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 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 – in lieu of drawing from the grid – will cover the cost of the financing over time.
The credit union is drawing on its own experience on the latter point – it installed solar grids in the parking lot of its headquarters building in 2016. The solar electricity used in its office has allowed 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. Anzalone said Belvedere has been in equipment leasing and finance for 30 years.
“There is an opportunity for small- and medium-sized businesses that have a demand for solar,” Anzalone said, adding through the use of federal grants and cost avoidance, businesses have the same advantages as consumers using solar. “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.”
There are several similarities in financing residential solar and financing commercial solar, Anzalone explained. He said target clients include 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.”
Different sort of risk
As for risk involved with residential versus commercial, Anzalone acknowledged there “definitely” is a difference.
“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.”
The good news: 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, allowing the credit union to serve as the financing arm.
“They know how to underwrite these loans, and will bring a complete package to us for approval,” he said of Belvedere.
“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.”
Anzalone said as far as he knows, he has not heard of any other credit unions doing commercial solar lending, though a number of CUs across the country have started solar lending programs for members or established solar energy programs for their facilities. “Belvedere says we are the first credit union they have worked with. They do work with some commercial and community banks. We are very excited about this. It is a real differentiator for us.”
In May of this year, Tech CU committed more than $500 million to residential solar loans.