Smarter Loans For Smarter Homes

Can a single loan help the environment, improve a community, and bolster a borrower’s bottom line? At Guadalupe Credit Union ($270.8M, Santa Fe, NM), the answer is “yes!”

Since 1948, the cooperative has been designing products and services with an eye toward making New Mexicans’ lives better. It became a Community Development Financial Institution (CDFI) in 2010 and received the Juntos Avanzamos credit union designation, which formally recognizes credit unions that tailor financial products and services to Hispanic and immigrant communities, in 2015.

In a state that struggles with energy challenges, including inconsistent electric service in rural areas, helping members find ways to save on energy use is critical. That’s why the cooperative launched its Smart-E Loan on April 22, 2023 — Earth Day. It’s a concrete step forward in helping members update their homes. It’s also an opportunity to be a leader in energy efficiency and conservation in a state with abundant sunshine.

“Smart-E Loan is not only good for the climate, it’s necessary for residents to keep up with climate change, including the abnormal rate of fires, water shortages, and electricity service disruptions,” says Diane Sandoval-Griego, chief of financial empowerment for Guadalupe Credit Union.

The Smart-E Loan provides long-term, low-interest financing to help New Mexican homeowners make energy improvements such as installing new windows, sealing leaky ducts, or upgrading to an efficient heating and cooling system. These updates can make a big difference on a family’s monthly bills, but the initial investment can be daunting — especially for the families who struggle to save money.

“The perception is that energy-savings measures require a lot of money upfront, which can make them feel out of reach, especially for those living paycheck to paycheck,” Sandoval-Griego says.

To combat this, Guadalupe is focusing on items that are easily attainable and can positively impact a household’s budget quickly. It expects energy-efficient appliances, home weatherization, and window replacement to be popular projects.

The credit union’s word-of-mouth awareness campaign focuses on the affordability and safety of projects as well as how applicable rebates might help borrowers further decrease their debt. For example, one member who purchased a solar panel setup for his home requested the rebate when he filed his taxes. After he received the funds, he was able to pay down part of his Smart-E Loan, and the credit union adjusted the remainder of his payments accordingly.

“Our short-term goal is to help members save on energy costs so they have more money for food and other necessities,” Sandoval-Griego says. Additional savings and debt repayment are added jewels in the crown.

Borrowers can use the Smart-E Loan to fund more than 40 home energy improvements, from insulation and energy-efficient windows to heat pumps and solar panels.  Want to see what else qualifies? Download the listing here. 

Longer-term, the credit union would like to integrate the Smart-E program into its mortgage department, too, to help members consider long-term energy costs at an important point of financial decision-making. Along those lines, Sandoval-Griego says the inflation in building materials presents the opportunity to help members save money while constructing a quality home using energy-efficient roofs, insulation, water heaters, and more. This would be especially welcome in rural communities, where new development is rare and many families must construct a new home or buy an older home and upgrade it.

Guadalupe Credit Union offers Smart-E Loan through a partnership with Inclusiv, the organization dedicated to helping distressed and underserved communities and their members, and Inclusive Prosperity Capital. To ensure all Smart-E Loans follow its guidelines, the credit union is 100% responsible for its own underwriting; however, Inclusive Prosperity Capital has been instrumental in developing program requirements, identifying the specific energy improvements that qualify, and vetting contractors.

That last part is especially important because Guadalupe wants to ensure borrowers have access to reliable contractors dedicated to serving all populations, Sandoval-Griego says. After all, the whole point of the loan program is to make it possible and profitable for any consumer to lower their energy consumption.

“There’s a lot of opportunity for credit unions to help members save on a monthly basis, especially as energy costs continue to increase,” Sandoval-Griego says. “Listen to community feedback and find projects in a variety of price ranges. People might have affordability concerns. Open up opportunities and show members saving money through energy efficiency is possible and affordable.”

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