Businesses of all sizes are now taking advantage of the financial benefits of going solar, according to EnergySage. In fact, businesses that use a solar panel system are able to reduce their monthly electrical bill by 75 percent, and they typically pay off their solar investments within three to seven years.
Reducing electricity costs is one of the biggest advantages of using solar energy, as is enhancing your brand by demonstrating your commitment to sustainable initiatives.
The investment may seem expensive for some small and midsized businesses (SMBs). It's true that a solar energy system often involves an upfront cost, but there are a lot of options when it comes to financing.
When you purchase a solar panel system outright for your business, you may be eligible for certain cash rebates and tax credits. For instance, businesses that purchase a solar panel system may be entitled to a federal solar investment tax credit (ITC), says the Solar Energy Industries Association. Through 2019, when your business starts construction on a solar panel project, you will receive an ITC equal to 30 percent of the cost of the system, minus any applicable rebates. In 2020, the ITC will drop to 26 percent, and it will drop further, to 22 percent, in 2021. After 2021, the ITC will drop to a permanent 10 percent for commercial installation.
Additionally, EnergySage says certain states, municipalities and utility companies that want to promote solar energy may offer a cash rebate for this type of investment. Some states also offer a state tax credit, which is a dollar-to-dollar reduction in your state income tax liability. Other incentives, such as solar renewable energy certificates, performance-based incentives, accelerated depreciation and subsidized solar loans may also apply. To find policies and incentives in your state, try searching the Database of State Incentives for Renewables & Efficiency.
Savings will vary depending on the state you do business in. However, there are online calculators that can help you estimate how much you can save when making a solar investment in your area. Overall, when you take into account all the potential solar panel incentives, rebates and tax breaks available, according to EnergySage, you could reduce the net cost of your solar project by anywhere from 30 to 50 percent.
Solar Financing and Funding
When it comes to paying for a solar project for your business, the most straightforward option is to use your internal funds, if resources allow. Another possibility is to secure a small business loan from a bank.
There are also companies that offer solar power installation and financing specifically for SMBs. For instance, Solect, a solar energy company, has three financing solutions geared toward SMBs: a loan option for outright ownership, an operating lease and a capital lease. Conduct an online search to see if a solar company in your area can match your business needs.
The U.S. Small Business Administration offers resources to help you find funding information for your solar energy project in the form of grants, loans, technical assistance and other financing opportunities.
As electricity prices continue to rise, it may be worth considering a solar energy system for your business. It is also an opportunity to support your local economy and show that your company is committed to sustainability, which benefits everyone involved (your business included).
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