Solar Financing for Contractors: How Does it Work

In today's dynamic solar market, being competitive does not simply mean having the best technology or the most efficient installation processes. It also means appreciating the economics that underpin the successful delivery of solar projects.

Understanding Solar Financing for Sales Contractors

Consider this scenario: you're a solar salesperson with high hopes for your business and have several hot prospects waiting for the right time to sign up for solar. But there's a problem: none of your clients are walking up with a wheelbarrow full of money. That's where solar financing comes in.

Solar financing solutions are the magic that allows homeowners to take on solar projects without going broke.

Types of Solar Financing

Solar Loans

Solar loans work similarly to other home improvement loans. The homeowner borrows money to purchase the system and pays it back over time with interest. The homeowner owns the system from day one and can take advantage of tax credits and incentives.

Leases

With a solar lease, the homeowner pays a fixed monthly amount to use the solar equipment. The financing company owns the system and is responsible for maintenance.

Power Purchase Agreements (PPAs)

With a PPA, the homeowner agrees to purchase the power generated by the system at a predetermined rate. Like leases, the financing company owns the system and handles maintenance.

Reviewing Your Project Pipeline

Start by taking a good, hard look at your project pipeline. Are you heavily relying on one single provider? "Putting all your eggs in one basket" is an age-old saying for a reason. You need to stay flexible and ready to engage with alternatives.

Evaluating Financing Partners

Key factors to evaluate:

• Interest rates and terms offered
• Approval rates and credit requirements
• Customer service and support quality
• Technology and tools provided
• Training and resources available

Performance Guarantees

When you deliver the solar bid for a customer, you're making promises about performance. Performance guarantees are becoming more common in the solar industry. They're like your safety harness for homeowners and for financiers.

Long-term Maintenance and Warranties

Many financing arrangements, especially leases and PPAs, have maintenance agreements built in. Understanding the warranty and maintenance terms helps you set proper expectations with customers.

Conclusion

Solar financing is the engine that drives the solar industry forward. As a contractor, understanding the ins and outs of different financing options allows you to serve a broader range of customers and close more deals. Contact ESP to learn about our dealer program!