|
|
POLLUTION
PREVENTION
|
|
This financing guide prepared for the Colorado
Department of Public Health and Environment (CDPHE) Pollution Prevention (P2)
Program, by the CU Business Advancement Center. Project Manager for the
financing guide, Donald Q. Webb received assistance in researching and writing
the guide from Marilynn Force, Director of the Boulder Chamber of Commerce
Small Business Development Center (SBDC), Sari Karplus and Sara Musfeldt,
University of Colorado student research assistants. The Project Manager would like to thank the
staff of the CDPHE P2 Program, and especially Parry Burnap, Manager, and Neil
Kolwey, P2 Engineer, for their advice and assistance in preparing this guide.
Any views expressed in this report do not necessarily
reflect those of the Colorado Department of Public Health and Environment
(CDPHE), or the Small Business Administration (SBA) and Small Business
Development Centers (SBDC). The mention of any product or company should not
be viewed as an endorsement by CUBAC, the CDPHE or the SBA and SBDC. Business investment in equipment for pollution
prevention (P2) continues unabated as environmental regulations and social
concern provide the driving forces behind the process. Once the technical
feasibility of a P2 project is demonstrated, funds must be identified to
cover the costs associated with its introduction into the production process.
While there are many financial and institutional barriers to P2 investment,
the lack of financing for these projects has become a significant one. Small
and medium sized businesses frequently lack the information about obtaining
financing, as well as the various sources of funds for P2 investment. The purpose of this P2 financing guide is to
provide companies in Colorado with a process of financial analysis for
approaching management decision-makers and lenders regarding a specific P2
project. This is followed by descriptions of the alternative sources of
financing, both P2 specific and general sources, as well as the various
organizations that provide P2 technical and general business assistance. Section 2, provides a strategy for presenting a
P2 investment project to company decision-makers. An important part of the P2
project strategy is an approach to financial analysis referred to as Total
Cost Assessment (TCA), which offers an approach to removing unnecessary
financial barriers to investment in pollution prevention and energy efficient
technology equipment. TCA assists businesses in the development of a comprehensive
financial analysis of the true profitability of environmental investments,
which is critical to the successful introduction of these projects. Section 3, Tips for Approaching Lenders, is an
important compliment to Total Cost Assessment, as it presents the factors
that a lender is looking for in determining the funding decision. These factors include, a business plan,
financial statements and tax returns for the last 3 years, cash flow
projections that indicate sufficient funds to repay the loan, a description
of the total cost of P2 equipment, the amount of borrowed funds needed, and
how the proceeds will be used. A number of important financial ratios that
lenders rely on in their loan decision are described in this section. Section 4, Case Studies, presents three Colorado
companies successfully investing in P2 projects. In each case study the presentation offers an analysis of the
P2 investment that incorporates end results that would be expected from a TCA
financial analysis plan. The evaluation
is accompanied by a description of the original manufacturing system and the
new system, with P2 modifications.
The case studies are concluded with an analysis of the sources of
financing that are the most relevant for funding the P2 investment will
assist other companies in understanding how to approach the P2 equipment
financing process. Once a company has performed its TCA financial
analysis for a P2 investment and assembled the materials a lender wants to
review, the next step is to determine the best lending source to approach for
funds. Section 5, Funding Sources, is devoted to describing these sources
which are separated into environmental specific financing sources and more
general lending programs. The environmental specific financing sources
include both federal and Colorado sources, while the general sources include
only those within the state of Colorado. Federal sources include Environmental Protection
Agency (EPA), Department of Energy (DOE) programs, and the Small Business
Administration (SBA). State of Colorado P2 financing programs involve the
Colorado Housing and Finance Authority (CHFA), the Colorado Department of
Public Health and Environment (CDPHE), and the Colorado Governor's Office of
Energy Conservation. General sources of loan funds include financing
for facilities and equipment, which is the SBA Certified Development Company
(CDC) 504 Loan Program. Equipment is an important part of most P2 projects.
For small and startup businesses, there are a number of micro-loan programs
in Colorado, which are described in this section. Colorado Revolving Loan
Funds, many of which serve the rural areas of Colorado, are identified. The
SBA loan guarantee program and special rural area financing programs of CHFA
complete the section on funding sources. Section 6, Colorado Pollution Prevention: Technical and Business Assistance, identifies programs that provide P2 technical assistance, including local departments of health P2 assistance programs, the CDPHE P2 program, federal DOE and EPA P2 assistance programs, 2 programs at Colorado State University (CSU), and the Recycling Development Incubator (RDI). This section also describes programs that provide technical, market and business assistance, including three centers affiliated with the University of Colorado, Boulder; the CU Business Advancement Center (CUBAC), the Rocky Mountain Trade Adjustment Center (RMTAAC), and the Mid-America Manufacturing Technology Center (MAMTC). The 20 SBA Small Business Development Centers located across the state of Colorado are listed for companies that need business assistance in the western parts, and the more rural areas of the state, as well as in the front range urban cities from Fort Collins to Pueblo. |
|
