Redefining Partnership: How C-PACE Became the Lender's Best Friend

For years, C-PACE financing lived in the shadows of commercial real estate finance. Banks often viewed PACE loans with suspicion—or didn’t fully understand them. "Another lender trying to take our deals," was the common refrain.

But the landscape is changing. Commercial lenders nationwide are discovering that C-PACE financing isn’t competition—it’s a powerful solution to some of their biggest operational challenges.

What changed? The industry finally understands the value of C-PACE and how PACE lending can enhance traditional lending structures.

 

The Consent Process: Your Deal, Your Rules

Unlike some sub-debt structures, C-PACE loans can’t proceed without explicit borrower consent. This isn’t just a courtesy—it’s a core feature of the structure.

The consent process typically involves:

• Initial review: Term sheet analysis and deal assessment
• Documentation phase: Risk evaluation and structure confirmation
• Final coordination: Consent execution and closing logistics

 

Compare that streamlined PACE loan approach to:

• Finding a participation bank: 4-8 weeks (if you can find one)
• Structuring mezzanine debt: 6-10 weeks
• Preferred equity: 10-20 weeks

 

C-PACE financing is faster, more transparent, and easier to integrate into complex deals.

 

Real Partnership in Action: The Stella Landmark Case

Consider the recent Stella Landmark Tower conversion in downtown St. Paul. PLG Senior VP Matthew McCormack worked with developers transforming a historic office building into 350+ apartment units—a $75M+ project—using C-PACE financing from PACE Loan Group.

"This was a uniquely complicated transaction with multiple capital sources, and C-PACE exceeded the bank financing," McCormack explained.

The bank maintained its senior position while C-PACE provided the majority of funding for essential building systems: envelope, windows, HVAC, plumbing, lighting, and mechanical systems—improvements necessary for the conversion anyway.

The result: a transformative community project bringing over 1,200 new residents to downtown St. Paul, with $1.2M in annual energy savings. This is the power of C-PACE funding.

 

Why Commercial Lenders Are Embracing C-PACE

Today’s lending environment poses multiple challenges: conservative credit committees, smaller check sizes, and borrowers seeking creative capital solutions.

 

C-PACE partnerships allow banks to:

• Work within existing credit parameters rather than pushing beyond comfort zones
• Serve larger relationship clients without exceeding internal check size limits
• Maintain senior lender control while reducing overall risk exposure
• Access valuable deposit relationships that often accompany C-PACE transactions
• Address DSCR constraints through improved borrower cash flow from energy savings
• Differentiate from competitors through innovative problem-solving

 

PACE lending is becoming a preferred strategy for lenders looking to enhance client relationships while managing risk.

 

The Operational Reality

C-PACE financing works because it respects banking realities. When credit committees approve higher leverage ratios but check size constraints create obstacles, C-PACE fills the gap while keeping banks well within their credit parameters.

It’s not about expanding risk—it’s about managing it effectively while meeting client needs.

 

Looking Forward

As C-PACE financing gains traction nationwide, early-adopting lenders position themselves as problem-solvers rather than rate competitors. The real competitive advantage isn’t the cheapest capital—it’s the most complete solution.

The question isn’t whether C-PACE will become mainstream—it’s whether your institution will be known as an innovative partner or just another lender.

Ready to explore how C-PACE loans or C-PACE financing through PACE Loan Group could enhance your lending portfolio? Contact our team to discuss specific scenarios and discover how C-PACE funding might address your current deal challenges.