The Nebraska Energy Quarterly features questions asked about 5% Dollar and Energy Saving Loans. Loan forms may be obtained from participating lenders or the Energy Office, or the agency's web site by clicking here.

As of June 30, 2003: 20,608 loans for $176.9 million
Questions and Answers...

5% Dollar and Energy Saving Loans

What is the current interest rate for a Dollar and Energy Saving Loan?


Fees paid to lenders can
raise the interest rate above 5 percent

The maximum interest rate a lender may currently charge on an energy loan is 5 percent. Participating lenders may not exceed this rate and it is solely at the lender's discretion if Dollar and Energy Saving Loans are offered at a rate lower than 5 percent.

What is the difference between the stated interest rate of 5 percent for a Dollar and Energy Saving Loan and the Annual Percentage Rate — also called APR — which the lender discloses to borrowers at the time the loan papers are signed?
Dollar and Energy Saving Loans may include indirect loan fees — such as an application/documentation fee of up to $50 or an origination fee of up to 2 percent of the eligible project cost being financed by the lender for writing the loan for the maximum allowable term. Indirect loan fees such as these which are paid to the lender (not to an independent third party for services such as providing title insurance, making flood determinations, doing appraisals, etc.) must be included as part of the finance charges, which must be included in the APR for the loan. Typically, inclusion of these charges brings the APR above 5 percent.

How is a lender able to offer Dollar and Energy Saving Loans at 5 percent?


Lenders make 10 percent on low interest loans

The Energy Office purchases 50 percent of an eligible loan made by a participating lender at zero percent interest. The borrower is paying 5 percent interest on the entire loan amount. The lender has just half the investment in the loan and thus makes 10 percent on the financing company's share. This, plus any of the allowable indirect loan fees, gives lenders a rate of return commensurate with market rates for offering, processing and servicing Dollar and Energy Saving Loans.

Does the Energy Office have a list of approved contractors for projects financed with a Dollar and Energy Saving Loan?
The Energy Office does not keep or maintain a list of contractors qualified to do work financed with energy loans. Borrowers are allowed to select the contractor they wish to use for their project. The borrower should check with the lender to see if there are any requirements covering selection of a contractor by their borrowers. The Energy Office does encourage applicants to check the credentials of the potential contractors and to review any referrals the contractor may provide to borrowers before a project is undertaken.


Improvements may include renewable sources

The supplements for Form 2, which are required for Window/Door, Siding and Roofing improvements, need to be signed by both the applicant and the contractor. Does this mean a borrower cannot make the improvements without a contractor?
No, borrowers may do the work. However, the loan cannot include any funds for a borrower's labor. For these types of projects, the costs listed on the application form and the bid should be for materials only. On the supplemental forms, just write in "self' in the sections requiring information about the contractor.

Have there been many renewable energy projects financed with Dollar and Energy Saving Loans?
Since the loans became available in 1990, 13 improvements involving a renewable energy source have been financed out of the more than 44,000 processed by the Energy Office. Three corn and five wood stoves have been installed in homes and one wood stove has been repaired. A home-scale wind generator has been repaired. Three wood heating systems have also been installed in businesses. The largest renewable energy project financed was the fuelwood heat plant installed in the Arbor Day Foundation's Lied Conference Center in Nebraska City.
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