C-PACE loan interest rates generally range from 4% to 8%, with typical rates falling between 5.75% and 6.25% for shorter terms like 10 to 20 years. These rates are often more favorable compared to other sustainable financing options such as private equity or mezzanine/gap financing, which are typically higher. Here’s a comparison with other sustainable financing options:
C-PACE vs. Other Financing Options
| Financing Option | Interest Rates | Key Characteristics |
|---|---|---|
| C-PACE Financing | 4% to 8% | Repaid through property taxes, terms up to 25 years. |
| 5.75% to 6.25% | Often used for energy-efficient upgrades. | |
| Private Equity | Higher, often over 9% | Typically used for high-risk projects with potential for higher returns. |
| Mezzanine Debt | Higher, often over 10% | Used to bridge funding gaps, often with higher interest rates. |
| Senior Mortgage Loans | Generally fixed, often lower than C-PACE | Traditional bank financing, less flexible terms. |
Key Differences
- Interest Rate: C-PACE loans generally offer lower rates than private equity or mezzanine debt but may be higher than traditional mortgage loans.
- Repayment Mechanism: C-PACE is repaid through property taxes, making it unique compared to traditional loans.
- Term Length: C-PACE terms can extend up to 25 years, aligning with the life of energy-efficient upgrades.
- Risk Profile: C-PACE is tied to the property, not the owner, and does not affect personal credit.
Overall, C-PACE financing provides a competitive and stable option for developers seeking sustainable upgrades while navigating fluctuating interest rates in traditional markets.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-c-pace-loan-interest-rates-compare-to-those-of-other-sustainable-financing-options/
