Ways to fund commercial solar
There is no single "best" way to finance a solar system — only the route that fits your balance sheet, your tax position and whether you want to own the asset. We model the route that suits you alongside paying cash and against a PPA, so the comparison is like for like. Here are the six routes.
Hire Purchase
Spread the cost, own the system at the end, and claim the capital allowances as if you bought it for cash.
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Finance Lease
Use the system and deduct the rentals; the lender owns it and usually passes the tax-allowance benefit back through lower payments.
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Operating Lease
The lowest-commitment rental route — pay for use, deduct the rentals, hand it back or extend at the end.
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Capital Purchase
Buy outright for the best lifetime return — the benchmark every financed route is measured against.
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Refinance & Sale-and-Leaseback
Release the capital tied up in a solar system you already own, then keep using it under a lease.
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Green Equipment Loan
An unsecured or lightly-secured business loan for solar — you own the kit outright from day one.
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Quick answer: the choice comes down to one question — do you want to own the system? Hire purchase, an equipment loan and paying cash all make you the owner, so you claim the capital allowances (the Annual Investment Allowance at 100% on up to £1m a year, and for companies the 50% first-year allowance above that) and you keep the export income. A finance lease or operating lease leaves the funder as owner: it claims the allowances and prices that benefit into lower rentals, which is the right answer only if your business cannot use the relief. A PPA gives away both the allowances and the export income in exchange for putting up no capital. Compare the routes on the total cost of credit in pounds, not on the headline rate.
Two questions decide the route
First: do you want to own the system? If yes, hire purchase, an equipment loan or cash purchase keep the capital allowances and the export income with your business. If ownership isn't the priority — or you can't use the allowances — a finance or operating lease can be cheaper month to month. Second: what's your tax position? A profitable company gains most from the Annual Investment Allowance via an ownership route; a low-profit or non-taxpaying body may prefer a lease where the lessor uses the allowances and prices them into lower rentals.
Whatever the answer, we structure the repayment to sit below the energy the system saves, so the project is cash-flow positive from month one. See the full asset finance vs PPA comparison, or read how we model the numbers on the cost page.