CHAPTER FIVE:
C-PACE Lender Consent

Senior lenders may be working with C-PACE financing for the first time. As such, education is critical to help a senior lender understand how C-PACE is positioned in the capital stack.

C-PACE has a fixed payment (fixed term, fixed rate) structure and does not grant the ability to accelerate those payments. Dues may only be collected in arrears. This gives lenders a sense of comfort that, in the very unlikely event of a default, there is only a tax payment or two that needs to be caught up. C-PACE capital providers cannot place a lien on the building for the principal balance or future payments.

Prepayment is available at any time (unlike a traditional tax assessment), and the C-PACE assessment may be transferred to the new owner in the event of a sale. If a foreclosure occurs, for example, the bank can transfer the obligations to a future buyer without penalties or approvals needed from PACE Equity Finance.

Not only does C-PACE not threaten a senior lender’s investment, it enhances the project’s economics and the value of the building, leading to a more stable and profitable asset.