Show Me the Money: Loan Guarantee Solicitation for Commercial Technology Applications
Oct 7, 2009 - Stoel Rives, LLP
In a much-awaited move, the Department of Energy ("DOE") has issued another solicitation under its Section 1705 Loan Guarantee Program (the "Section 1705 Program"). Unlike other solicitations under the American Recovery and Reinvestment Act ("ARRA"), this solicitation is not aimed at the borrowers or the developers — it is open to lenders only and invites them to apply for a partial, risk-sharing loan guarantee under the Department of Energy's ("DOE") Section 1705 Loan Guarantee Program for Commercial Technology Renewable Energy Generation Projects. This solicitation provides up to $750,000,000 of the $3.95 billion made available to support debt financing of U.S. renewable projects. The solicitation appears to be DOE's answer to the inability of eligible borrowers to meet the cost-share requirement.
This particular solicitation will be implemented through the use of a Financial Institution Partnership Program ("FIPP" for short), a streamlined set of standards that is layered on top of (not instead of) the existing Section 1705 Program. DOE's goal is to accelerate the loan guarantee underwriting process through FIPP and encourage the provision of private lender expertise and capital for eligible projects.
The requirements for the eligibility under this solicitation include the following:
"Commencing construction" includes the following:
The borrower must deliver written assurance that construction has started to the lender and DOE.
As always, there are significant reporting requirements and the project must comply with Davis-Bacon and Buy American provisions (the latter are an issue only for public buildings or public projects.)
The application process is in two parts: Part I submissions will be accepted on a continuing basis and applicants must submit a Part I application to be eligible to make a Part II application. DOE will let the applicant know whether it should submit a Part II application within two months of receiving the Part I application. The Part I submission should give DOE a good overview of the project, the financing strategy and list the licenses and permits that it has received by the date of submission. The Part II submission must provide much more detail, including anticipated milestones, engineering reports and an estimate of project costs. There are ten Part II submission deadlines between November 23, 2009 and January 6, 2011, occurring almost as frequently as once per month.
The DOE anticipates issuing another FIPP solicitation that will provide loan guarantees for commercial renewable manufacturing projects — no indication as to when that solicitation will be issued.
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