- Available Funds: $4,500,000 (estimated) as of October 11, 2019.
- Interest Rate: 4.0%
- For updates, send an email to Loans@CalRecycle.ca.gov
The Department of Resources Recycling and Recovery (CalRecycle) offers the Greenhouse Gas Reduction Loan Program pursuant to Public Resources Code sections 42995-42998. The first loan cycle (Cycle 1A), offered loans for only organics projects. The second cycle (Cycle 1B), offered loans for organics, fiber, plastic, and glass projects. Cycle 1C offered loans for organics, fiber, plastic, and glass projects using the approved FY 2015-16 criteria. These cycles are now closed.
Cycle 2A is now open and applications are being accepted on a continuous basis, subject to fund availability.
The purpose of this noncompetitive loan program is to lower overall greenhouse gas emissions by providing loans to expand existing capacity or establish new facilities to process California-generated waste materials into new value-added products.
Loan Recipient Search: Displays data on number of loans awarded, amounts, and how funds were used.
Loan Applicant Type
Eligible applicants include:
- Cities and Counties
- Regional or local sanitation agencies, waste agencies, or joint powers authorities.
- Private, for-profit entities.
- Nonprofit organizations (except private schools).
- A preprocessor produces an intermediate product which requires further processing by another manufacturer.
- The preprocessor must result in new diversion from landfills, i.e., beyond that which was already being diverted.
- The preprocessor must provide proof of binding agreement with a California finished product producer that receives the preprocessed feedstock to make compost, soil amendments, biofuels, bioenergy, or recycled content finished products.
- Finished Product Producer
- A finished product producer makes a good or package in a form which requires no further processing or forming before it is offered for sale to an end-user. It does not include intermediate products, such as plastic pellets sold as feedstock to a converter for fabrication into a consumer product).
- Food Waste Prevention
- The loan program cannot finance equipment and machinery that will be located and operated by a third-party.
- A preprocessor who makes intermediate recycled-content intermediate products, must be located in California, and sell the products to Finished Product Producers that are also located in California.
- Finished product producers must be located in California.
Feedstock Waste Material Types
- Organics Projects: Organics (green waste and food waste) waste materials.
- Recycled Fiber, Plastic, and Glass Projects: Recycled fiber (paper, textiles including mattresses, carpet, and wood), plastic, and glass waste materials.
- Greenhouse Gas Emission Reduction:
Projects must be located in California and result in permanent, annual, and measurable reductions in greenhouse gas (GHG) emissions.
- Feedstock/Waste Material Diversion from Landfills
Projects must increase the quantity (tons) of:
1. Organics projects: California-generated green or food materials, or alternative daily cover (ADC) newly diverted from landfills and composted or digested; or
2. Recycled fiber, plastic, and glass projects: California-generated fiber, plastic, or glass materials newly diverted from landfills.
For purposes of this program, “newly diverted” means the tons of materials that are currently being landfilled or used as alternative daily cover that will instead be diverted as a result of this project.
- Construction, renovation, or expansion of facilities to increase in-state infrastructure for:
1. The digestion or composting of organics into compost, soil amendments, biofuels, or bioenergy; or
2. The manufacturing of value-added finished products using California derived recycled content fiber, plastic, or glass.
- Construction, renovation, or expansion of facilities to increase in-state infrastructure for:
1. The preprocessing of organics when providing preprocessed materials to an in-state digestion or composting facility that is using the waste to make compost, soil amendments, biofuels, or bioenergy; or
2. The preprocessing of fiber, plastic or glass waste when providing preprocessed materials to an in-state manufacturing facility that is using the waste to make finished products.
- Expansion of projects that have previously received Greenhouse Gas Reduction grants or loans from CalRecycle are eligible provided the project meets the loan criteria and the previously funded project is progressing in a manner satisfactory to CalRecycle.
- Food waste prevention projects result in measurable reduction in food waste normally destined for a landfill. These project can prevent food waste through source reduction and/or edible food rescue. Food rescue must result in rescued food being distributed to people in a disadvantaged community with any food waste residuals from the project being sent to a compost, digestion, or fermentation facility when one is available within the food waste prevention project’s service area.
- New and expanded facilities will be required to use the best available control technology (BACT) to limit emissions and ensure compliance with air quality standards.
- The maximum loan amount is $2,000,000 or 75 percent of total project cost, whichever is less.
- A borrower and its related entities may receive more than one loan, but may not have more than $5,000,000 in total principal outstanding on all CalRecycle loans at any one time.
Matching Funds Requirement
The GHG Loan Program has a matching funds requirement. The borrower must contribute at least 25 percent of the total project cost. The purposes of the match requirement are for the borrower to have financial risk in the project, which will incentivize the business to remain successful during the loan term, and to ensure that there is adequate equity in the loan collateral. In addition, the matching fund requirement must be in an amount sufficient to ensure that the business has sufficient working capital to pay operating expenses.
Schedule of Fees and Costs
- Loan Application Fee: $300, due at the time of loan application submittal.
- Loan Closing Points: 0.50 percent, due when loan funds are paid into escrow.
- Loan Interest Rate: 4.00 percent, fixed, on a simple interest basis.
- Prepayment Penalty: None.
The maximum loan term is 10 years when collateralized by assets other than real estate or 15 years when partially or wholly collateralized by real estate. Some loan terms may be less than 10 years to match the useful life of the equipment.
Use of Loan Fund Disbursements
Eligible costs include:
- Purchase of equipment and machinery
- Real estate improvements associated with the installation of the equipment and machinery. The land owner may need to provide a deed of trust to ensure that the loan has adequate collateral.
- Purchase of real estate that is directly associated with the project’s material processing, where the real estate includes a building or other real estate improvements used solely for that processing or manufacturing.
Loans made to finance the purchase of commercial real estate and/or to make necessary real-estate improvements will require the application of sustainable building practices. At least 25 percent of the loan funds approved for improvements to property
must be applied toward costs involving sustainable building products and services. Examples include the use of recycled paints, carpets, cubicles, and rubberized asphalt. The installation of energy efficient lighting, heating and cooling systems,
water conservation and shade producing landscape would also apply. Borrowers are required to provide invoices showing that 25 percent of the amount borrowed for improvements was used for sustainable building practices.
Ineligible costs include:
- Working capital
- Refinance of onerous debt
- Payment of the loan closing fee
Permit and CEQA Requirements
Permit requirements are as follows:
- Eligible projects do not qualify for a loan unless they are past the design phase of the project and are prepared for construction. Applicants must obtain all significant applicable federal, state, and local permits prior to CalRecycle Loan Committee consideration of the application. Significant permits may include: Air Permit, Water Quality Permit, Fire Permit, Solid Waste Facility Permit, Business License, and/or a Conditional Use Permit.
- Applicants shall complete all California Environmental Quality Act (CEQA) requirements for their project before the loan request is presented to the loan committee.
Loan Underwriting Requirements
- Experience: Satisfactory work and educational experience of the facility operator.
- Ability to repay the loan: The applicant must be creditworthy, and the project and the borrower must have the financial capacity to generate sufficient cash flow from the sale of recycled-content products to repay the loan (or other sources if the borrower is a government entity).
- Adequacy of the collateral: The collateral value must match or exceed the loan amount.
- An owner of 20 percent or more of the applicant business generally must guarantee the loan. CalRecycle may ask other owners or key management to also provide a guarantee.
Applications which meet the above criteria and all other eligibility and priority criteria will be recommended to the Loan Committee for approval
Greenhouse Gas Reduction Calculator
The FY 2015-16 Draft Quantification Methodology (QM) and accompanying calculator will be used until the Air Resources Board approves its final QM, at which time the GHG emission reduction calculations will be modified by CalRecycle in consultation with ARB, if necessary. To access the QM, select the hyperlink, scroll down to Department of Resources, Recycling, and Recovery (CalRecycle), then select the blue hyperlinks to access the QM and the Emission Reduction Calculator.
Timeline and Cycle Details
Loan applications can be submitted at any time and are processed on a first-come-first-served basis, subject to availability of program funds. The GHG Loan Program is a revolving fund. In addition to received appropriated funds, monthly loan repayments become immediately available to fund new loans.
To apply for Cycle 2A, use the loan application materials on the program's Forms and Documents page.