Through its three lending programs, the U.S. Department of Energy’s Loan
Programs Office finances large-scale energy infrastructure projects in the United States.
This video outlines how LPO works with applicants and borrowers--from initial project development,
through all steps of the formal application and loan transaction process,
all the way to loan maturity.
First, it’s important to know some basic elements of LPO’s approach to lending: While LPO takes a
rigorous approach as a lender to protect the interests of the American taxpayer, we are
equally committed to working cooperatively with applicants and borrowers through every step of the
process. This focus on partnering for long-term success begins immediately, with LPO engaging
potential applicants early, well before the formal application is even submitted. Finally, while the
loan transaction timetable can vary for borrowers depending on project complexity and readiness,
LPO’s commitment to working with applicants to shorten the timeline between submitting
an application and reaching loan closing is a fundamental part of our lending approach.
Now let’s take a closer look at the
loan transaction process steps that an applicant can expect:
1) First, we offer Pre-Application Consultations. These consultations
allow potential applicants to engage with our team of financial,
technical, legal, and environmental compliance experts for a series of no-cost
meetings to better understand LPO’s approach to reviewing a project’s technical eligibility
and financial viability. There is no timeline on when to start talking with us--discussions
can start weeks, months, or sometimes years before a project is ready to move forward. Our goal here
is to identify potential hurdles early on and work with you to find pathways to overcome them.
2) Once the potential applicant has developed a strong understanding of how the project
meets the program’s eligibility requirements and has discussed a high-level deal structure,
it’s time to submit a Formal Application. LPO then reviews and confirms the project’s
technical eligibility and financial viability. Depending on the loan program, fees and costs
may be involved and application fees may apply. 3) After completing the formal application review,
a project is then invited into Confirmatory Due Diligence and Term Sheet Negotiation. This part
of the process will be similar to any lender’s and the timeline can vary. During this stage,
any third party advisor costs will be paid for by the applicant.
4) Upon completion of this stage and agreement on a term sheet,
the deal will go through a Credit Approval Process to formally approve the term sheet, including
any relevant interagency consultations. 5) After the Credit Approval Process is complete,
DOE will issue a conditional commitment, which is a public agreement between the parties for DOE to
provide a loan or loan guarantee for the project, subject to completion of conditions precedent.
Following issuance of the conditional commitment, the loan documents are negotiated and executed
using the approved term sheet. Finally, LPO and the borrower close on the loan
and disbursements can be made. After closing, LPO continues its long-term
partnership to make innovative and challenging projects a success. Our portfolio managers and
technical experts can be a valuable resource for long-term project success, particularly
during construction and early operations of projects using innovative technology.
So let’s talk about your project--contact
us to see what financing options may be available to you. It’s the value of working with LPO.