By Megan Birney

The core fundamentals of any successful business venture lies in maximizing profits while streamlining efficiencies, and for small businesses, where every dollar counts, this maxim is paramount to success. A key component of maximizing profit lies in seizing all cost savings opportunities when available, and one option that’s becoming more and more accessible is renewable energy. In particular, solar electricity.

It’s abundant, reliable, and, after being installed, cheap. But is it accessible? Traditionally, solar energy hasn’t been a feasible option for most small businesses, partly due to the fact that these small businesses typically lack a public credit rating, which is crucial when it comes to financing the upfront costs of a given solar project. Without a public credit rating, it’s nearly impossible to secure investor interest for a lease or power purchase agreement (PPA). These types of financing are crucial for mitigating upfront costs of solar and allowing business owners to immediately see savings. Creditworthiness is a proxy for the businesses’ ability to make long term payments on the solar investment. If there’s no assurance that payments can be made, then there’s little hope of getting a project off the ground.

The larger commercial scale projects often cited in the news are located on major corporations that have public credit ratings; residential solar is booming because homeowners are able to leverage their own FICO scores to secure creative financing; what do small and mid-sized businesses have?

Making Solar Work

Just because smaller enterprises may lack a credit score to satisfy risk assessments, it does not necessarily mean solar is off limits. There are other methods businesses can leverage in order to take advantage of the creative financing solutions available in the solar development industry today.

SolarCity recently announced that, through property assessed clean energy (PACE) funding, they will attach a solar lease to a building’s property, instead of the building owner, helping to mitigate risk and ensure a safer investment. My own firm, Wiser Capital, works directly with small and mid-sized facilities to vet any project’s bankability through our online platform. We assign an automated risk-rating score known as a Wiser Solar Asset Rating (WSAR) score, which operates similarly to a FICO score. It is a combined metric detailing both bankability and risk to reduce time and effort to bring a project to life.

All financing options are going to require a level of diligence from the parties involved that will resemble a small business loan. Documentation may include audited financial statements, proof of longevity, and tax returns. Anything that can speak to the financial stability of the business that comes from an established institution can go a long way in helping small business owners get over the initial hurdle of proving credit reliability.

There are also other factors to consider beyond finances, one being proper title and rights of the property to even install solar panels. Specifically, when financing the system, a business owner will need proper ownership to relegate control of a rooftop (or other portion of property) to a solar developer over the course of the agreement.

Why Solar Matters

Once bankability is assessed and risk is reduced, solar becomes more of a viable solution for small businesses, and can have real, immediate effects in reducing costs in energy, and, perhaps more importantly, remain competitive.

As stated earlier, it’s not uncommon to find large corporations have solar panels installed across their brick-and-mortar stores, and that’s because larger companies tend to be leaders when it comes to adoption, while smaller businesses tend to pick up new technology once it has been proven elsewhere.

An example of this in practice are credit and debit cards—when first introduced to the market, large corporations were the first to adopt this technology to help streamline the point-of-sale process with consumers. It introduced a new level of convenience, as the worry of having enough physical cash is eliminated by being able to immediately access bank accounts at check-out. Now there’s a set expectation that businesses today accept credit and debit cards at the cash register.

While corporate chains and franchises were able to easily integrate the technology into their everyday workflow due to their resources, small businesses lagged behind. Still to this day, in some cities it’s not uncommon to enter a locally owned business and see a “cash only” sign by the register, which can turn customers away or limit purchasing power.

The same can be said about access to solar energy—we’re at a pivotal point in the market where small businesses are starting to access solar in ways similar as large corporations, meaning they’ll be able to compete better with big business. Solar energy brings with it the promise of positive economic cash flows, while also being an ethical source of energy. Consumers are growing more conscious about the products they buy and brands they support.  Using solar electricity can go a long way in cementing brand identity and consumer loyalty.

Solar has been transforming operating costs for home and large scale business owners for years —the time has come for those benefits to flow to small and medium sized businesses as well.

Megan Birney is Director of Strategic Affairs for Wiser Capital, the financial services firm that facilitates and invests in mid-scale commercial solar projects. Megan is responsible for major policies and initiatives as well as key partnerships at Wiser Capital. Over the past eight years she has helped home and business owners switch to solar energy in a variety of roles. @mbirney.