Direct loans for clean energy projects
Loans for ready-to-build clean energy and emissions-reduction projects in Minnesota, including projects led by businesses, nonprofits, local governments and Tribal nations.
Questa opportunità è attualmente disponibile in inglese.
MnCIFA lends directly to projects, with options for short-term bridge financing to cover upfront construction costs, longer-term loans for buying or improving assets or covering operating costs, and participation in an existing third-party loan. An intermediary can also borrow for a portfolio of smaller projects with an aggregate loan need of at least $250,000.
The minimum loan to a single entity is $250,000. Loans made so far have ranged from $250,000 to $5 million, with larger amounts possible. Terms are typically two to seven years, assessed individually; some have reached ten years.
Interest uses U.S. Treasury borrowing costs as a starting point, with an adjustment based on MnCIFA’s assessment of project risk. Project risk, jobs, benefits to environmental justice communities and geographic diversity affect pricing. At first disbursement, the one-time origination fee is 1% of the first $2 million borrowed and 0.5% of the amount above $2 million.
MnCIFA must leverage private investment. Its current call offers financing up to 50% of total project costs; other funding can include equity, debt, grants and utility rebates. Having the cash already in hand is not required to apply, but MnCIFA reviews your fundraising plan and may require funding commitments or milestones before closing. It assesses expected tax-credit payments individually to decide whether they count as project financing or a repayment source.
You must repay the loan. Repayment schedules are agreed for each project and may include a period in which interest accrues and is added to the loan balance before monthly instalments begin. For bridge financing, MnCIFA assesses which assets you must pledge as security for the loan. These can include real estate, inventory, equipment or, in some cases, money owed to you by customers (accounts receivable).
Eligibility
- Potential borrowers include local governments, Tribal nations, nonprofits, project owners and developers, private entities, and LLCs or holding entities. Direct loans target projects ready to proceed to construction. Public entities and municipalities must have authority to borrow and repay; they undergo the same financial assessment as private applicants.
- The financed project must be in Minnesota. Customers can be elsewhere, except for power-generation projects where most electricity purchasers are outside Minnesota.
- Projects must satisfy at least one qualifying route: substantially reduce greenhouse-gas emissions; reduce energy use without reducing service; deploy renewable energy, storage, district heating, smart grids or microgrids; replace fossil-fuel technology with electric technology; support EV charging, electric buses or electric fleets; conserve water or protect, restore or preserve surface-water quality; or shift electricity demand in response to prices or when reliability is not jeopardized. Separately, state law requires every financed project to reduce greenhouse-gas emissions.
- For projects with a budget of $100,000 or more, all contractors and subcontractors must pay at least the prevailing wage rate. This combines hourly pay and qualifying employer benefit contributions, based on the rate paid to the largest group of workers doing the same kind of work locally. Contractors must also follow the statutory labor requirements, including posting wage rates, hours and basic pay rates for all trades at the project site.
- Preference goes to projects creating high-quality jobs and apprenticeships for local workers, especially workers from environmental justice communities, labor organizations and communities with retiring or retired power-generation facilities, including former workers at those facilities. Here, local workers are Minnesota residents permanently living within 150 miles of the project.
- Other preferences cover domestically produced energy technology receiving the federal section 45X manufacturing tax credit, certification that contractors and subcontractors recognize workers’ rights to organize and unionize, and a project labor agreement: a prehire collective bargaining agreement with construction-trade labor organizations that prohibits strikes, lockouts and similar disruptions and provides a binding process for labor disputes. MnCIFA can require that agreement for a particular project.
- Environmental justice communities include communities classified as disadvantaged by the federal funding source, or meeting Census-based thresholds: at least 40% nonwhite residents, at least 35% of households at or below twice the federal poverty level, at least 40% of residents over five with limited English, or location in Indian country. The statutory target that at least 40% of direct benefits flow to these communities applies to MnCIFA’s overall activities.
- For innovative technology, MnCIFA prefers a commercial demonstration and may consider financing in stages linked to deployment and scaling milestones. Financial due diligence checks business potential, financial viability and whether project cash flow can cover debt repayments.
How to apply
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- Preliminary applications are accepted at any time; progression requires assessment and an invitation to a full application. Financing depends on capital availability.[^c14][^c19]
Start with the Direct Loan preliminary application linked from MnCIFA’s direct loans page. It asks about your project and financing needs. For direct loan questions, contact Chief Investment Officer Arpita Bhattacharyya at Arpita.Bhattacharyya@state.mn.us.
MnCIFA accepts preliminary applications on a rolling basis, subject to capital availability. Its current strategic call closes October 30, 2026, with decisions on invitations to full applications planned for November 13; rolling intake continues after the call.
Following preliminary review, MnCIFA may invite a full application. That stage requires a business plan, audited financial statements and supporting documents, followed by due diligence, Credit Committee review and a public Board vote. Approval is followed by final due diligence and negotiation of the lending agreement. Funds are disbursed after the agreement and supporting documents are finalized and signed.
After disbursement, borrowers meet regularly with MnCIFA to monitor use of the financing and report on lending-contract requirements.