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MICHIGAN — A program to help small businesses go green is getting a little lift.

With small businesses spending more than $60 billion on energy each year, there are real savings if an owner adds energy reduction to his company’s portfolio. The Small Business Administration raised the loan limit for green projects from $4 million to $5.5 million last fall. Changes to the law will permanently increase SBA 7(a) and 504 limits from $2 million to $5 million, while manufacturers in 504 loan programs can get up to $5.5 million.

Regional SBA lenders say that can open up credit for renovations that will green small businesses’ operations, reduce their energy consumption and help their bottom line.

Jane Sherzer, president Michigan Certified Development Corp., said that the law change reduced the attractiveness of the green loans — the Green 504 program had loan limits up to $4 million. Still, the loans don’t have the same job-creation requirement of traditional SBA loans and may be attractive for some borrowers.

“Last September there were all sorts of changes in the 504 program. The size increased and the benefits to all these sorts of programs went away. We certainly want to get word out to lenders in the state that the limits have been raised, and with interest rates as low as they are, it is a great time to look at energy efficiency,” Sherzer said. “It may help small businesses look at things like geothermal heating and cooling — that is a substantial expense. That could be $100,000 or more to set up geothermal. It is not chump change to do that.”

Sandy Bloem, executive director at the Economic Development Foundation in Grand Rapids, said there are three criteria for loans to be eligible under the Green 504 program.

Energy savings — If relocating, the company must realize at least a 10 percent reduction in energy consumption.

Sustainable design — Companies are eligible for buildings that meet the U.S. Green Building Council’s LEED building standards.

Alternative energy — Firms are eligible if they are using any sort of alternative energy.

Bloem works with consultants to help determine if the projects meet the underwriting standards for the programs. Many businesses find that the energy savings surpass projections and realize their return on investment far quicker than they anticipated.

“There has to be some analysis. We partner with an environmental firm that can do that. We work with customers to see what they are changing to help minimize their energy costs. In most cases, it is much more than 10 percent savings,” Bloem told MiBiz. “This isn’t for every business, but it may help them qualify where they might not have, if they were not creating enough jobs.”

Bloem said there are few small businesses that will be able to take advantage of the loans, but it is another tool for SBA lenders.

“The reality is that for most of the customers that we do loans for, they don’t bump up against that $5 million cap — let alone the $5.5 million cap. It is a benefit if they are large enough, but it doesn’t really affect that many small businesses,” she said.

The SBA expects that small businesses investing in energy efficiency can shrink utility costs 10 to 30 percent without impacting their ability to be competitive. An additional benefit for businesses is that even with existing SBA debt, businesses may be able to then seek additional funds for capital projects.

“Businesses can use all the SBA programs to benefit their energy efficiency,” Sherzer said. “If they are looking at making capital improvements, upgrade windows or upgrade their HVAC system to a more efficient unit, the 504 program is an option.”