THE GREEN LOAN DNA. WHAT MAKES A LOAN ECO-FRIENDLY?

• Publish on Jun 18, 2025
• Read Time 5 min

The Ultimate Green Loan Eligibility Checklist
Is Your Project Green Enough? Here’s What Lenders Check!

How prepared are you to get a loan for your eco-friendly project?

Green loans are a fantastic way to fund sustainable projects— but how do you know if your business qualifies for one? It’s not just about being “eco-aware.” It’s about meeting clear, structured criteria that align with national green finance standards.

So, whether you're seeking solar financing for a rooftop installation, EV finance for an electric bike-sharing fleet, or an SME loan for opening a cozy zero-waste café, this checklist is here to help. Let’s see if your business is ready to go green in the lender’s eyes.

1. Does your business genuinely help the planet?

Let’s start with the basics. It’s not how green it may look. A green loan requires measurable environmental benefits, meaning your project should be connected to one or more of the following areas:

• Renewable Energy (solar rooftops, wind farms)
• Energy Efficiency (LED upgrades, building retrofits)
• Pollution prevention and control
• Water conservation (rainwater harvesting, greywater recycling)
• Clean transportation (EV fleets, shared mobility)
• Sustainable agriculture or forestry

2. Can you state your environmental goal in one line?

Before anyone gives you funding, they will want to know: What are you trying to achieve?

Here’s a mock structure to help you define it:

• The environmental problem you're tackling
• How your solution makes an impact
• Metrics for success (e.g. “X kilotons of CO₂ saved per year”)

3. Can you track every spending?

It’s not just about tracking your spending. It’s about building a clean, traceable system that keeps green funds separate and purposeful; to ensure there’s no mixing of green finance with your general expenses. You will need to set up a dedicated account or system to track where the money is going.

4. Can You Show Progress—Not Just Promise It?

This isn’t your average borrow-and-return loan. Green lenders expect regular updates, and you always must be on the green merit list.

This includes:

• Progress reports of the project
• Environmental performance indicators (like kWh saved or water reused)
• Third-party verification, if applicable

5. Is Your Lender Truly Green? Or Just Greenwashing?

Not all banks and NBFCs offer green loans. Some have very narrow criteria. Others might call their loans green without a framework. You need to be wary of greenwashing!

Specialization is key; that’s why Ecofy is dedicated solely to financing eco-friendly initiatives, emphasizing transparency in its lending practices.

6. Do You Have a Solid Proposal?

Think of your green loan proposal like a pitch deck meeting a sustainability report.

You’ll need:

• Detailed project description
• Realistic budget
• Timeline
• Your expected environmental impact
• Potential risks and how you’ll manage them

If you already have an ESG strategy or sustainability officer, bring them in here.

7. Got Certifications? (Even Better!)

Some lenders love third-party endorsements. If you have IGBC or LEED certification (for green buildings), ISO 14001 (for environmental management), or verified carbon reduction data, you’re already ahead of the pack. Not there yet? No stress—these certifications are bonus points, not deal-breakers.

8. Can you afford the loan?

Your mission matters, but your financial health matters too.

Lenders still need to check:

• Credit history
• Revenue stability
• Your ability to repay on time

A green impact is the priority; good financial hygiene is a necessity.

9. Are you aligned with India’s Green Taxonomy?

India is rolling out a green taxonomy to define what counts as a sustainable activity. It’s still evolving, but aligning your project with national goals (like EV adoption or clean energy targets) will boost your credibility.

In summation, does it support India's commitments under the Paris Agreement? This includes reducing emission intensity by 45% from 2005 levels by 2030 and achieving net-zero emissions by 2070.

Final Thought: It's Not Just a Checklist—It's a Mindset

Run through this checklist. If your idea checks most of the boxes, you're likely green-loan ready—and Ecofy’s here to get you started.

Got a green idea that’s ready to see fruition? Ecofy will help you with the financing that’s planet-first every step of the way.

FAQs

1. What type of business typically qualifies for green loans? A business that helps reduce environmental impact, either by being built as a green business from the ground up or by implementing ways to lower its carbon footprint, is eligible to apply.
2. Are there any tax benefits for businesses taking green loans? The interest you pay on an SME loan is treated as a business expense, so it’s tax-deductible, not taxable income.
3. Are green loans more affordable than regular loans? The interest rate is fixed, and you get up to 48 months to repay it. Want to know your exact monthly outgoing for the loan repayment? Try out our EMI calculator to plan it down to the last rupee.