03 Apr Do energy savings get considered when obtaining finance?

In short, no.

It’s a common bugbear I hear from you guys. And the argument is not unfounded.

Financing solar improves your cash flow position.
Financier says you aren’t making enough money to pay for the solar.
But not getting the solar is making you lose money!
Catch 22 much??

I mean cash flow positive is pretty much my whole mantra, so seems a bit hypocritical that energy savings are not considered right?

I’ve said it before and I’ll say it again, financiers are a pessimistic bunch. They will assume you are going to install a hunk of crap (I sure hope that isn’t true!). So even if the solar doesn’t work they know the customer is in a position to pay the money back.

Also finance contracts are generally multiple years long. Who knows if a business will be around that long. Sure the solar can improve cash flow, but if the business doesn’t exist there is no cash flow to improve.

In situations where a deal is borderline, it can sway the deal in a positive direction. But that’s only a borderline deal. If income servicing looks bad without adding energy savings, then adding it in won’t be considered.

In saying that recently there have been some financiers that are coming around on the idea. They will usually take assurances from yourself that a system will reduce the energy bills. But these financiers are the minority and this process makes you liable.

Personally I expect the tide to turn as the energy asset market as a whole matures, and there is a significant amount of data to provide comfort to the financiers.

Most of the commercial transactions going through nowadays are low-doc / matrix deals anyway. So income isn’t looked at and the above is irrelevant. But for any residential and full doc commercial deals the above is unfortunately where we are at the moment.