When to Go Local in Lending

20 Aug 2015


In structured finance or cash deals, regional or local lenders may have more competitive offerings than a national bank or debt provider.

In structured finance or cash deals, regional or local lenders may have more competitive offerings than a national bank or debt provider. Often their rates are cheaper by a point or more compared to the traditional debt players in the industry. Some local or regional players may also be more flexible with loan tenors – and may even offer loans for longer than the PPA term. Finally, local lenders may be more comfortable with various state and regional risks, like solar renewable energy credits (SRECs) or other incentives that larger banks may not underwrite.

Local relationships matter. Local lenders may be mission-based in such a way that benefits solar investments. Existing relationships may also make the difference for a developer/investor; for example, developers seeking affordable debt might want to take a look at existing lending relationships at the corporate level or with the host customer. A local lender is more likely to provide an attractive offering if they already understand and work with the parties in question, even if they are unfamiliar with solar generally. Developer and investors alike may be pleasantly surprised with the affordability and flexibility.

For mainstream, clean-cut projects, it is still best to work with institutional lenders capable of writing big checks and handling the complexity of other parties at the table, like tax equity investors. If you have a debt partner already, it is best to hold onto that relationship and not let them go; there is a dollar value one can put on efficiencies that arise from repeat business. But if you are working on a project that falls outside of the typical 5MW+ box, especially in a common solar state, it may be a good idea to think local.

This is an excerpt from our August edition of SOURCE: the Sol Project Finance Journal, a monthly electronic newsletter analyzing the solar industry’s latest trends based on our unique position in the solar financing space. To view the full Journal or subscribe, please e-mail pr@solsystems.com.


Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 262MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

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Sara Rafalson

Sara Rafalson