When our co-founder Scott Nguyen went solar in 2016, options to pay for the system weren’t easy to navigate. He of course could pay cash, but outside of that he felt stuck. He learned that PPAs weren’t allowed in Austin Energy, leased systems didn’t qualify for Austin Energy’s rebate, the process for a home-equity loan was cumbersome and lengthy, and the solar-specific loans he saw came with significant dealer fees. So he ended up paying cash.
Fast forward 7 years, and Scott would be quite the outlier. Today, almost 70% of solar customers turn to loans, making them a cornerstone of the solar sales process. However, just because they’re popular doesn’t mean loans are easy to talk about. Like Scott, most homeowners today still find the solar financing process stressful and confusing
While your sales team doesn’t have to be an expert on all of the different financing options, if they can be another resource to help a homeowner find the right financial solution, your business can benefit. Answering questions around PPAs, solar loans, and more is all part of delivering a great customer experience — which in turn can yield more reviews, referrals, and follow-on sales.
In this article, we give your sales team a step-by-step guide to the solar financing conversation with solar customers. By taking the time to have these trust-building conversations early in the sales process, your team is more likely to win the deal, and your business is better equipped to deliver a great customer experience.
Common options for financing solar installations
Many homeowners looking at financing a solar installation aren't aware of all of the options available to them. And, unfortunately, once they learn about them, they feel overwhelmed. As a result, a solar business may be forced to deal with longer sales cycles or even cancellations. That’s why it’s crucial that your sales team can explain what solar financing options are available to the homeowner, as well as the pros and cons of each.
Armed with the proper knowledge, you can guide customers toward a solution that works for them. By helping a homeowner through the financing process, you can increase the chance that they get the funding needed to make a purchase from you and decrease the likelihood of the type of buyer's remorse that could result in negative reviews about the sales process.
We’ve gone into detail about the various solar financing options (and their archetypal customers) elsewhere. However, below is a quick recap on some typical solar financing options available to homeowners, as well as who might most benefit:
- Solar loans: As we mentioned above, solar loans have supported a majority of recent solar projects. Through companies like Sunlight Financial, Sungage Financial, Dividend Finance, and Goodleap, to name a few, your customer can get a specialized, low-interest loan. You may suggest this to the homeowner if they 1) Don’t want to or can’t pay cash, 2) Have the tax liability, and 3) Want to own their system.
- Leasing / Power-purchase agreement: PPAs and other leasing options allow homeowners to invest in solar energy with little to no upfront costs. This is a good option for homeowners who do not have the tax liability to take advantage of the ITC. However, they'll see lower long-term savings and won’t own their system.
- Mortgage options: Several options fall into this category. A customer may get a cash-out refinance, where they refinance their existing mortgage with an additional amount to cover the solar installation added in. They may get a home equity loan or line of credit. In either of these cases, they will be putting their home on the line to get the loan. This will significantly reduce the credit requirements and allow for financing without the dealer fees.
While you and your sales team should certainly feel empowered to help guide your customers in financing discussions, it’s also important to stress that you aren't a financial professional. Recommend that they talk with an accountant or tax professional. The cost of discussing with a financial professional is minor if it ensures the security of their investment.
Related: Sungage Financial and Bodhi join forces to support solar businesses as they scale
Working with an accountant is also the best way for homeowners to understand the full picture of their financial investment. Accountants will be aware of all the potential incentives and tax breaks that the customer will be eligible for and will be able to help them understand how the cost-savings of solar will impact their long-term financial health. Your customer will be more prepared for these conversations thanks to their initial discussion with you.
5 steps for moving the solar financing discussion forward
Now let's take a more detailed look at how the solar financing process might go. The steps listed below are how we recommend solar installers and their sales teams structure their conversation with potential customers about financing solar installations.
Step 1: Understand the customer's electricity spending and savings goals
This is probably a part of your initial conversation with customers already, since it’s important to design a PV system that will align with their goals and expectations. However, knowing what their electricity spending and savings goals are is also an important part of helping them choose the right financing option.
After all, a customer looking to maximize long term savings probably won't be as happy with a lease or a long term loan. Each financing option has strengths and weaknesses that are not only impacted by the borrower’s financial situation but by their goals for taking out the loan. Without knowing what they want out of their purchase, it's next to impossible to steer them in the right direction.
For example, customers looking to simply save off their monthly electricity bill while going green should be steered towards a low interest 25 year loan or a PPA or lease option. Customers wanting to maximize savings and planning on staying at their home long term should be steered towards taking out a home-equity loan.
Step 2: Discuss their customer's tax appetite
If the customer has indicated that owning the system is a priority for them, there are a few additional things to consider. If the tax credit is a key part of the sale, be sure to confirm that the homeowner has sufficient tax appetite. One of the worst things that can happen and will lead to 1-star Google reviews or even lawsuits is homeowners being misled. Even if a homeowner doesn’t have sufficient tax appetite in a single year, the tax credit can be rolled over into future years. We don’t recommend scenarios where the tax credit is rolled over for more than 2 years. If the homeowner doesn’t have sufficient tax appetite, a lease or PPA is a better fit.
An accountant can provide the homeowner with the most detailed answers to these questions so that they can make a sound decision. Still, it's important for you to take these things into consideration so you can point them in the right direction and provide them with questions to ask when they speak to a financial professional.
Step 3: Match the customer's needs with the right financing company
If a customer has sufficient tax liability, a solar loan is a good option to explore. Of course, there are many different solar financing companies out there, and the loan products and qualification requirements of each can vary. For example, Goodleap has a reputation for having higher dealer fees but more flexibility with its credit requirements. In contrast, companies like Sungage and Sunlight offer competitive interest rates but can be more particular in who they lend to. Credit unions on the other hand may have higher interest rates but lower dealer fees. As a solar installer, work to be familiar with these companies and the basics of their requirements.
Related: The hidden costs of poor communication with solar customers
When customers come to you looking for information on solar financing, there's a good chance they won't be familiar with any of the companies. Once you've gotten a picture of the homeowner's finances, needs, and goals, you can use your knowledge of the various options to match the homeowner with a list of companies that might work well for them.
Step 4: Create a customer-friendly proposal
After your discussion, a homeowner will have a lot to consider, and they'll likely need to refer back to some of the information that you've presented to them. If your proposal isn't easy to read, this process will be more difficult, and your sales staff may have to spend time answering unnecessary questions instead of closing deals. The homeowner is also more likely to become frustrated with the experience.
Most proposal software today like Aurora, Open Solar, and Solo provide customer-friendly proposals and are integrated with most of the major solar finance companies. The integration allows for the sales staff and the customer to easily apply for credit approvals on the spot. Many of the proposal tools also have the capability to adjust the system design and recalculate the estimated savings, allowing customers to explore their options.
Step 5: Keep the customer informed
Don’t throw away all your hard work. If you've followed these steps, you've already built a stronger, more trusting relationship with your homeowner than most solar companies are able to achieve during the sales process. However, maintaining that level of trust requires continuous communication throughout the loan approval process, design, permitting, installation, and beyond.
A customer-facing platform that can provide homeowners with automated updates on the entire solar process can remove customer anxiety and free up staff for other duties. By investing in a platform (like Bodhi!) that can automate personalized customer communications and automate financing milestone submissions, you can keep up the level of service that your sales team provides without straining your operations team.
How Bodhi can help
When they decide to go solar, your customers are embarking on a journey that is both exciting and expensive. This creates a powerful combination of anticipation and stress. By following the steps outlined above, you can become a trusted partner in this journey with them.
Of course, as we touched on in step 5, financing a solar installation is just the beginning of the customer’s journey. Savvy solar installers know they need to keep their customers in-the-loop at every phase of the project in order to get five-star reviews and referrals. The Bodhi platform can help you keep customers happy and engaged by providing you with a powerful customer experience that goes beyond the basics. To learn more, schedule a demo today.
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