AIB has unveiled a new €100m lending strategy for SMEs that wish to invest in energy-efficiency projects to reduce costs for their business.
The bank said energy accounts for around 9pc of operating costs in most businesses – equating to €70,000 a year for the average SME.
Under the new lending scheme, the bank will take into account the projected savings from energy-efficiency projects when calculating the borrower’s repayment capacity.
An AIB-sponsored Amárach Research report found that 54pc of businesses expect their energy costs to rise over the next three years.
Focus on energy savings
The cost of installing energy-efficiency projects varies, but one in seven SMEs are expected to seek bank finance to support an energy project in the next 12 months and the majority expect to need less than €25,000.
AIB is also planning to make €1bn available to the energy sector over the next three years.
“Our policy is informed by substantial market research which identifies clients’ needs, leading us to design a method of costing projected savings from energy-efficiency projects into the borrower’s repayment capacity,” said AIB’s director of Personal, Business and Corporate Banking, Bernard Byrne.
“It is also clear that the economic downturn has prompted businesses to focus on energy savings as a way of cutting costs when revenue growth is slow. On the broader canvas, that in turn should help Ireland achieve its 2020 targets of reducing energy consumption by 20pc by 2020,” he added.