Arkansas Energy Technology Loan Fund (AETL)


The AETL Fund finances energy efficiency retrofits and green energy implementation for companies in Arkansas.  The AETL Fund encourages Arkansas' companies to make investments in clean technologies and improvements in the energy efficiency of commercial and industrial processes and systems.  This enables companies that operate with a higher degree of energy efficiency to devote more resources to retaining and creating jobs.  Low interest rate loans are provided to assist those companies in financing their energy cost reduction efforts.

The program’s revolving loan mechanism allows borrowers to repay loans through the stream of cost savings realized from the projects. AETL funds are distributed on a “first come - first served” basis. 

Energy Efficiency Measures (EEMs) financed through the program include, but are not limited to: 

  • Replacing low efficiency equipment (turbines, motors, lighting, HVAC etc.)
  • Using renewable energy resources
    • Installation of wind generation
    • Installation of solar generation
    • Installation of bio-mass projects
  • Recycling waste heat (for example; recovering waste heat from boiler exhaust to pre-heat combustion air)
  • Power factor corrections resulting in removal or reduction of utility power factor penalties

 Project Eligibility Requirements:

  1. Project must be located in Arkansas.

  2. Project must meet one or more of the following criteria: 
    • demonstrate measurable improvements in energy efficiency,
    • result in a reduction in energy demand, 
    • implement an energy recycling process such as waste-heat recovery,
    • implement a clean technology energy system.

  3. Company must meet the definition of industry by having a North American Industry Classification System (NAICS) designation of 11, 21, 22, 31-33, 48, 49 or 562213. 
    • 42        (Wholesale Trade)
    • 44-45   (Retail Trade)
    • 493110 (General Warehousing and Storage)
    • 493120 (Refrigerated Warehousing and Storage)
    • 493130 (Farm Product Warehousing and Storage)
    • 551114 (Corporate, Subsidiary, and Regional Managing Offices)
    • 551112 (Offices of Other Holding Companies)
    • 621491 (HMO Medical centers)
    • 622110 (General Medical and Surgical Hospitals)
    • 622310 (Specialty (except psychiatric and substance abuse) Hospitals)
    • 531120 (Lessors of non-residential buildings)
    • 721110 (Hotels and Motels - except Casino Hotels)
    • 722110 (Full-Service Restaurants)
    • 722212 (Cafeterias)
    • 722320 (Caterers)

  4. Project must meet federal and state air and water quality standards.

  5. Any project that does not specifically involve retrofit of existing industrial buildings and facilities- such as energy efficient lighting controls/sensor, chillers, furnaces, boilers, heat recovery, and motors – has to have a National Environmental Policy Act (NEPA) review to ensure compliance with environmental regulations.

  6. Project must use existing reliable commercially-available technologies.

  7. To ensure loans are available for multiple projects, no single applicant may receive more than 20 percent of the IETL loan fund.  On rare occasions, this limit may be waived by the AEO.

Financing Options and Requirements:

  • Loan will be secured.  Security requirements will be determined in underwriting.

  • Maximum loan term is ten years.

  • The return on investment (ROI) should be sufficient to cover the loan payment.  A project with a ROI of more than 10 years will be considered if the company commits to buy down the payment such that it is repaid in 10 years.

  • The company's financial strength will be a factor in determining the interest rate reduction.

  • Interest rates will be below market rate and will be determined during the underwriting process.  The market rate at the time of closing will be used to determine the starting point of the interest rate with an option to lock in the rate at an earlier time. To encourage companies to commit to an energy efficiency project with a longer return on investment, a lower interest rate will be considered for the extended period.  The market rate to be utilized is the rate at time of closing.  Examples of typical loan rates include (based on a company with excellent financial strength and a non-lighting/insulation only project):
      • Loan Term 6 – 10 years = 2% below market rates
      • Loan Term 3 – 5 years = 1.5% below market rates.
      • Loan Term 0 – 2 years = 1% below market rates.  

      To allow a company to realize the energy savings immediately, the term can be extended up to one year past the ROI, not to exceed ten years.  The interest rate will be based on loan term, not the expected ROI period. 

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