Small businesses in San Diego can borrow up to $100,000 interest-free to make energy efficiency improvements, under an initiative announced Tuesday by Mayor Jerry Sanders.

The 10-year loans can be used to fund energy efficiency improvements such as lighting retrofits, upgrades to heating and air conditioning, water pumps and food-service equipment replacement.

The so-called San Diego Clean Enterprise program is a partnership between the city, CleanTECH San Diego and San Diego Gas & Electric. "San Diego Clean Enterprise lets small business owners invest in money-saving improvements to their businesses, and this helps our economy,'' said Sanders, who announced the program outside a business in Old Town.

"Money not spent on energy costs can be invested back into the business,'' he said. "It also strengthens San Diego's clean-technology sector and further solidifies our leadership position in this very promising industry.''

SDG&E will provide funding for the program, which will be administered by CleanTECH San Diego, according to the mayor's office. The city will help promote the program to eligible businesses.

To qualify for the program, which starts June 1, businesses must have an SDG&E account that has been active for the past two years and receive a rebate or incentive through a utility-sponsored energy efficiency program.

The interest-free loan applies to energy efficiency costs not covered by existing rebates or incentives, and must be paid back through the businesses' monthly SDG&E bill.