Unfortunately, many lower-income residents face barriers qualifying for solar financing, or if they do qualify, face barriers accessing affordable (i.e., low-interest) solar loans, primarily due to their lower FICO scores. A Solarize team can play an important role in reducing these barriers by integrating credit score enhancements or alternatives.
The primary credit enhancement approach is creating an LLR to encourage and enable FIs to provide affordable financing to lower-income residents by partially covering the perceived higher risk. Lenders can draw on the LLR to cover a prespecified percentage of losses on loans due to defaults or nonpayment. LLRs are especially relevant for programs with many smaller loans, like Solarize campaigns. The primary steps for a local government to develop an LLR are: