The expansion of solar technology is one of the most important issues of our time. However, Germany’s companies are still investing too little in climate-friendly projects – their ambitions must be more than doubled in the future. However, financing such projects often turns out to be a challenge. Fintech loans offer a pragmatic interim solution here. This article will provide some insights into how companies that want to invest in solar technology can benefit from fintech loans.

According to the KfW Climate Barometer, German companies invested 55 million euros in climate protection in 2021. That seems a lot and is already a good start, but in fact 120 million euros are needed annually to achieve climate neutrality for Germany in time. There are also some economic issues and impacts: The damage costs incurred by climate change in this country from 2000 to 2021 are estimated at around 145 billion euros. Despite the urgency, however, many companies so far have been reluctant to invest in climate protection projects. Often there is uncertainty about the economic viability of the expenditure, the payback period is too long, or they simply lack financial resources or suitable financing.

Advancing with solar technology

In order to master the energy transition, the expansion of renewable energies and thus also the increased use of solar energy is of decisive importance. According to the Federal Environment Agency, electricity generation from photovoltaic systems rose by 23 percent in 2022. However, to compensate for Germany’s nuclear phase-out and the planned departure from coal in the long term, significantly more electricity from renewable sources will be needed.

It therefore makes sense for companies to invest in solar technology as well. On one hand, solar installations bring benefits to a company, such as reduced operating costs and CO2 emissions, greater independence from public utilities, and protection against rising electricity costs. On the other hand, many SMEs are concerned that they will not be able to finance the desired installations and that their project will be rejected by the company’s bank.

Bank behavior still restrictive in granting loans

Companies are currently facing many challenges: high energy costs and inflation are causing problems for many businesses. In addition, banks are tightening their lending policies, which poses challenges for SMEs in particular when it comes to climate-friendly investment projects. SME loans are often less attractive to banks, as the cost of loan appraisal and individual support is high, while the interest yield is often low, and risks are sometimes difficult to calculate. According to the KfW-ifo credit hurdle survey, many SMEs view bank behavior as restrictive. Investment loans from so-called fintech companies offer solutions that can help companies finance solar building technology. Also, for the subsequent replacement by a bank loan, alternative financing from fintechs can offer appropriate conditions.

Investment loans from fintechs increase liquidity.

In the meantime, alternative lenders can also be used for investment projects such as solar technology. Fintech platforms like creditshelf arrange working capital loans for their customers as a temporary solution. The advantage: fintech loans are often unsecured – potential risks are covered by appropriate pricing. This means that the construction of a solar plant can be started promptly, even if the bank has been reluctant due to a lack of other collateral. In addition, the loan appraisal process is technology-supported in the case of credit platforms and is thus significantly accelerated. If the result of the review is positive, the loan can be disbursed within weeks.

Since no additional collateral has to be provided for a fintech loan, collateral remains available for other financing solutions, e.g. bank loans. In addition, there are opportunities for replacing the fintech loan: as soon as the plant or building with solar technology is in place, these can themselves be used as collateral for a subsequent bank loan. With newly created assets and projects completed, credit institutions are more willing to lend, and conditions can also be negotiated more easily.

Requirements: What do companies need to provide for the fintech loan?

Even for a fintech loan that can be arranged quickly, there are some prerequisites. creditshelf, for example, can support businesses that

• generate annual revenues of more than 2.5 million euros,
• have a company history of at least three years,
• have a creditworthiness index of no more than 300 points with creditreform,
• have equity capital
• can show a profitability of more than 0 of EBITDA (unless it is a fast-growing company with sufficient equity) and
• that are required to prepare financial statements (according to German local GAP “HGB”).

For the review, a possible offer and the processing of the disbursement within four weeks, the timely delivery of all documents is necessary.

Tips for a Fintech loan

Some things to consider when discussing fintech loans in your company:

– The interest rate depends on the creditworthiness of the company and the term of the loan. In addition, possible collateral offered by the company can also affect the interest rate, should it be a secured financing offer. For example, the construction project can serve as collateral.

– For investment loans from fintech companies, appropriate interest rates should be factored in. The term should therefore be adapted exactly to the solar plant construction. In this way, expenditure and benefit can be optimally planned.

Loan redemption: changing the source of financing

Borrowers can change financiers at the end of the term, which has been precisely matched to the completion of the plant. It is important to draw up a strategy for loan replacement several months in advance. Ideally, the subsequent bank financing is already in place when the fintech loan is concluded. For a better comparison, offers should be obtained from roughly three possible financiers. And sufficient time must also be planned for a possible reassessment of collateral and the company’s risk assessment.

Fintech loans as interim financing

Fintech loans have their use as a pragmatic lever for solar technology investments. As solar will play an increasingly important role in the energy mix in the future, SMEs can use this tool to plan the financing of plant construction more reliably.

Please feel free to take a look at creditshelf and learn more about investment financing via fintech loans.