Founder | BPI® Energy Auditor Certified Professional
So you’ve decided you want to power your home with solar energy. Wise choice! But now you are wondering how to pay for it. Sure, there are rebates for renewable energy. But it is still a large investment.
If you are like most Americans, you don’t have that kind of cash lying around. You know in the long term that solar will pay off with reduced energy costs. But how do you get started?
Don’t worry. We’re here to tell you about the six best solar financing companies in Florida. We’ve even found a bank in St. Petersburg that’s completely dedicated to environmental sustainability. But before we dive into the specifics, let’s talk about the types of solar financing available.
Types of Solar Loans
When it comes to solar financing, there are two main types of loans you can apply for: secured and unsecured loans. Let’s explain the difference between these two loans.
Secured Loans
When a bank gives you a secured loan, they ask for something as collateral in return. That way, if for some reason you were unable to pay them back, they haven’t lost all their money. Usually, your house is the collateral. Having collateral makes the loan less risky for the bank.
Home equity loans fall into the category of secured loans. Often referred to as a second mortgage, home equity loans require that you have a good credit score and equity in your home. It may take longer for approval for this type of loan, but in general, secured loans have a lower interest rate than unsecured loans.
Unsecured Loans
Unsecured loans, as the name implies, do not require that you put up any collateral. That makes this type of loan riskier for the bank–if you choose not to pay, the bank has nothing to collect from you. As a result, these loans often have a higher interest rate. Another difference is that with a secured loan, the interest is tax-deductible, whereas with an unsecured loan, it is not.
Top Solar Financing Companies
Now that you know a little more about the types of loans, let’s look at who can provide you the financing you need for your solar energy system.
Climate First Bank
Caring about environmental sustainability isn’t usually the first thing that comes to mind when you think about banks. That’s where Climate First Bank in St. Petersburg is different. They are a full-service bank, just like other banks—but rather than focusing solely on making money, they are also concerned with taking care of our planet.
Climate First is the first bank in the southeast to become a registered B Corporation. While not non-profit, a B Corp must demonstrate the highest social and environmental performance standards to balance profit and purpose. And as you look at Climate First, it is easy to see their commitment.
Not only do they have a net-zero carbon footprint, but they also give 1% of gross profits from certain products to support grassroots environmental non-profits.
With all this in mind, it is not surprising that Climate First is our top pick for Florida solar financing.
As you would expect from a bank focused on environmental sustainability, they offer a line of low-interest residential solar loans. The terms on the loans range from 12-20 years, with interest rates available as low as 4.08%.
SunCoast Credit Union
While SunCoast Credit Union doesn’t have the same commitment to environmental sustainability that you will find at Climate First, they are still a good option if you are looking for solar financing. Florida’s largest credit union, they focus on offering services that benefit their members. Plus they are carbon neutral, have solar-powered buildings, and help the Arbor Day Foundation plant trees.
So, it’s not surprising that they offer financing for green home improvements. They offer a variety of lending options depending on which suits your needs best. Loans are only available to credit union members, but membership is open to anyone who lives, works, attends school, or worships in the counties they serve. The best interest rates they offer are on their home equity loans, but they also have other secured and unsecured options. If you need less than $10,000, apply for the Home Improvement Signature Loan.
City of Tallahassee
If you are a utility customer in the City of Tallahassee, you qualify for their solar financing options. The city offers a secured loan with an interest rate of 5% to electric and natural gas customers. Solar Loans are generally repayable over ten years, and you can borrow up to $20,000 for solar (with certain restrictions).
The loan payments are added to your monthly utility bill, but here’s the idea: your energy consumption should decrease so you don’t see a dramatic rise in payments. Minimum payments can be as low as $25 a month, and if you finance the maximum, it will be $212.13.
The loan does place a lien on your house, and you will need to pay it off in full if you sell your home.
Florida PACE Program
The Florida PACE program is a bit different than the other types of lending we’ve discussed. This is a government program to help address the lack of funding options available for renewable energy and other sustainable improvements.
Through the PACE program, you can receive financing with zero down on approved solar projects. However, rather than issuing the loan to you as a person, this loan is applied to the property. You make payments by a special tax assessment that is added to the tax bill each year.
The term of the loan is based on the life expectancy of the products purchased. This can cause problems if you plan to move before you finish paying it off. Some mortgage lenders will not allow mortgages on homes participating in the PACE Program. This can make it more difficult to sell your home. However, if you are in your forever home, the PACE program is worth looking into.
YGrene
YGrene is a lender that works through the PACE program. They provide financing with a quick approval process that is not based on your credit score. They offer low interest rates and delayed payments, making it easier for you to make the switch to your solar energy system. Your payments will be made annually on your property tax bill.
It is important to note that if you get funding through YGrene or any of the other PACE lenders, they do put a lien on your property. This can make it difficult if you are looking to borrow against your home later.
Mosaic
Like Climate First and SunCoast Credit Union, Mosaic is another lender that values environmental sustainability. In fact, their stated vision is 100% clean energy for all–how amazing is that? To this end, they offer various lending options for you to choose from to finance your solar power system.
The first program they offer is called PowerSwitch ZERO. This program allows you to choose not to make payments for your loan’s first 12-18 months. After the grace period, you can choose to repay the loan over a period ranging from 10 to 25 years, and there are no penalties for early repayment.
They also offer the PowerSwitch CHOICE and PowerSwitch PLUS. The Power Switch CHOICE is designed for people who hope to take advantage of the Federal Solar Investment Tax Credit. The intent is that you pay down 26% of the loan within the first 18 months. After 18 months, the monthly payment is adjusted up or down based on how much you have paid off.
The PowerSwitch PLUS loan is the best choice if you intend to do additional upgrades besides solar. That way, you can upgrade doors or windows or do whatever else you need to do to make your house as energy-efficient as possible.
You can use both the PowerSwitch CHOICE and PLUS to upgrade existing solar systems, add batteries, and even re-roof a portion of your home.
Mosaic’s loans are secured loans. But they hold a lien on your solar panels, rather than your house.
Final Thoughts
When it comes to solar financing, there are a variety of different options available. From small local banks like Climate First to city programs like the one in Tallahassee, there are people who not only talk about caring for the environment but are willing to put their money where their mouth is.
Terms and interest rates will vary depending on which program you choose, but most programs we’ve discussed have low interest rates, making your switch to green energy even easier. It is important to remember that many of those low interest rates do come with a price–you will probably have to demonstrate equity or place a lien on your house.
Make sure you carefully evaluate the terms, and see that they align with your future plans. Some solar financing options are great if you are in your forever home but can create challenges if you plan on selling your home down the line.
However, with so many options available, solar energy no longer needs to be just a dream. The first step is to contact a lender and see what you qualify for. Before you know it, you could be living in a home powered by clean, renewable energy.