Bright future for solar lending
WITH ITS RESIDENTIAL SOLAR LOANS program going strong, $2.4 billion Technology Credit Union, San Jose, Calif., is branching out with a solar financing program for its commercial, non-profit and government members.
According to Joe Anzalone, Tech CU’S chief commercial banking officer, the program will allow members to finance solar energy systems ranging in price from $100,000 to $2 million with no money down. All financing will be structured so that the savings from using solar energy will cover the cost of the financing over time.
The credit union is drawing on its own experience: it installed solar grids in the parking lot of its headquarters in 2016, allowing it to shrink its non-renewable energy consumption by nearly 30 percent.
For the new commercial solar financing program, Tech CU is working in conjunction with Belvedere Solar Finance. “I was able to work with Belvedere when I was at a previous financial institution seven or eight years ago. I wanted to do a version of the same program at Tech CU, so I put together a commercial solar program.”
Tech CU is targeting small manufacturing firms, grocery stores, gas stations and certain non-profit organizations. “All of these companies see rising utility costs and the benefits of using solar versus paying their utility company,” he said. “We structure five- to 10-year financing so the cost is less than their utility bill. There is a lot of demand for this based on that economic rationale. Loan sizes typically range from $200,000 to $2 million.”
Though commercial and residential solar loans have much in common, Anzalone said the key difference is the risk involved. “The underwriting is different. We have to price per the risk profile, the ability to repay by the borrower and we price accordingly once we evaluate their creditworthiness. We try to make an attractive equipment loan for them.”
Tech CU believes there is a “growing pipeline” for commercial solar lending. Anzalone said Belvedere will identify prospects and do the underwriting at the front end, including the documentation of the borrower. “They know how to underwrite these loans, and will bring a complete package to us for approval,” he said.
“This is a great program for us. It allows us to really scale,” Anzalone continued. “This is a program that should do $5 million to $10 million per year. That is our rough estimate right now.”
“Belvedere says we are the first credit union they have worked with,” he added. “They do work with some commercial and community banks. We are very excited about this. It is a real differentiator for us.”