Should You Offer Financing for Solar Installations? Pros & Cons

Introduction

Offering financing options for solar installations can be a game-changer for installers. With the rising costs of energy and increasing awareness of solar energy’s long-term benefits, more homeowners and businesses are considering going solar. However, the upfront cost often becomes a major barrier.

By providing financing options, solar installers can overcome that barrier, expand their customer base, and close more deals. But is it always the right move?

In this article, we’ll explore the pros and cons of offering financing for solar installations, the impact it has on your sales strategy, and how to decide if it aligns with your business goals.

Why Financing Matters in Solar Sales

Solar systems often require a significant upfront investment—anywhere from $10,000 to $30,000 for residential systems, and even more for commercial setups. Despite the long-term savings, the initial cost can be intimidating.

Financing options like loans, solar leases, and power purchase agreements (PPAs) help customers adopt solar without bearing the full upfront burden. This flexibility can be a powerful tool in your sales arsenal.

The Pros of Offering Solar Financing

1. Increased Sales and Market Reach

When you offer financing, you immediately open the door to a larger market. Many potential customers who might shy away from a large cash investment become viable leads.

Example: A solar installer in Arizona introduced $0-down financing options. Within six months, their lead-to-sale conversion rate increased by 25%, and their average project volume grew significantly.

2. Better Customer Experience

Financing simplifies the decision-making process. When you can present a system as “just $99/month” instead of $20,000 upfront, it’s more relatable.

Offering easy-to-understand financing options builds trust and positions your business as a solution provider, not just a contractor.

3. Higher System Sizes and Upsells

With financing, customers are more open to larger system sizes or upgrades (like battery storage) since the increase in monthly payments is often negligible.

4. Competitive Advantage

Not all installers offer financing, or they might offer limited options. By presenting flexible financing plans, you stand out.

Pro Tip: Partner with multiple financing institutions so you can tailor plans to fit various customer needs.

The Cons of Offering Solar Financing

1. Increased Complexity and Administrative Work

Financing comes with paperwork, credit checks, and sometimes complicated approval processes. You or your sales team will need to explain terms and assist customers through the application.

Solution: Use digital tools or CRM platforms that integrate financing applications and streamline the process.

2. Lower Profit Margins in Some Cases

Depending on the financing partner, you may have to pay dealer fees or give up a portion of your profit. Some plans might also limit your flexibility in pricing or bundling services.

3. Risk of Customer Delays or Drop-Offs

Customers with poor credit scores might be declined. Others might delay their purchase while they shop around for better terms.

4. Reputation Risks

If customers have a bad experience with the third-party financing provider, it can reflect poorly on your business, even if you had no control over the process.

Popular Solar Financing Options

Here’s a breakdown of commonly used financing models:

1. Solar Loans

• The customer owns the system
• Can claim tax credits and incentives
• Fixed monthly payments

2. Solar Leases

• A third party owns the system
• The customer pays a monthly lease fee
• Often, no upfront cost
• No access to tax credits

3. Power Purchase Agreements (PPAs)

• The customer pays for the electricity the system produces
• No ownership or maintenance responsibilities
• Lower monthly costs but no long-term equity

Real-World Scenario: Small Installer in Texas

A small solar company in Texas began offering loan-based financing in partnership with a local credit union. They trained their sales team to explain APRs, terms, and total system value.

Result:

• 3X increase in qualified leads
• 40% faster close times
• Increase in average system size from 5kW to 7.5kW

By integrating financing into their pitch, the installer transformed the sales process into a value-based conversation rather than a cost-based one.

How to Offer Financing the Smart Way

1. Choose Reliable Financing Partners

Work with institutions that specialize in solar and have a reputation for customer satisfaction. Some popular solar financing companies include:

• Mosaic
• Sunlight Financial
• GoodLeap
• Sungage Financial

2. Train Your Sales Team

Ensure your team understands the financing terms and can explain them clearly. The more confident they are, the more trust they can build with customers.

3. Bundle Financing into Your Proposal

Don’t wait until the end of your pitch to talk about financing. Include monthly payment estimates in your proposals and show how it compare with their current electricity bill.

4. Keep Compliance in Mind

Finance-related sales conversations may be subject to regulations depending on your state. Ensure your sales team follows all legal and ethical guidelines.

Should Every Solar Installer Offer Financing?

Not necessarily.

Financing can be an incredible growth tool, but only if you’re ready to manage the added complexity and customer service demands. For small teams, the burden may outweigh the benefits, at least in the short term.

That said, the majority of solar customers now expect financing options. If you’re not offering them, you could be losing deals to competitors who are.

Final Thoughts

Offering financing for solar installations isn’t just about increasing sales—it’s about empowering customers to go solar sooner. The right strategy can enhance your customer experience, boost average project size, and improve cash flow.

But like any business decision, it requires careful planning.

If you’re considering financing, start by evaluating your customer base, team capacity, and partnership options. A well-executed financing strategy could be your edge in an increasingly competitive market.

References

• U.S. Department of Energy – Solar Financing
• Solar Energy Industries Association (SEIA)
• NREL – Solar Loan Analysis