TRADITIONAL FINANCE - Green loans & Asset Finance

WHAT IS IT?

A green loan is a secured or unsecured loan offered by banks, credit unions, or specialist lenders (such as Brighte, Plenti, or Solaris Finance and others*) to finance the purchase of your solar system. Green loans typically offer competitive rates - often 5–9% for borrowers with good credit - and are now the most common form of traditional finance for solar.

Asset finance (sometimes called a chattel mortgage) is a type of secured arrangement where the lender provides the funds and takes a ‘mortgage’ over the solar system as security. This is less common for solar than green loans but may suit some business structures.

WHO WOULD IT SUIT?

These options will suit pretty much anyone with a good credit rating.** Whether you are a business owner or a body corporate with the capacity to borrow, traditional financing options will be a good choice to finance your commercial solar power system and minimise your payback time.

WHAT ARE THE BENEFITS?

• You take ownership of the solar system once it is installed and you can start saving on your power bill.

• You can claim interest, depreciation, and running costs as a normal business tax deduction.

• You can claim the GST paid on the purchase price in your next BAS statement and often receive a significant refund.

• The instant asset write-off threshold is currently $20,000 (ex GST) for small businesses with turnover under $10 million, extended to 30 June 2026. Most commercial solar systems exceed this threshold, but individual components or smaller systems may qualify. Check with your accountant**.

• Typically, depending on the term of the loan, your monthly repayments can be less than the saving you make from your solar system giving you a cash-positive outcome.

• With a loan you can pay it out early without penalty which means when business is good or the payback from your solar is better than you thought, you can reduce your overall cost by paying a lesser amount of interest.**

• Remember that the federal STC discount will already be applied to your quote, reducing the amount you need to finance.

  These financing options can also be applied to battery storage systems. The federal Cheaper Home Batteries Program (launched July 2025) provides approximately 30% off eligible batteries via STCs, reducing the amount you need to finance. Speak with your installer about current incentive levels.

TRAPS FOR THE UNWARY

• Unsecured loans are generally difficult to get and, if you do get one, they usually come with a higher interest rate. A lender may want to take security over your business or perhaps even your personal property. You may also be required to provide a personal (director’s) guarantee.

• If you are looking at a business loan or green loan, make sure you check for any additional costs such as application fees or monthly account keeping fees - watch out for excessive fees and check the comparison rate.

• Check that the discounted rate for a ‘green loan’ is a genuine discount. You should expect to get a rate that is at least 0.25% (25 basis points) lower than the standard equipment finance rate.

• Check that you are able to make early repayments without penalty. It’s quite common for asset finance agreements to have early repayment fees.

• Remember that with a fixed interest rate loan, the interest rate will remain the same throughout the term, whereas with a variable rate, the interest rate could go up.

• If you’re considering asset finance, make sure you tally up all of the repayments you will make during the term and compare the total to the upfront costs of the system: the difference is the cost you are paying for the facility.

• With payments under asset finance, only depreciation and interest can be claimed as a tax deduction.

• Most of all, make sure you’re dealing with a reputable lender that is licensed and listed on the ASIC professional register.

* Disclaimer 1: ZEN Inc. does not provide recommendations about the suitability or effectiveness of any product or service, nor does it endorse any provider mentioned.

Publishing of information is done as a public service to raise awareness. If a product or service is of interest to you as a solution, you need to conduct your own due diligence as to whether that product/service is right for you prior to making any investment or commitment.

ZEN Inc. is not liable for any losses incurred in any way through your use of the information provided, nor for the actions of any product/service provider you engage as a result of the information received from ZEN Inc.

** Disclaimer 2: This is not financial advice. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances. ZEN is not liable for any loss caused, whether due to negligence or otherwise, arising from the use of, or reliance on, the information provided directly or indirectly, by use of this factsheet.