Green loans for small businesses

While there are many benefits to becoming a more sustainable business, investment is one of the biggest challenges to decarbonisation and green business operations.

According to research by the British Business Bank (PDF, 210 KB), 11% of SMEs – roughly 700,000 smaller businesses – have accessed external finance to support net zero actions and 22% are prepared to access external finance to do so within the next five years.

Finding funding to invest in more sustainable operations can be a challenge.

There are numerous incentives and grants available to support transitions to, for example, zero and ultra-low emission vehicles.

Other types of investments are centred on loans from commercial institutions such as banks.

Green loans offered by banks and other financial institutions may be an option.

Green loans to SMEs are typically restricted to funding sustainable business activities such as investment in renewable energy, green buildings, and pollution prevention.

We've included some examples of banks and funds that offer green loans for smaller businesses.

However, it's essential that you shop around and get professional, independent financial advice when sourcing funding for your business, as loans may not be suitable for all businesses.

Loans can be more expensive to pay back than the initial capital loaned to your business, and some may require security such as business or personal assets.

Loans are subject to status, application and eligibility, so there’s no guarantee that you will be approved for finance.

Further resources to find green loans

• Business Climate Hub
• HSBC (Green SME Fund)
• Lloyds (Clean Growth Financing Initiative)
• Barclays (Green Loan)
• Virgin Money (Sustainable Business Loan)