A business owner who asks their usual lender about a solar loan often gets a lukewarm answer, and assumes it is about their business. Usually it is not. It is about the asset.
Solar is treated differently from almost everything else a business finances, and understanding why makes the difference between an awkward application and a straightforward one.
Why lenders grade solar the way they do
Most commercial lenders sort assets into tiers. Trucks, excavators and vehicles sit at the top, because there is a deep second-hand market and the lender knows it can recover and sell them. Solar usually sits in the bottom tier, often alongside fitouts and specialised gear.
That grading is not a judgement about solar as a technology. It is about recovery. A rooftop system is bolted to someone's building, costs money to remove, and is worth a fraction of its installed price once it comes off. From a lender's position, the security is weak even though the asset is excellent.
What the bottom tier means in practice: smaller maximum amounts, shorter maximum terms, tighter rules about who supplies and installs it, and more weight on everything else about the business. One lender on our panel goes further and excludes solar from its secured commercial lending altogether, considering it only as unsecured cash flow lending instead. That is unusual, but it tells you exactly how the security is viewed.
The question that matters most: do you own the premises?
This moves the outcome more than your credit history does, and most business owners do not expect it.
If the business owns the building, the system is going onto an asset you control. Lenders are materially more comfortable, and the amount, term and structure available all improve.
If you lease, you are proposing to attach a valuable asset to someone else's property, for a term that may outlast your lease. Expect questions: how long is left on the lease, what the make-good clause says, whether the landlord has consented in writing, and what happens to the system if you leave. At some lenders there is no straightforward path for this asset class without property backing at all.
None of that makes leased premises impossible. It makes preparation decisive. Get the landlord's written consent and your remaining lease term in front of the broker at the start rather than three weeks in.
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The moveable-versus-fixed trap
Here is a contradiction worth knowing before you apply, because it catches people out.
Several lenders require commercial equipment to be moveable, individually identifiable by serial number, and not fixed to another asset, while separately listing solar as an acceptable asset. Rooftop solar is, by definition, fixed to a building.
Those two positions are not reconciled in the lenders' own documents, and the cautious reading is that rooftop may not qualify under the strict wording even where solar appears on the acceptable list. In practice it varies by lender and by how the deal is presented. It is a very good reason not to lodge an application on an assumption.
Panels and inverters, and why batteries are a separate conversation
Commercial lender policies are generally written around panels and inverters. Battery and storage systems are a newer and much less settled area, and a business planning to add storage should treat it as its own question rather than assuming it rides along with the panels.
If the system is residential rather than commercial, that is a different market entirely with different products: see solar and battery finance for the home side, and our guide to zero interest solar finance for how the installer offers are structured.
Supplier and condition rules
The bottom-tier grading brings rules that do not apply to a ute or an excavator:
- Recognised suppliers only at several lenders, with private sales excluded outright.
- Asset age limits that are tighter than for other equipment, and brand new only at some lenders.
- Installation evidence, because a system that is not properly installed and certified is not the asset the lender thought it was funding.
The practical effect is that your choice of installer can decide whether a lender will fund the deal. That is worth knowing before you sign a quote, not after.
Structure
Most commercial equipment is financed on a chattel mortgage, where the business owns the asset from day one and the lender registers its interest. That ownership is what drives the depreciation and GST treatment, and the instant asset write-off covers the deduction side. Thresholds change, so confirm the current position with your accountant rather than relying on a page.
Rental and lease structures also exist on panel, and for solar specifically the available terms under some structures differ from standard equipment lending. The detail varies enough that it is worth asking what structures are open to you rather than assuming a chattel mortgage is the only option. How the business is structured decides who borrows and who signs: see how your business structure affects finance.
Where the system is going on leased premises, or the financials are not current, low doc business loans and low doc equipment and asset finance are worth understanding, and where there is no suitable secured path, an unsecured business loan assessed on bank statements is sometimes the answer instead.
Size it to the business, not the roof
Installers quote the system the roof can hold. Lenders fund what the business can service. Those are different numbers, and the gap is where deals fall over.
A system sized to your actual consumption generally finances more easily than a larger one sized to export, because the repayment is being supported by what you stop spending rather than by what you hope to earn back.
What lenders assess
- Time trading, ABN and GST registration
- Turnover and its consistency, and your existing commitments
- Whether the premises are owned or leased, and the lease terms if leased
- The supplier and the installation
- Credit history, personal and company, on your credit file
Our guide to business loan requirements sets out the order lenders work through, and asset finance explained covers the wider picture. For other business equipment, see equipment finance and machinery finance.
Where a broker fits
Lender appetite for solar varies more than for any other asset we arrange: one will not secure against it at all, another treats it as its own category rather than lumping it into the bottom tier, and the terms available differ by structure. Knowing which is which before anything is lodged is the difference between a clean approval and a decline on your credit file.
This article is general information only and is not financial, tax or legal advice. Lender criteria vary between lenders and change frequently. Tax treatment depends on your circumstances; confirm with your accountant or registered tax agent.
Damo Treadgold is the director of Treadgold Finance, an FBAA-accredited finance broker on the Sunshine Coast, arranging business, equipment, vehicle and personal finance Australia-wide.
Frequently Asked Questions
Why do lenders treat commercial solar differently?
Because of recovery, not technology. A rooftop system is fixed to a building, costs money to remove and is worth far less once removed, so lenders generally grade it in their lowest asset tier. That means smaller limits, shorter terms and tighter supplier rules.
Does it matter whether I own or lease my premises?
It matters more than almost anything else. Owning the building improves the amount, term and structure available. On leased premises, expect questions about the remaining lease term, the make-good clause and written landlord consent, and at some lenders there is no straightforward path without property backing.
Can I finance batteries and storage with the panels?
Treat storage as its own question. Commercial lender policies are generally written around panels and inverters, and battery finance is a much less settled area. Ask before you assume it is included.
Does it matter who installs the system?
Yes. Several lenders fund recognised suppliers only and exclude private sales outright, and some set tighter asset age limits than for other equipment. Your choice of installer can decide whether a lender will fund the deal, so check before you sign a quote.
What structure is commercial solar usually financed on?
Most commercial equipment is financed on a chattel mortgage, where the business owns the asset from the outset. Rental and lease structures also exist, and the terms available for solar can differ by structure, so it is worth asking what is open to you.
Can I claim the tax deductions?
Under a chattel mortgage the business owns the asset, which is what allows depreciation and, where registered for GST, the GST credit, subject to how the asset is used. Thresholds and rules change, so confirm your position with your accountant or registered tax agent.
