Dividend Solar has launched a financing platform for residential solar providing direct loans to consumers with interest rates starting at 6.5%, according to Eric White, founder and president of the San Francisco-based company.
The EmpowerPortal loan option, unlike leases or power purchase agreements (PPAs), allows the consumer to claim a federal tax credit of 30%.
The company also guarantees performance and maintenance through a blanket agreement with Next Phase energy, based in Berkeley, California, which already services 250 MW nationally.
The lending rate is less than the percentage charged by industry leader Sonoma County, California, for property-tax based PACE loans currently 7%. By contrast, the consumer advantage offered by major solar lease companies and solar PPA companies are around a 15% discount off utility bills over a 20-year contract.
One requirement for the Dividend Solar loan is cash savings from day one from the replaced utility energy bill.
Case by case loan decisions
"We also look at FICO scores (a type of credit rating), but ultimately we make every loan decision on a case-by-case basis," said Phil Meachin, vice president of strategy for Dividend Solar.
Initially, the company is focused on the 20 leading U.S. solar states. Dividend Solar has already secured an eight-digit funding line from major Wall Street investors including hedge funds and is essentially securitizing the residential loans into private portfolios, among other financial vehicles, White said.
Loan approval time requirements can range from a few hours to a few days, Meachin added.
"We require bankable technology from Tier 1 suppliers; if they are U.S. companies, so much the better," said White. The company is strategically aligning itself with established installers and maintenance companies for basic needs, and backstops with Next Phase, he said.
In the event of default by a consumer, the situation would be examined on a case-by-case basis, Meachin added.
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