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Is your business prepared to finance or lease a solar project? Read these EASY tips and see if you pass the lenders test.

Qualifying your business for solar and hydrogen fuel cell EQUIPMENT lease or financing.

In any type of sales process, a business will eventually need to ask itself, “are we ready, willing, and able customers”?  Are we ready and willing to sign up for the products or services that we desire? Are we able to pay by some method or another?

Fortunately, most every prospective solar or hydrogen fuel cell energy customer is ready and willing… these days, who isn’t?  The critical question is, are they able to finance their desired project?  Some customers will be able to pay cash out of company funds. Others may want or need to get financing from an outside source, and will easily be able to get approved for their project. But the reality is that some of you may have difficulty getting approved for the financing needed.  And if it turns out that you can’t get financing for your project, then you don’t have an energy deal take advantage of.  It’s an unfortunate fact, but even though you feel quite ready and willing, with no financing there’s no sense in pursuing this effort until your budget allows.

So How Can You Tell if You Can Get Approved?

Well, there are many ways to be certain in advance.  Although the real weight of finance and numbers takes an expert looking at your complete financial package, there are some questions you can ask yourself early on in your inquiry of the sales process, which may help us, alongside you and your lender.   Working together we can better determine if you should go forward, and if so, how to proceed.  The answers could very well give us strong encouragement, or could turn up some “red flags” that a financier will need to check out. Here are some questions to ask, as soon as you feel confident that your sales process is appropriate:

1) How old is your company? You usually need minimum five years time in business, but there are exceptions, e.g. as a customer, you could be a new branch or subsidiary of a well-established parent company; stand-alone start ups would not qualify for financing.

2) Who owns your company, and how is it structured? Is it a sole proprietorship, owned by a single individual or couple? A partnership? Is it a corporation? If so, is it a C-Corp, an S-Corp, or an LLC? Are there many shareholders, or just a few? Is this company a division or subsidiary of another corporation? There are no wrong answers that disqualify you as a customer for financing; this information just helps us create the best finance solution.

3) Are owners of your business US citizens or entities, or foreign-based? Foreign ownership in itself is not an automatic disqualification, but in general a Lessee must be a US-based entity.

4) Will you as the owner or your owners of the company personally guarantee the financing? This is required if the company is “closely-held” by a few owners, regardless of structure (sole prop, partnership, or corporation). If there are many shareholders, and controlling interest is not in the hands of a few, we can potentially waive personal guarantees. If the company is a subsidiary of another, a lender will need guarantee from the parent company.

5) Are company financials available? A lender will need to review the most recent three years statements and tax returns, plus personal information on owners if closely-held. If a customer can’t or won’t provide the information most lenders request, they won’t be able to help your business get the project approved.

6) Has the company been profitable in the past three years? What is the trend? Profits are a prime indicator of the health of a company, and directly relate to the cash flow available to cover the lease payments. Generally a lender will need to see a history of profitability with positive trends.

7) How does company net worth compare with the total cost of the solar or hydrogen fuel cell system? We normally will need net worth (shareholder equity) to be about three times the amount we’re financing.

As you can see, there is an education in and of itself to any type of lending practice. These are the everyday questions many businesses will encounter when shopping for energy equipment financing or lease options.  We hope this helps as your preliminary guideline. 

This article is co-written by Jennifer Coleman and Jerry Guffey.

Jennifer Coleman of Sun Source Solar Brokers in Sonoma County, Cotati, California…a Solar Broker and Energy Consulting Marketing Group representing buyers of commercial and industrial solar and other renewable and sustainable energy equipment purchases.

Jerry Guffey of Mission Capital Funding in Windsor, Sonoma County, California…representing buyers with capital funding and creative lease finance options for solar and other renewable and sustainable energy equipment purchases.

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Sun Source Solar Brokers
525 East Cotati Avenue, #220
Cotati, California 94931
707-888-7046

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