Solar Operating Leases
Solar Operating Lease – Solar Pro
Financing of commercial solar projects makes a lot of sense when the owners’ finance payment is less than their monthly utility bill and they are still getting all their energy needs met. We offer an economical Solar Pro Operating Lease for commercial (for-profit) entities with exceptional reductions to the monthly payment. The IRS offers a 30% investment tax credit for new installations and we can retain that credit as well as monetize the depreciation and reflect it in the stream of payments as an additional discount thereby offering the company a negative interest rate. Many companies do not have use of the tax credit yet they can still gain the benefits of it through the Solar Pro program. The structure is the same as with any operating lease; there are fixed “rental” payments with a fair market value buyout at the end of term. In this case, the buyout is capped eliminating any surprises of a large balloon payment.
Guidelines for the Solar Pro Operating Lease include:
- For-profit Companies only (non-profits do not qualify)
- Term: 84 months for all projects
- End of term – 20% FMV (fair market value) for leases under $500K and 15% FMV for projects over $500K.
- Sample lease factor of (.01112) equates to a negative interest rate, because of the special tax credits. Sample payment ($100,000.00 = $1,112.00 per month) or -1.95%.
- Payments are fixed for the entire term
- Client and vendor approval required
- Rates range from -1.95% to -3.10% based on project cost
- Client – Minimum time in business is 3 years
- Client – Net worth needs to be 5 times the loan amount
- Client – Cash flow needs to be 1.5X yearly debt service
Projects can start as low as $100,000; the perfect solution for small to mid size companies wanting to take advantage of the current tax credit and other incentives which many cities and states offer.