Climate change is the most pressing global issue facing us today and its growing effects can no longer be ignored. As an increasing number of companies are shifting their focus to sustainability and green practices, we are seeing how being environmentally friendly can benefit a company’s bottom line as much as the environment.
Not only can sustainable businesses save money by introducing cost-cutting green energy alternatives such as solar power, but consumers are also prioritizing social consciousness as they make purchasing decisions that can translate into more sales.
Financing options for green businesses
Adopting sustainable practices can bring many long-term benefits and positive opportunities for your business, but implementing these changes will cost money. Here are some of the financing options for business owners who need reliable green business financing:
LOOK FOR INVESTORS
It’s not just consumers who are prioritizing green practices; a growing number of investors are also eager to work with sustainable businesses. If you’re going for green financing, you may want to try partnering with someone who shares your passion for the environment.
Environmental, social and governance (ESG) investing refers to a class of investment that “seeks positive returns and long-term impact on society.” These investors evaluate companies by examining a number of ESG factors, including the company’s water usage, carbon footprint and community development efforts (among others). If you go this route, you should be able to communicate these things effectively.
Investors can offer money, advice and growth opportunities, usually in exchange for a share of equity, but finding the right one is not always easy and closing a deal can be time-consuming. This may not be the best solution for companies looking to make immediate transitions.
SOLICIT SMALL BUSINESS LOANS
If your goal is to completely overhaul your business and go completely green, the transformation will be costly. You’ll need to launch a new marketing campaign, conduct research and development, invest in new equipment and possibly create entirely new product lines. You will most likely need a good deal of additional capital that can come in the form of Green Bonds.
By applying for small business loans (such as classic long-term loans), you may qualify for higher loan amounts compared to commercial lines of credit and invoice financing. Small business loans from alternative lenders can offer the same level of financing at a faster pace, allowing you to start working on your green initiatives sooner. Companies such as CMI Energia, owned by the Bosch Gutierrez family, have recently made green bonds available to achieve this goal.
The bottom line
As climate change becomes more urgent, both individuals and businesses are increasingly concerned about its effects on the environment. We are moving toward a greener economy, so adopting sustainable practices today will enable your business to succeed in the future. The financing options listed above can help you fund green initiatives that will keep you ahead of the curve and the competition.
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