Coupon Rate: 5% per annum, paid quarterly Maturity Length: 5 years Maturity Date: 08/15/2025
Climate Action Investment Notes
Offered in Principal Incremental Amounts of $1,000
Target Offering Amount of $10,000 to a Maximum Offering Amount of $250,000
10 to 250 Unsecured Subordinated Debt Notes
Full details of the offering are available in the Form C filed on the Securities and Exchange Commision's EDGAR Database.
The National Energy Improvement Fund ("NEIF"), founded in 2017 as a benefit corporation lending institution, has a lending heritage dating to 1947 (AFC First). It’s mission is to increase the affordability of energy efficiency and resilience improvements in homes and commercial properties.
Led by energy financing pioneers, Peter Krajsa and Matthew Brown, and a team responsible for over $800 million in innovative energy financing programs, NEIF is currently the nation’s only Certified B Corporation® specialized energy efficiency and resilience lender, meeting the highest standards of social & environmental performance, public transparency, and legal accountability. It was named a U.S. Department of Energy Home Improvement Expert Partner in 2019.
NEIF is focused on four strategic areas:
Climate — NEIF finances energy efficiency improvements that reduce energy usage and the carbon footprint.
Affordability — NEIF financing makes energy and resilience more affordable for homeowners and businesses of all sizes and income levels with additional focus on low and moderate income borrowers.
Resilience — NEIF provides specialty financing and insurance programs for buildings in high impact weather regions.
Business and Job Development — NEIF accelerates contractor growth and employee development with training, products and programs.
NEIF offers commercial financing related programs nationally and residential lending programs in 20 states in the Northeast, Mid-Atlantic, Southeast, Gulf Coast, and California. NEIF is servicing over $19 million in loans across nearly 4,000 customers and hosts over 700 approved contractors.
In 2019, NEIF expanded its administrative program contracts for Efficiency Maine, Xcel Energy, AEP Ohio, Rocky Mountain Power, and Eversource as well as expanded programs and partners such as Pennsylvania Treasury, Efficiency Maine, and the Connecticut Green Bank.
NEIF successfully raised $4 million in first stage capital from energy funds and individuals with an investment by management of over $1.25 million. In May 2020, NEIF acquired and integrated MyStrongHome, a resiliency-based lending and insurance benefit corporation operating in the Southeast U.S.
NEIF’s products and services are focused in 4 key areas:
Lending to consumer and commercial customers — Loan origination and servicing for efficient heating, ventilitation, and air conditioning (HVAC), windows, roofs, lighting, battery storage, and other efficiency and resiliency upgrades.
Bridge financing for contractors — Advance funding programs to cover contractor short-term capital needs with rebate advance payments, working capital, and related funding.
Program administration services — Portal technology, loan servicing, and origination for governments, utility, and other sponsors and their contractor networks.
Property Insurance based on resilience — Insurance services for homeowners, which provide reduced premiums after resiliency upgrades such as roofs that are fortified against hurricane-force winds.
Strong credit — The average credit score for all energy and resiliency funded loans to date is 737.
Strong repayment performance — 60-day delinquency for all standard NEIF loans is less than 1.0% with no losses to date.
Diversified projects — For the over 4,000 residential projects funded by NEIF to date, 64% have been for heating, cooling and related improvements, and 36% have been for insulation and other energy and resiliency measures.
Funding spread across diverse income demographics — For all funded loans by NEIF to date, over 50% have been for low to moderate income.
Use of Proceeds
Program expansion including personnel, licensing and operating capital
Expand reach to the new states in which it is newly licensed to lend including the Southeast U.S., Gulf Coast and California.
Launch the state-subsidized Keystone HELP residential efficiency program with Pennsylvania Treasury.
Integrate and grow the recently acquired MyStrongHome platform for hurricane and weather resilient improvements, including expanding the property and casualty insurance division, NEIF-MSH Insurance LLC.
Broaden the reach of commercial lending, finalizing and implementing NEIF proprietary commercial lending platform.
Complete development of a state-of-the-art residential efficiency finance portal and in-home contractor sales tools leveraging NEIF’s commercial portal technology.
Develop an integrated energy and emissions reduction tracking system for funded projects.
Marketing and program development
Launch new digital marketing initiatives to attract new contractors, and new digital advertising, and print portals for contractors.
Finalize and launch a new residential HVAC leasing program in cooperation with national distributor partners.
Pilot portfolio loan programs
Establish test programs with expanded credit criteria for low and moderate income borrowers.
Steady, recurring revenue — Business model combines revenue and transaction fees with a focus on loan balance growth to build the stream of business.
Growth — NEIF is currently servicing $19 million in loans, projected to break-even at $75 million in 2021.
Team — Decades of experience in energy, lending, and compliance.
Management is invested — $4 million raised with $1.25 million from management.
Transparent impact — Publish an annual NEIF Benefit Report for investors, detailing NEIF's impact on energy and carbon savings from efficiency improvements financed, the broadening of the affordability of these improvements to all classes of income, small business growth among others.
NEIF became operational in 2018, with planned operating losses during the startup and growth phase through 2021, when NEIF is, based on information currently available as well as certain assumptions from the management team, projected to achieve positive returns when total loans being serviced approach $75 million.
NEIF has raised over $4 million with $1.25 million from management. To support its growth, NEIF is currently seeking an additional $3 million over the next 2 years by adding to their existing equity Preferred Units.
This section contains certain forward-looking financial statements and/or projections. Actual results could differ materially from those projected in such forward-looking statements and projections as a result of various factors, including the risks typically associated with this type of enterprise and changes in the market. NEIF undertakes no obligation to publicly release the result of any revisions to these forward-looking statements and projections that may be made to reflect events or circumstances that occur after the date of this offering statement or to reflect the occurrence of any unanticipated events.
NEIF originates and sells loans into pre-committed capital pools. NEIF retains ownership for the life of the loan, of a loan servicing spread for account management, payment processing, collections and reporting and a program management spread for contractor management, training, improvement qualification and reporting. These spreads range from 1.5% to 4% of the loan portfolio depending on level of services.
NEIF also receives monthly retainers from utilities and other programs. Services include management of lending activities for a utility’s commercial and small business initiatives and range from $1,000 monthly to $5,000 monthly depending on the level of service. NEIF provides premium subscription services to contractors for preferred access to sales tools, NEIF’s proprietary financing portals and additional marketing services.