How do I apply for a solar loan?
How do I apply for a solar loan?
Solar is free, but the installation isn’t. Falling short of cash? Don’t have enough capital to go Solar? Are these things holding you back from owning a long term valuable asset? Then don’t worry you are in the right place. Shortly you are going to discover that these situations are no longer the obstacles for your monetization of the energy in future. Now you can easily maximize your profit by opting for Solar Loan without actually side tracking or worrying about liquidity of your own capital. The process is much more simplified now just like buying a home loan policy for you.
Apparently Indian Government is uplifting the solar sector by providing Solar financing through many organizations, private institutions, banks, and Solar EPC companies at reasonable costs. They are readily available to offer a complete financially feasible solution for your solar project. This is in accordance with the statutory instruction by Ministry of Finance. The usual cost of setting a plant is nearly 50 million/MW in India. 30% of the cost is through equity and the rest is covered by debt financing. If this high budget bothers you, read along because we are going to discuss the option of solar loan or solar finance in detail.
When you decide to embark on your solar journey you should always prefer solar quotes tailored to your needs. Choosing a good solar EPC company renders multiservice option under one roof so your process is undisturbed and requires low up-keep. In addition to providing EPC services, they also provide funding for your projects in the form of Debt for project financing which is typically larger around 70-85% of the total cost or Equity for initial capital requirement which is around 15-30% of the total project investment cost, and some provide debt-equity mix type. You need to define your route if you want a secured loan or an unsecured loan. A secured loan typically involves collateral for the loan while an unsecured loan doesn’t have any such clause. However there are different implications on the borrower for respective type. Also you need to look for the duration of the loan that would determine your monthly installments for repayment. It is advised to keep the repay span shorter in order to enjoy the benefits of energy saving and also you pay considerably less interest overtime. Such an option might provide value added services quite soon. India has comparatively low installation costs for solar PV system than other countries. Precisely India has twice the sunlight and half the costs.
Now how do you apply for loan? Let us explore the various domestic and international options of institutions available for Solar financing in India.
- Indian public sector and private banks : Debt finance for solar project is provided by many public sector and private banks like State Bank of India, Central bank, Bank of Baroda, ICICI, at an interest rate of 11% – 13%.They are usually for 7-8 years and can be extended up to 15 years. A public release by Indian government stated that among public sector banks, State Bank of India would be financing the biggest capacities of 15,000 MW with a cost of 75,000 crore trailed by IDBI bank 3000 MW
- Private sector NBFCs : are involved in Debt financing and are obliged for financing Renewable energy projects of 76,352 MW capacity with an expense of 3.82 lakh crore over 5 years through green commitment certificates.
- IREDA : Indian Renewable Energy Development agency is a NBFC under administration of MNRE- Ministry of New and Renewable Energy. They provide term loan for renewable energy efficient projects up to 75% coverage of the total project cost. They provide loan at comparatively lower rate of interest and it is mediated through either direct lending or financial intermediaries. Also the collateral that has to be provided in securing the loan is only 10%-33% of the total repayment amount.
- International Finance Corporation : a division of World Bank is involved in financing solar undertakings in India. It offers services under one roof for equity debt and organized fund for companies looking for good time with renewable energy. It is one of the first global financers in India
- Asian development bank is emerging as a leader in financing the solar projects in India. Many funds are also available that provides equity at considerable rate and supports the solar projects.
- The Rural electrification company aids in solar installation through its financing by debt-equity mix which is 70:30 for private sectors.
- Kreditanstalt fuer Wiederaufbau German’s bank also supports the solar projects in India through financing by KFW Development Bank.
- International Financing is also an active option but the time to process the loan is longer than usual and hence it delays the beginning of installation. However the interest rates are lower in International Financing. It is available for tenure of 16- 18 years.
- Solar EPC Companies are one stop solution for the needs of all the involved stakeholders involved that provide solar project financing through debt-equity mix. Right from Project Development, EPC, and Storage O&M till financing they offer streamlined process for end users. They offer CAPEX as well OPEX projects in accordance with the needs.
These are the scope of Solar Finance in India. Now there are various parameters that are looked for before you are sanctioned the loan.
- In the organization there should be positive cash flow through the operational activities and it is evaluated on the basis of certain financial ratios.
- The total debt of the company should be summed to less than 40%
- The debt service coverage ratio should be more than 1.5 of the organization.
- The legal, consent and technical and economical soundness are looked for by both equity and debt investors since these are few diligent areas of the projects.
Steps involved in financing of a solar project :-
- Proposal submission
- Business plan development
- Feasibility studies
- Review of EPC contracts
- Approval and disbursement of funds
- Monitoring the progress of the project
- Loan repayment and loan resettlement
Loans are the most convenient and inexpensive solutions when it comes to solar projects. They are reliable when you need the working capital for continuous workflow and also at the same time you cannot liquefy your capital to go for an energy efficient solution. Financing your solar project gives you a complete ownership of your PV system and then it just has to be maintained routinely by your EPC companies. However you have this option of going with EPC companies for all your energy needs. Independent power producers, Developers, manufacturers, EPC, contractors and investors, the industrial and commercial end users engage in financing of the projects in different time frames. Debt and equity financing go hand in hand because the projects at some point of their life cycle are under debt and that is obliged to be repaid by the borrower.
What makes us different?
Solar Finance has always been the core of our business development activities. We work on the principle of risk mitigation for your solar projects, sharing the financial burden of the customers and providing additional benefits of providing solar loan thus fulfilling commitments made by us. We understand the massive requirement of capital for the projects according to the needs and thus provide comprehensive assistance to our customers. We are more inclined to providing cash equity finance to our customers. Solar project finance is not merely a deal or negotiation of financial restructuring, it’s much more that which necessarily involves scrutiny of procedures, due diligence, EPC contracts, legal permits, cash management, tax analysis and the list continues. Soleos is known for providing satisfaction to all its stakeholders through well defined streamlined process flow.
Soleos highlights some distinguishable features :-
- We offer 70-80% financing of the project to our customers.
- To provide a convenient mode for the borrowers we provide long tenure for repayment of the loan.
- In addition to that we also provide flexible repayment schedule for our customers.
- We offer reasonable rate of interest for the projects to our customers in the solar industry.
- We offer loans in multiple currencies if the source is through international financing.
- Lower collateral security
- We offer Smooth ongoing process with minimum documentation
- We upkeep our performance by providing quick approvals typically 3-5 days.
Let us take a tour of our process flow. By and large we follow clear and legible 8 step process which includes:-
- Reports Preparation
- Identifications requirement
- Credit Analysis
- Preparation of offer
- Securitization of credit
- Funds disbursement
- Periodic Review
- Credit control
With such predefined strategies and expertise in the industry we are here to offer you a holistic package that you can’t resist for your solar projects and growing energy demands. We are trusted and acclaimed solar EPC Company in India to help you redefine your future with renewable energy.
So this time give a chance to Soleos for your Solar Finance.