What lenders look for in a solar finance application

Most commercial solar projects in the UK that get funded are not the ones with the best panels or the lowest installer quote. They are the ones presented to the right lender, with the right numbers, in the order a credit team wants to read them. If you are a finance director or owner-manager weighing up a roof full of PV, it helps to know what an asset-finance underwriter is actually assessing before you submit anything.

This guide walks through what lenders look for in a solar finance application, why the project economics matter as much as your accounts, and how to put a proposal together that gets a clean approval rather than a referral or a decline.

How a solar finance application is assessed

Commercial solar finance is asset finance, not a personal loan. That distinction shapes everything. An underwriter is lending against your business — its trading record, its balance sheet, its ability to service the rentals or instalments — and against an asset that has a long, predictable working life and a measurable energy saving attached to it.

There are three things a credit team weighs, roughly in this order:

1. Covenant — can the business afford the repayments and is it likely to still be trading at the end of the term?
2. The accounts — what do the filed and management figures actually show?
3. The project economics — does the solar system pay for itself, and does that saving support the facility?

Get all three lined up and approval is usually quick. We see indicative decisions inside 24 to 72 hours on well-prepared deals. Where applications stall, it is almost always because one of the three is missing or presented badly.

Covenant: the question behind every other question

Covenant is shorthand for the strength of the borrower. An underwriter looks at how long you have traded, your sector, your customer concentration, and whether your cash flow comfortably covers the proposed payment alongside everything else you already owe.

You do not need to be a blue-chip. Plenty of SMEs and farms finance solar on the strength of steady trading and a sensible debt position. But the term matters: a finance company is committing for five, seven, sometimes ten years, so they want reassurance the business will be there to make the final payment. If your covenant is thinner — a younger company, a recent restructure, a sector under pressure — that is not the end of the road, but it changes the pricing and may bring a guarantee scheme into play. We cover that route in our guide to solar finance for a new or weak-covenant business.

The accounts: what underwriters actually read

Lenders read your last two years of filed accounts and, ideally, recent management figures. They are looking at profitability, net assets, the existing debt profile, and any going-concern flags. Abbreviated accounts filed at Companies House rarely tell the whole story, so a strong application volunteers management accounts and an up-to-date aged-debtor and creditor position rather than waiting to be asked.

Two points worth pre-empting. First, directors’ loans and intercompany balances often need explaining — underwriters notice them and an unexplained balance reads as a risk. Second, if the most recent year looks weaker than the prior one, say why. A one-off cost or a deliberate investment year reads very differently from a declining trend, but only if you tell the story.

The project economics carry real weight

This is where solar finance differs from financing a van or a forklift. The asset generates a saving, and a good underwriter treats that saving as part of the affordability case. A system that cuts a £90,000 annual electricity bill by a third is, in effect, partly self-funding — the energy saving offsets a large slice of the rental. The closer your repayment sits to your projected saving, the easier the affordability case becomes.

So a strong application includes the numbers that prove it: the system size in kWp, the modelled annual generation, your current consumption and unit rate, the expected self-consumption percentage, and the resulting bill reduction. Our finance calculator is a quick way to sketch the repayment against the saving before you approach anyone, and quoting realistic capex ranges by system size keeps your figures looking credible rather than optimistic.

Don’t overlook the tax and export income

Two things make ownership materially stronger than a power purchase agreement, and underwriters understand both. When you own the system — through hire purchase, an equipment loan or cash — your business claims the capital allowances. Solar PV is special-rate (integral-feature) expenditure, so it qualifies for the Annual Investment Allowance at 100% on up to £1m of spend a year, with a 50% first-year allowance on anything above that. Both reliefs are permanent. Note that solar does not qualify for 100% full expensing — that relief is for main-rate plant only — so anyone telling you it does has the tax wrong.

Ownership also keeps the Smart Export Guarantee income with your business. Under a PPA, the third-party funder claims the allowances and keeps the export income — the trade-off for putting in no capital. If you want the full comparison, our asset finance versus PPA page lays it out, and our capital allowances page works through the figures. The headline: owning via asset finance keeps the tax relief and the export income inside your business, which strengthens both the project return and the affordability case you present to a lender.

Choosing the structure before you apply

The finance route you pick changes who owns the asset, who claims the allowances and how the VAT falls. Hire purchase and equipment loans mean the business owns the system and claims the allowances from day one; a finance lease usually leaves the allowances with the lessor, passed back to you through lower rentals; an operating lease gives you deductible rentals but no allowances. VAT-registered businesses reclaim the VAT either way — paid up front on HP and loans, spread across the rentals on a lease.

One change worth flagging to your finance team: under the revised FRS 102, most leases come on-balance-sheet for lessees for accounting periods beginning on or after 1 January 2026 (short-term and low-value leases are exempt). That affects how a financed system shows up in your covenant calculations, so it is worth modelling before you commit to a structure.

How to present a strong application

A clean submission usually contains: two years of accounts plus recent management figures, a short business summary, the installer’s quote and system specification, your current energy bills, and the projected saving. Bundle those together and you have answered most of an underwriter’s questions before they ask them.

Because we broker whole-of-market rather than acting for a single funder, we match the deal to the lender most likely to say yes at the best price, rather than forcing it into one provider’s box. You can read more about how we work on our about page. A broker’s value is partly access and partly framing — presenting your covenant, accounts and project economics in the way a given credit team wants to see them.

If you are ready to test the numbers, request a quote with your system size and recent energy spend, and we will come back with indicative terms and the route that fits your tax position and balance sheet.