Montana Department of Environmental Quality About Us Permitting & Operator Assistance Public Participation

Alternative Energy Revolving Loan Program

Program Overview

The Alternative Energy Revolving Loan Program (AERLP) provides low-interest loans to increase investments in alternative energy systems and energy conservation measures in Montana.

The AERLP was established by the 57th Montana Legislature in 2001 and is managed by the Montana Energy Office, a bureau of the Department of Environmental Quality (DEQ). Since its inception, the program has provided financing for more than $14.2 million in alternative energy systems and energy saving measures installed in Montana homes and businesses. The revolving loan program is principally funded by air quality penalties collected by DEQ.

The interest rate for 2021 is fixed at 3.25 percent, 3.662% APR*.

 

 

*APR based on a $20,000 loan, 3.25% interest rate, 10 year term, and $504 in closing costs.

Contacts

Loan Program Assistance

Energy Resource Professional
Meranda Bass (406) 444-6586

Energy Resource Professional
Bill Webb (406) 444-6465

Mailing Address

Alternative Energy Revolving Loan Program
Montana Department of Environmental Quality
1520 E. 6th Ave.
Helena, MT 59601

Application Forms and Checklists

Prior to filling out a loan application, please review the application checklist (individual, business) and contact program staff if you have any questions about required information or supporting documentation.


Individual Loans

Individuals must complete the Individual Application Form and provide the supporting documentation outlined in this checklist.


Business Loans

Small businesses must complete the Business Application Form and provide the supporting documentation outlined in this checklist.


Nonprofit, Local Government, & University

Please contact program staff to discuss required application materials.


How to submit an application electronically:

The application forms are fillable PDFs that may be filled out and saved to your computer. We can only accept electronic submittals through the Montana File Transfer Service. To use the Montana File Transfer Service, click here, set up an account, and send your signed application and supporting documentation to msikes@mt.gov. For more detailed instructions please click here or contact program staff at msikes@mt.gov or biwebb@mt.gov.


How to submit an application by mail:

The application forms are fillable PDFs that may be filled out, saved, and printed from a computer. You may also print and fill the application out by hand.

Mail or deliver completed and signed application and supporting documentation to:

  • Alternative Energy Revolving Loan Program
  • Montana Department of Environmental Quality
  • 1520 E. 6th Ave.
  • Helena, MT 59601

Loan Terms

The current terms for the program are listed below. Please note that availability of loan funds, loan terms, and closing costs are subject to change without notice. Actual closing costs are set during the application review and will be disclosed to the applicant with a loan commitment statement.

  • No application fee
  • 2021 interest rate: 3.25 percent, fixed for the term of the loan, 3.662% APR*
  • Maximum loan amount: $40,000
  • Maximum loan term: 10 years
  • $0 down payment; no early-payment penalty
  • Closing costs include origination fee of $250 or 2 percent of loan amount, whichever is greater; and other fees of approximately $200.

*APR based on a $20,000 loan, 3.25% interest rate, 10 year term, and $504 in closing costs.

Eligible Applicants

Funds from the AERLP may be used to provide loans to individuals, small businesses, units of local government, units of the university system, and nonprofit organizations.

“Small business” is further defined for the purpose of this program as a business that: “(a) is independently owned and operated; (b) is not dominant in its field of operation; and (c) employs 100 or fewer individuals (Administrative Rules of Montana 17.85.105(15))."

Funding from the AERLP may be used to provide loans for the construction of alternative energy systems and capital investments for energy conservation purposes when done in conjunction with an alternative energy system.

Alternative Energy Systems

“Alternative energy systems” are defined in Montana law as “the generation system or equipment used to convert energy sources into usable sources using fuel cells that do not require hydrocarbon fuel, geothermal systems, low-emission wood or biomass, wind, photovoltaics, geothermal, small hydropower plants under 1 megawatt, and other recognized non-fossil forms of energy generation.” (15-32-102, Montana Code Annotated)

Alternative energy systems commonly financed by the AERLP include:

  • Solar photovoltaic (PV) systems
  • Solar thermal systems for water or space heating
  • Geothermal systems, including ground source heat pumps
  • Wind generators
  • EPA-certified low-emission pellet stoves or wood stoves
Energy Conservation Measures

"Capital investments for energy conservation purposes when done in conjunction with an alternative energy system" are defined in Montana law as "a capital investment that is used for an energy conservation purpose that is in the same structure as, and is constructed, installed, or otherwise put in service as part of, or at about the same time as, an alternative energy system to reduce the size of energy system needed." (17.85.103, Administrative Rules of Montana)

Energy conservation measures commonly financed by the AERLP include:

  • Insulation
  • High-efficiency windows
  • Energy-efficient appliances
Additional requirements

The proposed project, activity, or equipment must:

  • Be located in Montana
  • Be technically appropriate for Montana’s climate
  • Be proven reliable and be commercially available
  • Generate energy for the sole use of the owner, however, net metering systems are eligible for funding
  • Meet all applicable certifications and standards, such as local building codes and utility interconnection requirements
  • Comply with applicable statutory and regulatory requirements protecting the quality of resources such as air, water, land, fish, wildlife, and recreational opportunities

DEQ will conduct a technical, environmental and financial review of all applications to determine program eligibility. Feel free to contact program staff with questions.

Application Review and Funding Steps

DEQ generally accepts and processes loan applications throughout the year. It usually takes two to four weeks for the approval process, and up to two additional weeks for loan funds to be deposited in the borrower's bank account.

  1. Upon receipt of an application DEQ assesses the application for completeness, and begins technical and environmental reviews. Program staff will contact the applicant if the application materials are incomplete or if additional information is required to determine eligibility. When technical and environmental reviews are complete, DEQ transfers the application to the AERLP financial services contractor, Montana Business Assistance Connection (MBAC) for financial review.

  2. MBAC analyzes the applicant’s credit and loan repayment history, debt-to-income ratio, and loan security. MBAC may request additional information as necessary to process the loan application. Upon completing its financial review, MBAC will make a recommendation to DEQ to either fund or not fund the loan application.

  3. DEQ reviews the recommendation and findings of MBAC’s financial review and either approves or denies the issuance of a loan commitment statement to the applicant. MBAC will mail the approved loan commitment to the applicant, including a list of items required for loan closing.

  4. Applicant must sign and return the loan commitment statement to MBAC. Upon receipt of a signed loan commitment statement, MBAC will mail final loan documents to the applicant.

  5. Applicant must sign and return the loan documents to MBAC. Upon receipt of signed loan documents, MBAC will deposit loan proceeds in the borrower’s bank account.

  6. Borrowers are required to keep records of expenditures and to document the completed installation with photographs. When installation is complete, borrower must send a photograph of the completed installation and any additional information requested by the department.

  7. AERLP may conduct site visits to verify the project installation.

  8. Borrower makes loan payments to MBAC. MBAC will remit those payments to DEQ in order to fund new loans.

How is the money received and used?

Loan funds are usually paid to the borrower shortly following signing of final loan documents. Loan funds are restricted to qualified expenditures. DEQ site visits may be required to assure the loan funds are used as proposed.


What can loan funds not be used for?

Loan funds may not be used to purchase land, buildings, or vehicles. Loan funds cannot be used to pay the applicant for labor or in-kind services. Loan funds cannot be used for back-up systems (i.e., electric furnace, fossil fuel-powered generator, etc.).


What can loan funds be used for?

Loan funds are restricted to qualified purchases and services, including: engineering and consulting services; financial services associated with the project; normal loan fees and closing costs; equipment and components; installation costs and associated services; energy conservation products and associated installation costs and services; other qualifying items as approved by program managers.


What technical information is required?

A site assessment of the project is generally required, including a map delineating the planned locations for the equipment to be installed. Other information includes:

  • Energy production estimates as appropriate;
  • Energy saving calculations with assumptions;
  • Product information, specifications, manufacturing data, brochures, etc. for appliances and/or equipment to be installed;
  • Information on dealers as needed; 
  • Contractor bids. 

What loan security is required?

An applicant must provide some form of loan security. The loan program can accept a first mortgage or a junior position on a home mortgage, should the applicant have adequate equity in the home. In these instances, the loan program may require a property appraisal. The installed alternative energy system components purchased through the program may be acceptable loan security with a lien on the equipment. 


What are the project documentation requirements?

Itemized purchase and construction receipts must be kept by the applicant to document that the loan is used only to pay for qualified project costs. Installations and construction phases will be photographically documented in color by the applicant. Loan recipients maintain records, documents, and other information relating to the loan project and keep records sufficient to account for all funds received and expended pursuant to the loan. All records, reports, and other documents that relate to the project are subject to audit by the office of the legislative auditor, DEQ, and where required by law, the legislative fiscal analyst.

Federal stimulus funding under the American Recovery and Reinvestment Act (ARRA) was introduced into the loan program in 2009. That funding came with specific requirements, including reporting and project verification, a high level of public transparency, as well as other provisions. Most new loans will carry the same requirements as the ARRA funds revolve back into the program. 


What happens to applications when the loan fund is depleted?

When the program receives more applications than funds are available, DEQ will implement a ranking process that prioritizes applications based on criteria published in the Administrative Rules of Montana (ARM, Title 17, Chapter 85). Ranking criteria include: the amount of energy produced, the diversity of technology in the portfolio, the return on investment, the use of a process as a system or equipment generally available in Montana, the geographical diversity of the project portfolio, and the diversity of borrowers in the project portfolio.


Will AERLP insure the project is a good one?

No. The Montana Department of Environmental Quality may not:

  1. Act as an attorney, engineer, financial, or tax consultant. The applicant should hire any professionals or professional services needed.

  2. Guarantee the project is a good investment.

  3. Endorse any product, manufacturer, contractor, or component. All evaluations are made only for loan purposes. The applicant should shop for competitive bids and use professional help if necessary.

  4. Compel a contractor or engineer to remedy defects in construction or to live up to any contracts they make with you.

  5. Insure that any project is safe.

Can AERLP recommend installers?

No; however, various organizations maintain lists of recommended or qualified installers that operate in Montana. The Montana Renewable Energy Association (MREA) maintains a list of its member installers on its website. Applicants in NorthWestern Energy's service area may wish to consult the utility's listing of approved installers through its Renewable Energy Program.