What makes a loan green
The Green Loan Principles, March 2025, set out a four-part industry framework. They cover financing and refinancing, so your enquiry may concern a new project or an existing eligible asset.
Here is the framework in practical terms:
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| Framework term | What it means in practice |
|---|---|
| Use of proceeds | Identify the eligible project costs the money will pay for. |
| Project evaluation and selection | Explain why the project qualifies, its goals and relevant risks. |
| Management of proceeds | Keep records showing where the money goes. |
| Reporting | Provide information on spending and environmental results. |
These principles are voluntary industry guidance. A claim of alignment still requires meeting all four components. Your legal and contractual obligations also depend on the applicable rules and financing documents you agree to.
Show how the project fits your business
Different types of businesses can explore the green-loan framework. The guidance accompanying the Green Loan Principles explains borrower scope, subject to law, credit assessment and a structure that meets the principles.
Bring together the project case and the repayment case. Ask how the financier assesses the proposed investment alongside your wider business activities.
If you want financing tied to agreed performance goals across your business, explore sustainability-linked financing. The same guidance explains how that differs from borrowing for a defined environmental project.
Make your project easy to understand
Start with a short project brief: what you will buy or build, where it will be, the supplier, expected cost and timing.
Describe the environmental improvement you expect, such as lower electricity use, renewable generation or reduced water consumption. Show the records and assumptions behind your estimate so the financier can follow your reasoning.
Imagine you're upgrading a machine to use less electricity. Bring its operating records, the supplier's technical proposal and a plan for checking energy use after installation. These are preparation suggestions; the financier will provide its actual requirements.
If the project involves permissions, certifications or specialist technical checks, establish which ones apply before committing to the work.
An example from Malaysian banking
For small and medium enterprises (SMEs), CIMB publishes an SME Renewable Energy Financing-i product page covering solar-panel expenditure. Its application documents include financial records, bank statements and a solar-installation proposal or agreement.
It shows how project information and business finances come together in an application. Use it as one example to investigate; suitability and acceptance depend on your proposal and the bank's assessment.
The product page links to a product disclosure sheet, a document explaining the facility and its terms. Ask the bank for the latest version and the terms for your proposal. The version located during our research is the SME Renewable Energy Financing-i disclosure sheet.
A second published example is RHB's SME Green Renewable Energy and CAPEX Financing, with a bank disclosure sheet valid from 30 January 2026. It covers renewable-energy and eco-efficient equipment. Match this conventional disclosure to the structure offered; other advertised structures need their own documents.
For an Islamic financing facility, ask how the contract works and which environmental-project criteria apply. Each is part of understanding the offer.
Organise your information into three groups
You can build an initial evidence pack around:
Your business: registration and ownership details, available financial statements, bank records and the money you expect to use for repayments.
Your project: the proposed work, quotations, delivery plan, technical information and any applicable permissions or certifications.
Your records after funding: how you will track spending, which results you will measure and who will maintain the records.
If a lender asks for environmental, social and governance (ESG) information, the Simplified ESG Disclosure Guide, Version 2 can help you organise it. Keep the lender's request beside you so you focus on what the application needs.
Compare the whole offer
Use the disclosure sheet and proposed offer to understand the full cost of borrowing and what you will commit to:
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| Item | What to ask |
|---|---|
| Amount and contribution | How much is approved, which costs are covered and what must you fund yourself? |
| Interest or profit | How is it calculated, can it change and what would a change mean for payments? |
| Fees | Which application, legal, guarantee or other charges apply? |
| Security and guarantees | What commitments are required from the business or other parties? |
| Payment schedule | Does it fit the project's timing and your business cash flow? |
| Early settlement | What happens if you repay sooner than planned? |
| Project commitments | Which eligibility, evidence, reporting or review conditions are included? |
Compare written offers for the same project scope, including rates, fees, repayment terms and conditions. Ask for an explanation of anything that changes your costs or responsibilities.
Make reporting manageable from the start
Before accepting an offer, establish how spending and results will be recorded. Ask how often you need to report, what information is expected and whether an independent review is needed.
Give someone responsibility for keeping invoices, technical documents and performance records together. If the project changes, discuss how that affects the agreed financing conditions.
Those records can also help you check whether the investment is delivering the improvement you expected.
Check whether a support scheme fits
The Green Technology Financing Scheme (GTFS) publishes guarantee support for financing the green component of a project through participating institutions. Our GTFS guide explains the version-specific summary and availability questions. You can also read the official GTFS FAQ.
Use Bank Negara Malaysia's SME funding directory to explore other facilities. Check their purpose, eligibility and availability with the participating institution.
Ask how any proposed guarantee or incentive would affect the written offer, fees and your obligations. Each scheme has its own assessment.
If you are borrowing for your home
For home solar, a green home or a vehicle purchase, use the household product's own disclosure sheet and eligibility terms. Check that product directly; household and business facilities have their own criteria.
For an ordinary personal loan, assess affordability, costs and repayments. An environmentally useful purchase does not, by itself, establish that the loan qualifies under a sustainable-finance framework.