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Solar Financing For Commercial Property Owners

Commercial solar loans are similar to home improvement loans that homeowners have used for decades to build a deck or add a second bathroom to their homes. When a purchaser borrows money from a lender, they agree to pay it back, plus interest, in monthly installments over the loan term. Solar panel loans have the same basic considerations as other types of loans:

  • Lower interest rates result in lower overall costs for borrowers.

  • Loans with shorter terms will generally have higher monthly payments and lower total costs over the life of the loan.

  • Solar panel loans can be either secured or unsecured, which results in a wide array of interest rates, term lengths, and credit requirements among loan offerings.

There is one very important difference between solar loans and other capital improvement loans: a solar panel loan allows the purchaser to own an asset that generates significant financial value. This includes both the value of electricity generated by the solar panel system over its lifespan and the ITC and other applicable rebates and incentives like solar renewable energy certificates (SRECs).

Key Solar Loan Considerations

Like any other financial product, solar panel loans have different structures, terms, and conditions. In order to find the solar energy loan that is right for you, there are two fundamental questions that you need to ask.

  1. Secured or Unsecured? Solar energy loans can be divided into two categories. Secured loans require an asset that will serve as collateral for the loan – in most cases, that asset will be the building or property in which the system is installed. Unsecured loans do not require any collateral other than the solar panel system itself. Both loan categories have implications for the borrower.
  2. How Much for Each Monthly Loan Installment? The amount you want to pay each month will impact the interest rate and the length of the loan. Loans with longer terms will have smaller monthly payments, but you will pay more in interest over the life of the loan. In contrast, payments on solar energy loans with shorter terms may exceed your monthly utility bill savings, but they offer a better value because you pay less in interest over the life of the loan.
Check out the benefits of commercial solar loans

Commercial Finance Secured vs. Unsecured Loans Chart

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