profiling typical P2 projects that have benefitted from external financing support (e.g., loans or
grants), could benefit from such support, or received technical support from a state to make the project more attractive to
financial institutions.
Case Study 1: Alternative Financing Via CDFI and State Voucher Program
Industry: Dry cleaners
P2 Activity: Switching out equipment to transition from dry cleaning with hazardous chemicals to wet cleaning
Project Cost: $50,000-$60,000
Environmental and Health Benefits:
Reduced human exposure to hazardous percholoroethylene (PERC)
Eliminated the risk of aging machines leaking and contaminating soil and groundwater
Business Benefits:
Improved worker safety
Costs associated with disposal of used PERC
Description: Transitioning from a traditional dry-cleaning process that uses hazardous chemicals to a less toxic
process, professional wet cleaning, requires a significant up-front investment. The equipment costs tens of thousands of
dollars (typically $50,000 and $60,000). To make this change, many dry cleaners must finance the project due to the
higher outlays. Traditional financing can be difficult for smaller businesses such as dry cleaners to get. However, they can
turn to non-traditional options, such as a CDFI, to help get the financing needed to implement the project. For example,
Craft3, a regional nonprofit CDFI in the Pacific Northwest, provides loans designed to help recipients who may not have
otherwise been able to access traditional financing. In 2019, Craft3 provided small business loans to two dry cleaners to
transition from dry cleaning to professional wet cleaning. This Craft3 loan, coupled with reimbursement funding provided
by the Washington State Department of Ecology Equipment Replacement Voucher Program, allowed these businesses
the financial means to transition away from this hazardous chemical.
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Case Study 2: Financing from State Loan Program
Industry: Medical
Activity: Transition from conventional imagingtechnology and film development (i.e., X-ray) to computed (or direct
digital) radiology technology
Project Cost: $32,000
Environmental and Health Benefits:
Prevents the generation of approximately 175 gallons of hazardous liquid waste containing silver halides
and lead compounds
Reducesthetotal amount of solid waste sentfor landfill disposal
Business Benefits:
Reduced hazardous and solid waste disposal costs
Description: A small medical office in Grand Rapids qualified for Michigan's Small Business P2 Loan program and secured
a $32,000 loan at a 2.5 percent interest rate in 2016. Michigan's Small Business P2 Loan Program provides loans of upto
$400,000 at an interest rate of 5 percent or less to independently-owned businesses with 500 or fewer full-time
employees. Low interest loans are available to all Michigan businesses including manufacturing, farming, retail, and service.
Through the program, the state partnered with a participating lender who provided half of the financing, ensured that the
applicant had the cash flow to repay the loan, established the terms and conditions of the loan, and serviced the loan until
it was repaid. The state provided the other half of the financing at 0 percent from the state's revolving loan fund. The
funding made it possible for the office to make the switch from conventional x-ray to computed radiology.
Case Study 3: Project Unable to Obtain Financing
Industry: Brewery
P2 Activity: Modernizing brewing equipmentto reduce waste and capture C02
Project Cost: $175,000 for centrifuge and $60,000 to 100,000 for C02 recapture system
Environmental and Health Benefits:
Installing centrifuges would reduce material, water, and
Improving canning equipment would reduce waste and
Installing C02 recapture and generation systems would
Business Benefits Could:
Increase yields
Reduce defects
Reduce material, water, and energy costs
Description: While the P2 opportunities could result in significant environmental benefits, the cost savings for this
project were not significant enough to offset the finance charges of any loans available. The investments required to
implement these P2 improvements were considerable relative to the size of the brewery operations. The size of the
company and the age of their business would result in higher-than-average interest rates because they look riskier to
banks. In this instance, the breweries were motivated to pursue the P2 opportunities, but they did not make financial
sense based on the interest rate, payback period, and the cash flow required for the business to remain profitable. The
payback period for the centrifuges was estimated to be 1-2 years but was dependent on the business scaling up
production. The C02 recapture system would be experimental. C02 costs for the brewery were $32,000 annually. If it
functioned properly the payback period could be less than six months, but the investment was deemed too risky as
the technology was not proven.
energy inputs
wastewater
reduce emissions from fermentation
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Case Study 4: Project Financed and Achieved Return on Investment
Industry: Cabinet manufacturing
P2 Activity: Install a solvent distillation system to reduce spent solvents and extend useful life
Project Cost: $40,000
Environmental and Health Benefit:
Extend the useful life of solvents and reduce the generation of hazardous waste (spent solvents)
Business Benefits Could:
Reduce solvent costs
Reduce hazardous waste management costs
Description: In 2018, Canyon Creek Cabinet Company worked with the Washington State Department of Ecology to
develop a site-specific return on investment (ROI) spreadsheet to analyze current costs, capital investments, and dollars
saved. Ultimately, the company invested approximately $40,000 for new distillation equipment, reduced acetone waste
generation by 90 percent, and achieved a payback period of about 7 months.
Case Study 5: Project Financed and Achieved Return on Investment
Industry: Surface coating in aerospace or automotive sectors
P2 Activity: Install newtechnology to reduce paint use and associated waste
Project Cost: $500,000
Environmental and Health Benefit:
Reduce use of solvents for equipment cleaning
Reduce solid waste
Business Benefit:
Reduced solvent costs
Reduced paint costs
Reduced waste management costs
Description: A plural component spray system is a substantial initial investment. The system mixes the paint directly at the
tip of the spray gun eliminating the need for premixing. Premixing paint normally leads to large volumes of unused paint
that ultimately needs managed as waste. One surface coating business in Washington State invested approximately
$500,000 to convert their painting linefrom conventional sprays systems to a plural component spray system. Estimates
showed that the business would realize a return on investment of 1.5 years dueto reduced labor, product purchases, and
waste generation and disposal costs.
Case Study 6: State Program Grants
The Massachusetts Toxics Use Reduction Institute (TURI) at UMass Lowell provides grants to industries to reduce
their use of toxic chemicals. The grant funding supports equipment upgrades, process modifications, improved
operations and maintenance and other means of achieving TUR. Below are four examples of grant supported
projects
River Street Metal Finishing received a TURI industry grant to purchase a new acid purification system that
filters the dissolved aluminum out of the tanks and returns the filtered solution back to the tank. As a result,
the reduction of sulfuric acid use is improving worker safety, reducing hazardous waste and saving money.
The company expects to save approximately $1,200 annually in chemical costs due to using less sulfuric acid.
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With the reduction of hazardous waste generated, the company expects to save an additional $3,800
annually.
Morgan Advanced Materials of New Bedford, Massachusetts, a manufacturer of ceramic feedthroughs for
medical and aerospace industries, eliminated the use of TCE used in a vapor degreaser. The company
received a TURI grant to purchase a water-based cleaning system and used TURI lab services to test the
effectiveness of various solutions to remove wax from parts. The company moved to a new borax mixture for
their cleaning purposes and are realizing an annual savings of approximately $30,000. Morgan will see a
return on their investment in a little over three and a half years.
Umicore worked with its vendors and TURI to find a safer parts cleaning process that eliminates its use of
perchloroethylene (PCE). Using a new vacuum degreaser system with a safer cleaning chemistry, the
company projects a savings of over $21,500 annually, while protecting worker health and safety and reducing
its regulatory obligations.
CD Aero of New Bedford, MA worked with TURI and the Massachusetts Office of Technical Assistance (OTA)
to find a safer alternative cleaning process to the use of n-propyl bromide (nPB). With a new aqueous
cleaning process, the company is now saving $46,000 per year, protecting health and safety and reducing
its regulatory obligations.
Case Study 7: State Technical Assistance, Making the Business Case
Washington State Department of Ecology assists small and medium sized businesses in achieving toxic chemical
use reduction by providing technical assistance along with economic analysis to help them make the business
case for making a capital investment. Below are two examples of how their services can help businesses move
towards P2.
Solvent distillation. In some industries, distilling solvents can present an alternative to directly disposing of
hazardous waste. This requires an investment in distillation equipment. In 2018, Canyon Creek Cabinet
Company (a cabinet manufacturing business) worked with the Washington State Department of Ecology to
develop a site-specific return on investment (ROI) spreadsheet to analyze current costs, capital investments,
and dollars saved. Ultimately, the company invested ~$40,000 for new distillation equipment, reduced
acetone waste generation by 90%, and achieved an ROI of 0.6 years.
Plural component spray paint. Businesses like those in aerospace and automotive industries use spray guns
to apply premixed paint for client's specific color requests. Premixing paint normally leads to large volumes
of unused paint that ultimately gets disposed of. By switching to a plural component system, which mixes
the paint directly at the tip of the spray gun, companies can eliminate overmixing and drastically reduce the
use of solvents for equipment cleaning. A plural component spray system is a substantial initial investment;
one painting business in Washington State invested ~$500,000 to convert. Although, estimates showed that
this was well worth the investment; an ROI of 1.5 years was achieved due to reduced labor, product
purchases, and waste generation and disposal costs.
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P2 FINANCING: DEFINITION OF TERMS
Customers:
"A person or an organization that buys goods or services from a shop or business" (Oxford Dictionary)
"One that purchases a commodity or service; an individual usually having some specified distinctive trait"
(Merriam Webster)
P2 Example: A small business that receives technical assistance may be viewed as a customer receiving a
service. A customer may also be a business receiving (borrowing) the loan for a P2 project. (EPA)
Financial intermediaries:
An "institutional unit" "channeling] funds from lenders to borrowers" (OECD)
P2 Example: An intermediary can help facilitate the loan process between small businesses or other
organizations and financial institutions that are participating in P2 projects. Intermediaries can support the
customer by providing guidance that will make their loan application more attractive to lenders.
Lenders:
"A business or financial institution that extends credit to companies and individuals with the expectation that
the full amount of the loan will be repaid" (Corporate Financial Institute)
P2 Example: An institution that is funding a P2 technical assistance project to a small business can be
considered a lender. The lender defines the terms of the loan. Some examples of P2 lenders include
commercial institutions and government programs (EPA).
Types of risk/uncertainty in the P2 financing space:
Definition of risk: "Degree of uncertainty and/or potential financial loss in an investment decision" (Investor, gov)
For small businesses, there are a variety of risks, including economic, compliance, security and fraud, financial, and
operational.-*¦
A P2 project may be a smaller business's first instance in taking out a larger-sized loan. The business may not have
the tools or knowledge to maintain the loan terms or payment timelines (EPA).
Lack of "established credit or cash flow history," which may be risky if they cannot meet the repayment
timelines (OCC). This also means they may not have "assets that can serve as collateral," and "uncertain
revenue prospects" (EPA).
Uncertainty in whether the business or organization will commit to a P2 project as a priority when faced with
other priorities unique to small businesses (EPA).
Lenders contracting with third parties to implement the loan can produce inherent "operational risk" (OCC).
Instruments/mechanisms to buy down the cost of capital - insurance, bundling, etc. - and how they work:
Definition of buy down: "To lower interest rates for a buyer in the early years of the loan" (Collins Dictionary)
Definition of cost of capital: "Minimum rate of return that a business must earn before generating value"
(Corporate Finance Institute): "The return a company needsto achieve in orderto justify the cost of a capital
project" (Investopedia)
» Cost of capital is one method by which lenders will determine whether to approve the loan
Insurance: Insurance includes "loan protection insurance," which covers payments if the borrower is not able to "due
to a covered event" (EPA).
» Loan insurance allows the business to be covered in case of an event where they cannot make payments, which
ultimately ensures the lender is covered (National Funding)
Bundling: "Companies sell several products or services together as a single combined unit" (Investopedia)
» Allows loans to be bundled together if businesses have taken out multiple loans they need to pay off.
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Debt financing: "Entails selling fixed income products, such as bonds, bills, or notes, to investors to obtain the
capital needed to grow and expand its operations" (Investopedia)
» Debtfinancingcan help small businesses growtheir capital
» Equity financing is similar, in which case businesses sell equity for the company to the lender
Tax incentives: Tax incentives to businesses applying for the loan implies there will be a growth in their
business and therefore reduces the lenders' cost of capital (EPA)
Aspects of costs that these instruments address:
Risk perception: "The subjective decision-making process that an investor uses when evaluating risk and the
amount of uncertainty" (Investor Behavior)
» Lenders use risk perception to determine whether a business is worth investing in based on their
business/financial history.
» Lenders may also perceive the actual benefits of the pollution prevention projects
Risk aversion/affinity:
» Risk aversion: "The tendency of an economic agent to strictly prefer certainty to uncertainty" (Corporate
Financial Institute).
» Certain institutions may favor businesses/organizations that apply for P2 funding that do not come with any risk
Efficiency of lending: Applies to commercial banking. Efficiency in banking means the efficiency ratio: "The
value of net revenue found by subtracting a bank's loan loss provision from its operating income" (The
Balance)
» This indicatorfor a bank's ability to process loans efficiently may impact a P2 project's businessthat has to cover
many costs up front
Fixed/variable costs of financing compared to returns:
» Fixed costs of financing: "A cost that does not change with an increase or decrease in the number of goods or
services produced or sold" (Investopedia)
» Examples for P2 projects may be the cost of a new piece of equipment.
Variable costs of financing: "Costs directly associated with production and therefore change depending on
business output" (Investopedia)
» Examples for P2 projects may be the cost of contractor services, as well as conferences, trade events,
maintenance, etc. (EPA)
Return: "The money made or lost on an investment over some period of time" (Investopedia)
» The above instruments allow for lenders to ensure their return rate is what they are expecting. P2 Technical
Assistance providers can help businesses to outline what the return on investment for a particular P2 project will
be (EPA).
Channel marketing: Using "new partnersto helptransfergoodsfrom producers to consumers" (Marketing
Schools). Businesses will use external, third parties to market their services or goods. This can be applied to
either the lender or the borrower. Channel marketing can reduce costs associated with outreach or
distribution.
Endnotes
1 httDs://www.americanexDress.com/en-us/business/trends-and-insiahts/articles/7-business-risks-everv-business-should-Dlan-for/
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