Loan program promotes solar power systems
Shenandoah Valley business owners are among those around the state taking advantage of a low-interest rate loan program for solar power systems.
Virginia Community Capital (VCC), a Christiansburg-based community development financial institution, recently received a grant to offer loans with subsidized rates to companies wanting to install solar power.
“We are offering 2 to 2½ percent fixed rate for five years to credit-qualified companies,” says Bill Greenleaf, a vice president and loan officer at VCC.
In offering the low-rate loans, VCC is working with three Virginia solar companies — Sigora Solar in Waynesboro, Sun Tribe Solar in Charlottesville and Integrated Power Sources of Virginia in Richmond.
The subsidized-rate loan program began in January. Since then, the majority of borrowers have been businesses in the Harrisonburg and Charlottesville areas.
Greenleaf started a solar-power lending program at VCC after he joined the organization in 2015. “We did about $3 million in solar lending in 2016 across the state,” he says, noting the interest rates for loans at the time ranged from 5 to 5½ percent.
The total amount of money available for loans in the current subsidized-rate program is $600,000.
Businesses wanting to install solar power systems also can use federal tax credits to offset the cost. However, the percentage of the costs covered by tax credits will decline in coming years.
Currently set at 30 percent, the tax credit will fall to 26 percent in 2020, 22 percent in 2021 and 10 percent after 2021. (Residential tax credits meanwhile will be eliminated after 2021.)
Selling solar power to Virginia businesses is difficult, Greenleaf says. While the U.S. solar market grew 95 percent last year according to the Solar Energy Industries Association, the commercial and industrial sector represented only a small portion of that increase. “That growth is what we are trying to jumpstart,” Greenleaf says.
The payback on the cost of installing a solar system is approximately seven to eight years, according to VCC. “For a lot of business owners, that is too far out,” Greenleaf says. “A lot of younger companies are still trying to invest [in building their operations]. More mature companies are the ones interested in solar.”
Greenleaf believes that all the money in VCC’s subsidized-rate program will be loaned out by the middle of the year, if not sooner. “It’s a first come, first served program,” he says. “It ends when the money is gone.”