Alternative Energy Revolving Loan Program (AERLP) is sponsored by Montana Department of Environmental Quality (DEQ). The AERLP offers zero-down, low-interest loans to individuals, small businesses, nonprofit organizations, and government entities to increase investments in alternative energy systems and energy conservation measures in Montana.

Alternative Energy Revolving Loan Program | Montana DEQ Alternative Energy Revolving Loan Program The Alternative Energy Revolving Loan Program (AERLP) provides low-interest loans to increase investments in alternative energy systems and energy conservation measures in Montana.

The AERLP was established by the 57th Montana Legislature in 2001 and is managed by the Montana Energy Office, a bureau of the Department of Environmental Quality (DEQ). Since its inception, the program has provided financing for more than $19 million in alternative energy systems and energy saving measures installed in Montana homes and businesses.

The revolving loan program is principally funded by air quality penalties collected by DEQ. The interest rate for 2026 is fixed at 3. 5 percent, 4.

023% APR*. *APR based on a $25,000 loan, 3. 5% interest rate, 10 year term, and $625 in closing costs.

Scoring and Ranking Procedure for All Applications Since April 2023, the demand for AERLP loans has exceeded the funds available each quarter. Pursuant to the administrative rules guiding the program ( ARM 17. 85.

111(5) ), DEQ has established ranking criteria to prioritize new, eligible applications for funding. The AERLP accepts new applications on a quarterly cycle in July, October, January, and April. Please see the table below for the list of due dates for applications.

Please contact AERLP staff with questions. Updated June 10, 2025. Due dates for AERLP applications - Electronic AERLP applications must be received by 5pm on the last day of the application window.

*Dates subject to change without notice.

Mailed Applications: Post Marked by July 28th Mailed Applications: Post Marked by October 28th Mailed Applications: Post Marked by January 28th Mailed Applications: Post Marked by April 27th Technical & Financial Review: August Technical & Financial Review: November Technical & Financial Review: February Technical & Financial Review: May Scoring & Funding: September 2nd, 2025* Scoring & Funding: December 1st, 2025* Scoring & Funding: March 2nd, 2026* Scoring & Funding: June 1st, 2026* Fiscal Year 2025 Outcomes Report Alternative Energy Revolving Loan Program Contacts Energy Resource Professional Meranda Bass (406) 444-6586 Energy Resource Professional Alternative Energy Revolving Loan Program Montana Department of Environmental Quality Permitting and Operator Assistance Application Forms and Checklists Application Forms and Checklists Prior to filling out a loan application, please review the application checklist and contact program staff if you have any questions about required information or supporting documentation.

The application forms are fillable PDFs that may be filled out, saved, and submitted online via the Montana File Transfer Service. You may also print and fill the application out by hand and mail or deliver to our office. Individuals must complete the Individual Application Form and provide the supporting documentation outlined in the checklist.

Individual Application Form Small businesses must complete the Business Application Form and provide the supporting documentation outlined in the checklist. Business Application Form Nonprofit, Local Government, & University Please contact program staff to discuss required application materials. How to submit an application electronically: We can only accept electronic submittals through the Montana File Transfer Service.

To use the Montana File Transfer Service: Send your signed application and supporting documentation using the File Transfer Service to msikes@mt. gov . For more detailed instructions please click here or contact program staff at msikes@mt.

gov or biwebb@mt. gov . How to submit an application by mail: Mail or deliver completed and signed application and supporting documentation to: Montana Department of Environmental Quality Alternative Energy Revolving Loan Program The current terms for the program are listed below.

Please note that availability of loan funds, loan terms, and closing costs are subject to change without notice. Actual closing costs are set during the application review and will be disclosed to the applicant with a loan commitment statement. 2026 interest rate: 3.

5 percent, fixed for the term of the loan, 4. 023% APR* Maximum loan amount: $40,000 Maximum loan term: 10 years $0 down payment; no early-payment penalty Closing costs include origination fee of $250 or 2 percent of loan amount, whichever is greater; and other fees of approximately $200. *APR based on a $25,000 loan, 3.

5% interest rate, 10 year term, and $625 in closing costs. Funds from the AERLP may be used to provide loans to individuals, small businesses, units of local government, units of the university system, and nonprofit organizations.

“Small business” is further defined for the purpose of this program as a business that: “(a) is independently owned and operated; (b) is not dominant in its field of operation; and (c) employs 100 or fewer individuals (Administrative Rules of Montana 17. 85. 105(15))."

Funding from the AERLP may be used to provide loans for the construction of alternative energy systems and capital investments for energy conservation purposes when done in conjunction with an alternative energy system.

Alternative Energy Systems “Alternative energy systems” are defined in Montana law as “the generation system or equipment used to convert energy sources into usable sources using fuel cells that do not require hydrocarbon fuel, geothermal systems, low-emission wood or biomass, wind, photovoltaics, geothermal, small hydropower plants under 1 megawatt, and other recognized non-fossil forms of energy generation.

” (15-32-102, Montana Code Annotated) Alternative energy systems commonly financed by the AERLP include: Solar photovoltaic (PV) systems Solar thermal systems for water or space heating Geothermal systems, including ground source heat pumps EPA-certified low-emission pellet stoves or wood stoves Energy Conservation Measures "Capital investments for energy conservation purposes when done in conjunction with an alternative energy system" are defined in Montana law as "a capital investment that is used for an energy conservation purpose that is in the same structure as, and is constructed, installed, or otherwise put in service as part of, or at about the same time as, an alternative energy system to reduce the size of energy system needed."

(17. 85.

103, Administrative Rules of Montana) Energy conservation measures commonly financed by the AERLP include: Energy-efficient appliances The proposed project, activity, or equipment must: Be technically appropriate for Montana’s climate Be proven reliable and be commercially available Generate energy for the sole use of the owner, however, net metering systems are eligible for funding Meet all applicable certifications and standards, such as local building codes and utility interconnection requirements Comply with applicable statutory and regulatory requirements protecting the quality of resources such as air, water, land, fish, wildlife, and recreational opportunities DEQ will conduct a technical, environmental and financial review of all applications to determine program eligibility.

Feel free to contact program staff with questions. Application Review and Funding Steps Application Review and Funding Steps AERLP staff accept and process loan applications throughout the year. The time it takes from submittal to funds will vary depending on when you apply relative to the next scoring and ranking date.

Once an application passes the technical review, the financial review, and scores high enough during the scoring process to be selected for funding, it can take up to two additional weeks for loan funds to be deposited in the borrower's bank account. Upon receipt of an application, DEQ assesses the application for completeness and begins technical and environmental reviews.

Program staff will contact the applicant if the application materials are incomplete or if additional information is required to determine eligibility. When technical and environmental reviews are complete, DEQ transfers the application to the AERLP financial services contractor, Montana Business Assistance Connection (MBAC), for financial review.

MBAC analyzes the applicant’s credit and loan repayment history, debt-to-income ratio, and loan security. MBAC may request additional information as necessary to process the loan application. Upon completing its financial review, MBAC will make a recommendation to DEQ to either fund or not fund the loan application.

After passing the technical and financial review, all applications are put into a pool to be scored based on the ranking criteria. Based on the available cash for the quarter, AERLP staff fund as many loans as possible. Applications with technical and financial merit that are not funded in a scoring round will be considered in a subsequent round of scoring for up to six months from the date the application is received by DEQ.

Applicants will be notified of their status following each scoring round. DEQ reviews the recommendation and findings of MBAC’s financial review and either approves or denies the issuance of a loan commitment statement to the applicant. MBAC will send via DocuSign the approved loan commitment to the applicant, including a list of items required for loan closing.

Applicants must sign and return the loan commitment statement to MBAC. Upon receipt of a signed loan commitment statement, MBAC will send via DocuSign or mail final loan documents to the applicant. Applicants must sign and return the loan documents to MBAC.

Upon receipt of signed loan documents, MBAC will request DEQ to initiate funds transfer. The funds are released from DEQ to MBAC and then to the borrower’s bank account. Borrowers are required to provide DEQ with photographs of all major components of the project no more than 30 days after installation.

Borrowers are also required to obtain and submit copies of all applicable permits, the approved inspection record for all applicable permits and a copy of the fully executed utility interconnection agreements (if required) no more than 30 days after installation. Project verification requirements are a condition of the loan and are the responsibility of the borrower. AERLP may conduct site visits to verify the project installation.

Borrower makes loan payments to MBAC. MBAC will remit those payments to DEQ in order to fund new loans. Frequently Asked Questions How long does it take to receive funds?

The timeline will vary based on when an application is received relative to the next scoring and ranking date. Once an application passes the technical review, the financial review, and scores high enough during the scoring process to be selected for funding, it can take up to two additional weeks for loan funds to be deposited in the borrower's bank account. I’ve heard you are out of money for the year, is that true?

This program is a revolving loan fund which means every quarter we receive funds in the form of principal and interest payments from pervious loans. Those funds are then loaned out and the cycle starts again. What goes into the scoring?

What happens if my application is not selected for funding during the current round of scoring and ranking? Applications with technical and financial merit that are not funded in a scoring round will be considered in a subsequent round of scoring for up to one year from the date the application is received by DEQ. Applicants will be notified of their status following each scoring round.

Applications become invalid at the end of one year. If the applicant has not built their project, they may reapply. If the project has already been complete, it is no longer eligible for funding.

My project is already completed; can I still apply? No, the AERLP does not allow projects to be financed retroactively. How is the money received and used?

Loan funds are deposited into the borrower’s bank account shortly after the final loan documents are signed and submitted to DEQ’s financial services contractor, the Montana Business Assistance Connection (MBAC). Loan funds are restricted to qualified expenditures. DEQ site visits may be required to assure the loan funds are used as proposed.

What can loan funds be used for?

Loan funds are restricted to qualified purchases and services including but not limited to: Engineering and consulting services Financial services associated with the project Normal loan fees and closing costs Installation costs and associated services Energy conservation products (when installed in conjunction with an alternative energy system) and associated installation costs and services Other qualifying items as approved by the program manager What can loan funds not be used for?

Loan funds may not be used for a number of expenditures including but not limited to: Purchasing land, buildings, or vehicles Paying the applicant for in-kind labor or services Purchasing fossil fuel-powered generators or heating systems Repairing or replacing roofs What technical information is required? The required supporting documents can be found in the application checklist ( individual , business ).

A site assessment of the project is required, including a map delineating the planned locations for the equipment to be installed.

Other information includes: Energy production estimates as appropriate Energy saving calculations with assumptions Product information, specifications, manufacturing data, brochures, etc. for appliances and/or equipment to be installed Information on dealers as needed Why do I need an asbestos inspection on a commercial facility?

The Asbestos Control Act requires an asbestos inspection be completed by a department-accredited asbestos inspector prior to any demolition or renovation of a commercial facility regardless of the facility’s age (ref: ARM 17. 74. 354 ).

A building previously used as a commercial or public facility, or a structure or installation with more than four dwelling units, are also subject to asbestos regulations. To determine if the Residential Exemption applies to your property, please see the Asbestos Control Program’s Residential Exemption Guide . To search for a department-accredited asbestos inspector please visit: http://svc.

mt. gov/deq/asbestosaccred/ . For other questions regarding the Asbestos Control Program please visit their program page or call 406-444-5300.

What loan security is required? It will depend on the borrower. Highly qualified borrowers may receive an unsecured loan.

All other loans financed through the AERLP are secured, and applicants must provide some form of loan security. Generally, this is a junior lien position on the real property where the project is located. In addition to the property lien, the installed alternative energy system components purchased through the program are listed as loan security.

For secured loans, the program strives to use real estate to secure loans wherever possible. In situations where this is not possible, the financial contractor will work with borrower to agree on a security arrangement. What documentation is required for project verification?

To verify eligible use of loan funds, borrowers are required to provide DEQ with photographs of all major components of the project no more than 30 days after installation. Borrowers are also required to obtain and submit copies of all applicable permits, the approved inspection record for all applicable permits and a copy of the fully executed utility interconnection agreements (if required) no more than 30 days after installation.

Project verification requirements are a condition of the loan and are the responsibility of the borrower. What happens to applications when the loan fund is depleted? When the program receives more applications than funds are available, DEQ will implement a ranking process that prioritizes applications based on criteria published in the Administrative Rules of Montana ( ARM 17.

85. 111 (5) ). Ranking criteria includes: the amount of energy produced, the diversity of technology in the portfolio, the return on investment, the use of a process as a system or equipment generally available in Montana, the geographical diversity of the project portfolio, and the diversity of borrowers in the project portfolio.

Will AERLP ensure the project is a good one? No, the Montana Department of Environmental Quality may not: Act as an attorney, engineer, financial, or tax consultant. The applicant should hire any professionals or professional services needed.

Guarantee the project is a good investment. Endorse any product, manufacturer, contractor, or component. All evaluations are made only for loan purposes.

The applicant should shop for competitive bids and use professional help if necessary. Compel a contractor or engineer to remedy defects in construction or to live up to any contracts they make with you. Ensure that any project is safe.

Can AERLP recommend installers? No; however, various organizations maintain lists of recommended or qualified installers that operate in Montana. The Montana Renewable Energy Association (MREA) maintains a list of its member installers on its website .

Applicants in NorthWestern Energy's service area may wish to consult the utility's listing of approved installers through its Renewable Energy Program . Are AERLP projects eligible for tax credits or utility incentives? Many projects funded by AERLP are eligible for federal tax credits.

For more information on these tax credits please visit: ENERGY STAR’s Federal Tax Credit Page: Federal Tax Credits for Energy Efficiency | ENERGY STAR IRS’s Residential Energy Credits Page: About Form 5695, Residential Energy Credits | Internal Revenue Service (irs. gov) The Database of State Incentives for Renewables and Efficiency (DSIRE) Please consult with a tax professional to determine your eligibility for available tax credits.

Some utilities provide cash incentives for energy conservation or renewable energy projects. Always contact your local utility to see what incentives are available. 2401 Colonial Dr. | Helena, MT 59601 Request Public Information Nondiscrimination and ADA