The U.S. Senate, Congress and then President Joe Biden all signed off on the Inflation Reduction Act last month, which gave a shot in the arm to the solar energy industry.
But because of the very inflation the government is trying to fight, the prices of solar panels are rising again after falling for decades.
Climate First Bank, based in St. Petersburg, was founded to help solar customers pay for the panels, and is offering a 4.99% interest rate over a 25-year term.
Some of the fine print includes paying all-interest for the first four months of the loan and a $267 fee that’s rolled into the loan. But Climate First Bank President Lex Ford said his bank can keep costs down for customers when compared to other solar loan companies, because it does not charge the solar companies fees like competing solar banks do. Those fees are often 25% to 30% of the cost of a solar panel system and get passed on to the customer.
“We hold all the paper,” Ford said of the St. Petersburg-based bank. “If you do a loan with us, we’re going to hold it. So we do 4.99 fixed for 25 years and fully amortize it. We finance 100% of the cost of the install. We don’t recapture the tax credit. So you keep your tax credit unless you want to pay it on the solar loan. And if you do want to pay down the solar loan, we’ll happily re-amortize the debt.”
The bank is new, having been founded in 2021. It also is growing, along with the solar industry in Florida. Climate First Bank was working with eight solar company installers at the beginning of this year and now has 60 solar company partners.
“You’ll save about $15 to $20 a month compared to your power bill,” Ford said of the monthly loan payments. “That’s before you factor in your power bill going up by 5% per year over the next 25 years. And that’s before you factor in the tax credit.”
Although the bank is new, the lenders are not. Ford and the bulk of his team have been in banking and lending specifically for solar panels since 2009 with other banks that have since sold.
“We feel like we’re the most legacy lender in the market when it comes to solar,” Ford said.
Mosaic, an Oakland, California-based financier of solar loans, has been offering loan products with low interest of 0.99% to 1.99% financing and relatively lower monthly payments. But Mosaic also charges its solar company partners an undisclosed fee, which gets passed on to customers.
John Bumgarner, general manager of solar and storage for Mosaic, said financing company worked with solar companies to bring down monthly payments for customers.
“All types of loans have pros and cons,” Bumgarner said in an email. “Home equity loans or lines of credit might have lower interest rates, but require a lot of paperwork and an appraisal, and can take months until they’re approved. New homeowners also may not have enough equity in their homes for bigger products. Credit cards can have higher interest rates, but they’re fast and easy to use. A major con of credit cards is payments spread over longer periods of time may substantially increase the total cost of the project after interest.
“The third option is specialty option, like solar loans. Interest rates for these types of loans typically fall in between home equity loans/lines of credit and credit cards. And the process is fast, easy to apply for and offers long-term repayment options. The homeowner can get pre-approved practically on the spot.”
Solar loan financing companies can charge lower interest rates than traditional banks because financing markets recognize solar loans as a strong asset class, Bumgarner said.
“Loans represented 21% of the financing mix in 2015 and grew to 63% of the financing mix in 2020,” Bumgarner said. “Nearly 90% of residential solar energy systems are now financed by third-party providers, with loan financing becoming the preferred option.”
