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A Pennsylvania-based finance company that serves the residential heating and cooling industry is enhancing its HVAC lending programs after merging with an innovative California lender best known for its work in residential solar energy financing.

AFC First Financial Corp., of Allentown, PA, has been acquired by Renew Financial, of Oakland, CA. AFC First Chairman and CEO Peter Krajsa says AFC First’s HVAC clients can expect to benefit tremendously from the merger. “We are trying to build a really great company here,” he said. “HVAC contractors remain very important to us.”

The merger is a great fit, he explained, because the two companies have similar goals and cultures. Both are focused on supporting energy contractors who serve residential customers, and they both have innovation in their corporate DNA. “We could not be more pleased to join the Renew Financial family,” he said. “The combination of Renew Financial’s groundbreaking leadership on [the Property Assessed Clean Energy (PACE) program] with our longstanding history in energy efficiency lending will create a powerful financing platform to better serve contractors and homeowners alike.”

Financing Pioneers

Renew Financial was founded in 2008 by CEO Cisco DeVries, who originated the idea of the PACE financing model. Named by Scientific American as one of the top 20 ideas that can change the world, PACE enables property owners to finance the entire cost of energy and water efficiency and renewable energy upgrades to their homes and businesses, and then repay those costs on their property tax bill.

Renew Financial is also involved with the Warehouse for Energy Efficiency Loans (WHEEL) program, which opens the residential energy efficiency finance market to large institutional investors. WHEEL represents an innovative collaboration among national leaders in finance and energy, including Citi, Renew Financial, the Pennsylvania Treasury, the National Association of State Energy Officials, and a growing number of states and utilities. The Commonwealth of Pennsylvania, the State of New York and other government entities have joined the WHEEL program, and additional states are expected to join soon. AFC First helped the WHEEL program complete the first securitization of loans last June.

As the nation’s first private, non-utility Home Performance with ENERGY STAR sponsor, AFC First has been a national leader in energy-efficiency and renewable energy lending and program management. Nationally, AFC First has operated its EnergyLoan® program, as well as administering programs in partnership with states, utilities, manufacturers and municipalities, including Pennsylvania’s Keystone HELP, Energize Connecticut Heating Loan and Efficiency Maine. Programs are offered through a network of over 5,000 approved contractors.

Krajsa’s father John Krajsa Sr. founded AFC First Financial in 1947 as a consumer lender and diversified into mortgages and then into long-term energy efficiency loans. The company has helped contractors sell heating and cooling equipment by providing unsecured loans at fixed, reasonable rates. This enabled homeowners to finance new equipment without subjecting themselves to credit card interest rates or tax liens.

AFC First strengthens Renew by bringing a robust contractor network to the company, as well as broad reach within HVAC, and Renew benefits the AFC First client base with strong capitalization through its Silicon Valley roots and innovative programming, according to Krajsa. The AFC First brand is being phased out, and contractors are now getting service under the Renew Financial brand.

“This acquisition brings together two of the most innovative and successful clean energy finance companies in the country,” said DeVries. “We have been working closely with Peter and the team at AFC First for years now.”

Innovative Program in New York

Renew Financial is demonstrating its innovative style in New York State with the new ReHome NY program. Supported by NY Green Bank and the New York State Energy Research and Development Authority (NYSERDA), NY ReHome offers 10-year fixed loans at 7.99 percent on any Energy Star qualified equipment with no money down. Contractors will be able to leverage new online technology to process and complete loan applications on the spot, even during an emergency change-out. “You’ll be able to get it approved and have the customer sign the loan document in the home,” Krajsa said. Unlike many similar programs, NY ReHome does not require a home energy audit prior to an equipment upgrade.

Renew will continue to operate other AFC First Financial State programs, including Pennsylvania Keystone HELP, Energize Connecticut Heating Loan and Efficiency Maine. Keystone HELP alone has done more than $100 million in energy efficiency loans. Energize Connecticut uses utility funding derived from a system betterment charge and is fuel-neutral. Krajsa said the program requires that energy savings be greater than the monthly loan payment, which has become a complication in light of reduced energy costs, although it still works well for replacing electric heat.

Renew will also continue to work directly with contractors through its market programs, which also offer fixed-rate, unsecured loans. Like AFC First, Renew works with select contractors who are financially stable, ethically strong and have at least three years in the business. “We work with qualified contractors, and we know they are putting in qualified improvements that make the home more valuable,” Krajsa explained.

He is pleased that the company presence in Allentown is expanding post-merger. “We had 60 people when we merged, and we are probably going to have 100 shortly. It was very important to me that we would at least have the opportunity to maintain jobs, and now it looks like we will be growing it,” he said. Krajsa joins Renew as Executive Vice President of Channel Development. “I’m one of the senior managers, focusing on the development of partnerships and contractor-driven programs,” he explained.