Where found? Administration > Finance Programs

Accessibility? Users with administration permissions only.

How used?

The Finance Programs screen is used to define the finance programs.

Note the closely related "Finance Companies" screen allows Admins to define the finance companies you work with. You can then associate multiple programs with a single company. Grouping a set of programs with a single company also allows your job process rules to take actions based on all the programs for a given company.

SolarNexus provides a set of generic finance mechanisms (cash, secured loan, unsecured loan, refinance, lease, PPA) that can be used for a customer's financial analysis. Each of these mechanisms has an associated set of parameters (for example: finance period, interest rate, etc). If your company offers a specific finance program, you can create a named finance program and pre-populate its parameter values so that sales users are free from having to enter these values.

From the Administration menu, click on Finance Programs. Add or edit a program. Provide a name and select the type of finance mechanism and complete its associated parameters.

Loan Details

Loans are the most commonly modeled finance programs in SolarNexus. SolarNexus supports unsecured, secured, and PACE loans. Below are the parameters:

Name: We recommend including the name of the finance company and the term within the name. For example, "GreenSky 20 yr, 12 mo No Interest No Pay" or "Sungage 15 Yr."

Type: Select one option: secured loan, unsecured loan, or PACE loan. NOTE: virtually ALL "solar loan"s are considered "unsecured". We use the traditionally meaning of "unsecured" which is that the loan is NOT secured by the property. Solar loans are typically only secured by the solar equipment itself.

Finance Company: The company offering the program. These companies are created on the Finance Company screen.

Annual Rate: Percentage, annual percentage rate. Used by SolarNexus to calculate some monthly payments.

Loan Fee: Also known as Dealer Fees, charged by finance companies to increase loan size. Does not result in revenue for the contractor, nor does the contractor pay for it. Fees are typically expressed as a percentage or a fixed amount. If percentage is selected, you are given an option to also add a fixed amount.

Loan Fee Basis (only when Loan Fee is a percentage): When fee is a percentage, you must specify the basis on which the percentage is calculated (i.e. principal plus the fee, or just the principal).

Additional Fixed Loan Fee (only when Loan Fee is a percentage): An added flat amount to the percentage fee calculated. For example, until recently SunGage charged a flat $750 + a 2.99% fee.

Payment Calculation Method: Options vary based on loan type (secured or unsecured).

• Calculate Monthly Payment Amortization - SolarNexus uses a standard amortization calculation using the given principal (+fees - down payment), annual percentage rate, and term.
• Calculate Yearly Payment Amortization - typical for PACE loans.
• By Payment Factor - Input a percentage that when multiplied by the principal, results in the monthly payment amount. Use this option for modeling split loans (see below). Many programs provide these payment factors for their programs. If not, they can be backward calculated if you can get a monthly payment calculation from the finance program's calculator (payment factor = monthly payment / principal).
• User inputs Monthly Payment - Payment is calculated outside of SolarNexus and simply input manually.

Term and Principal: Input the term(s) in months, and select the principal amount to use for the term. If modeling unsecured loan payments using payment factors, you can model 2 terms and principals (see below).

Prepayment Penalty: If the program disallows pre-payment without paying a penalty, that is an important information that can be presented within the proposal regarding the program.

Hints: You may optionally enter "Hints" to assist the user in completing parameter values for the defined finance program. Any "Hints" you enter will appear as a small text message to users when this finance mechanism is selected.

 

Modeling "Split", or "Combo" Loans

Some programs provide dual loans, one for the expected tax credit amount, and another for the contract cost minus the tax credit. Use the "By Payment Factor" option under Payment Calculation Method and model each of the terms. For example, during the first 18mo, the program may have one payment factor that applies to only the tax credit amount, and then after 18 months the tax credit is paid to the finance company and a different payment factor applies to the principal less the tax credit for the remaining months. In another example, there is a 12 mo zero interest, zero payment loan for the tax credit amount, but the regular term starts immediately for the principal less down payment and tax credit. In that case you'd input 0 months for term 1 and a payment factor and term for the standard loan.

 

How to Calculate Payment Factors

You can use this spreadsheet to quickly calculate payment factors using the process below (create a copy of this sheet for your own use).

You can calculate payment factor easily by using an example. So let's say you have a $10,000 cash price, with $1,500 dealer fee. Contract price = $11,500.

Let's say the customer put $0 down and your finance company says monthly payment is $100. So the payment factor is $100 / $11,500 = 0.008695 = 0.8695%

Most solar loans have a promo period of 12-18 months where the loan principal is the full amount, and then at month 12-18 the customer pays a lump sum equal to the ITC amount. So this is two separate periods with two separate payment factors. For our example above:

• Finance company says promo period (12 months) = $100
• and if the ITC is paid to them, payment will continue at $100 (else will go up)

So to get the payment factors for each period:

• Promo. $100 / $11,500 = 0.008695 = 0.8695%
• Standard. $100 / ($11,500 - $3,450 ITC) = 0.01242 = 1.242%

Now if you select the option to NOT pay down the ITC, the monthly payment will go up.

 

Leases and PPAs

Leases have the following parameters:

• Name (required) - the name you'll see in the finance program options drop-down on the Analaysis screen
• Default monthly amount (optional) - typically not used. Amount typically will vary from solution to solution. User is expected to get this value from lease provider and input it on Analysis.
• Default Payment Escalation rate (%, optional) - If the lease payment has an annual escalation % to payment, input the default value here.
• Min and Max Payment Escalation rate (%, optional) - Some lease programs may allow a range of escalation rates to be employed. Setting a min and max level ensures that user cannot input a value outside of this range.
• Allowable termination options (required) - at least one option must be selected. These are the options for what can happen at the end of the lease term. Options include:
  • Purchase - customer will make a lump sum payment at end of period and then own the system and its energy benefits without making any further payments.
  • Renew - monthly payments continue past term, customer continues to receive energy benefits
  • Return - system returned to owner, no further payments, end of analysis term.
• Default termination option (optional) - this is the termination option that will be selected for user by default.
• User hints (optional) - may include instructions to user about how to find and input correct monthly payment.

Examples

Service Finance

Service Finance provides unsecured loans with an 18 month interest only period during which the customer can acquire their investment tax credit. If the customer chooses, they may pay their tax credit amount to Service Finance to lower their principal during the remainder of the loan period.

 

Their portal has you input the full loan amount, which is a sum of your cash price plus their dealer fee.

 

• Loan Fee Basis - This is the amount that the dealer fee percentage applies to.
• Terms - The terms are consecutive. The total term for the loan is actually 258 months (18 + 240).
• End of Promo Fiance Payments - This will set the default value on the analysis screen. You can change it to assume that the customer will pay their tax credits to the finance company, which will result in a lower payment. You can even include two instances of the same loan in an analysis to compare the payment if the customer pays their tax credit to the finance company or not.

 

Mosaic

Mosaic provides a number of secured loan options structured to give the customer a promotional time period with a lower rate that assumes the customer will pay their tax credits to Mosaic after filing their tax return. The promotional rate is set so that the payments made during the promo period will be about the same as the ongoing payments once the customer pays down the principal with their tax credit.

 

 

• Loan Fee Basis - This is the amount that the dealer fee percentage applies to. In Mosaic's case, the 12.5% is of the contract price (total of your cash price + the fee).
• Payment Calculation Method - You must model the Mosaic loan as a unsecured loan to take advantage of the payment factor approach. You may also use the secured loan modeling and set the principal to be the contract amount less the ITC.
• Terms - The terms are consecutive. The total term for the loan is actually 180 months (18 + 162).
• First Year Tax Credits To - This will set the default value on the analysis screen. You can change it to assume that the customer will pay their tax credits to the finance company, which will result in a lower payment. You can even include two instances of the same loan in an analysis to compare the payment if the customer pays their tax credit to the finance company or not. IF you model the Mosaic loan as a secured loan, SolarNexus cannot model the case where the customer does not pay their ITC to Mosaic because there is only one term and one payment amount (that is, no way to show an increase to the payment if they do not pay down the ITC).

 

Changing Finance Programs

Finance program parameter values may change over time, and most may be edited. However, once a finance program has been used in any solution analysis, its Type cannot be changed. If for example, you have created a program as an unsecured loan and used it to model finance scenarios for proposals, SolarNexus will disallow you from changing it to a secured loan. To change to a secured loan, you must create a new finance program. You can disable a finance program that you no longer want your team to use by unchecking the "Program Enabled" checkbox.