Solar energy is a clean, renewable source of energy that can provide significant benefits for commercial businesses. However, the upfront cost of installing solar panels can be a barrier for many businesses. Fortunately, there are a number of loans and power purchase agreements / financing options available to help businesses finance the cost of solar panels. 

In this blog post, we will discuss two of the most common types of commercial solar financing: loans and power purchase agreements (PPAs). We will also discuss the pros and cons of each type of financing, so that businesses can make an informed decision about which option is best for them. 

Solar Financing Loans 

A loan is a type of financing in which a lender provides the borrower with a sum of money that must be repaid over time, with interest. Loans can be used to finance a variety of expenses, including the cost of solar panels. 

There are a number of different types of loans available to businesses, including traditional bank loans, government loans, and private loans. The terms of each loan will vary, so it is important to compare different options before choosing a loan. 

Pros of financing solar panels with a loan: 

• The business owns the solar panels outright. 
• The business can deduct the interest on the loan from its taxes. 
• The business can build equity in the solar panels over time. 
• The business may be eligible for federal and state tax credits and depreciation benefits. 
• We offer commercial loans with low interest and up to 20 year terms. 

Cons of financing solar panels with a loan:

• The business must make monthly loan payments. 
• The business may have to pay closing costs. 
• The business may not qualify for a loan. 

Power Purchase Agreements 

The federal government’s investment tax credit (ITC) for solar has been expanded in three key ways: 

A power purchase agreement (PPA) is a contract between a business and a solar developer. Under a PPA, the solar developer owns and installs the solar panels, and the business purchases the electricity generated by the panels at a fixed rate. 

• The business does not have to make any upfront investment. 
• The business knows exactly how much it will pay for electricity each month. 
• The business can take advantage of the tax benefits associated with solar energy. 
• The business may not have to pay for maintenance or repairs. 

The cons of financing solar panels with a PPA include: 

• The business does not own the solar panels. 
• The business may be locked into a long-term contract. 
• The business will not directly get any tax credits.

Which Type of Financing is Right for You? 

The best type of financing for your business will depend on a number of factors, including your budget, your risk tolerance, and your tax situation. If you are comfortable with making monthly payments and you want to own the solar panels outright, then a loan may be the best option for you. If you are looking for a more flexible financing option and you do not want to make any upfront investment, then a PPA may be the best option for you. 

If you are not sure which type of financing is right for you, then it is a good idea to talk to a solar financing specialist. They can help you understand your options and choose the best financing solution for your business. 

Conclusion 

Solar energy is a great way for businesses to save money on their energy bills, reduce their environmental impact, and boost their brand image. There are a number of financing options available to help businesses finance the cost of solar panels. The best type of financing for your business will depend on your budget, your risk tolerance, and your tax situation. If you are not sure which type of financing is right for you, then it is a good idea to talk to a solar financing specialist. They can help you understand your options and choose the best financing solution for your business. Click here to learn more about federal solar incentives for businesses.