As more companies turn to solar to avoid rising utility prices, the cost of installing and buying solar systems has decreased considerably. If you are a small to medium-sized business that doesn’t have enough cash to pay for a solar system upfront, then you might be looking for commercial solar loans to finance your next project.
Commercial solar loans allow your organization to reap the benefits of federal solar investment tax credits, accelerated depreciation, and state tax credits. Along with these benefits, your organization can join the green business approach and enjoy the energy cost savings.
When transitioning to solar, there are a few options you can choose from. You can either purchase your solar system upfront, sign a lease, or apply for a loan. Commercial solar loans tend to be the most popular because it’s a win-win for both the lender as well as the business who is interested in the solar system.
When you are looking for solar loans, there are two you can choose from. One is a Bank Loan and the other is a Commercial Property Assessed Clean Energy (CPACE) loan.
A bank loan is perfect for an organization that has great credit and pays a substantial amount in taxes but does not have the cash to pay for the solar project upfront. After all, a bank loan will typically finance up to 80% of your solar project. Additionally, if you are interested in retaining capital for reinvestment or you would like to spread out your project payments over time, you should contact your bank to get more information about financing.
What are the cons of bank loans for solar?
The downside to financing through a bank is that they will own your system until it is paid off. They will provide you with someone who will maintain and operate the system since they own it. Once you reach the end of your term, you can opt to own your system or you can apply for another loan. In addition, some may find that a bank may not know all the intricacies on how to underwrite for solar. If you find that your bank is not capable of doing this, AVANA Capital is here to help.
To pursue a clean energy project, you might want to consider Commercial Property Assessed Clean Energy loans. CPACE loans allow building owners to borrow money for solar projects. The difference is that you can make repayments via an assessment on their property tax bill. Take note that CPACE is only available in areas where state and local laws allow this form of financing.
Some advantages you can expect to receive from a CPACE loan are lower transaction costs compared to private loans. Additionally, long-term financing options that allow for lower monthly payments. Even more, it covers 100% of the hard and soft costs of a solar project thus property owners don’t have to put any money down.
With this knowledge, it’s up to you to decide which option is right for you. If you are unsure which one will benefit your business more, reach out to the solar professionals at AVANA Capital.
For over five years, we have been working with businesses to finance solar projects that have the best ROI. Our main goal is to present you with inventive lending solutions for your next clean energy project that remains within your budget and solve your unique problem. For more information about how your company can benefit from a commercial solar loan, contact us today.