How to get a small business loan for solar in Nigeria

Find the best financing options for your business size and industry, and then apply

by Chidalu Onyenso and Damola Agboola

Published on May 24 2024

Switching to solar energy is a smart move for both the environment and your wallet, but it can be overwhelming due to the high initial upfront costs, which often prevent buyers from enjoying the huge long-term savings. However, the the cost of installing solar panels and inverters has decreased significantly in recent years. In addition to this, loans that allow you to spread the cost into manageable monthly payments has made the upfront cost even lower. These monthly instalments can even be lower than your current diesel and petrol monthly costs, making the transition to solar even more affordable.

If you're considering this investment for your small or medium-sized enterprise (SME) in Nigeria, understanding the steps to secure a solar loan is crucial. Here’s a detailed guide to help you navigate the process and ensure your business benefits from solar energy.


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We’ll start with a brief questionnaire to better understand the unique needs of your business. Once we uncover your personalized matches, our team will consult you on the process moving forward.

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A Comprehensive Guide to Applying for Solar Loans for SMEs in Nigeria

If you are looking to switch to solar, the most cost-effective option is to get a loan. This way you can save cash, while locking in a low monthly cost that doesn’t change with inflation. And once your done paying, the system is totally free. But if you’re interested in this option you’ll have to be ready and patiently weigh the different options at hand - especially if you want a low interest rate path.

In this article, we’ll walk you through the 6 steps to successfully apply for a solar inverter business loan.

1. Calculate your solar energy or inverter needs

Before applying for a solar loan for your SME, it's essential to determine your energy requirements. Here’s how to calculate them:

Assess Your Current Energy Usage

Begin by reviewing your electricity bills over the past year to get an average monthly consumption. This gives you a baseline of how much energy your business currently uses.

Estimate Your Solar System Size

Use online solar calculators or consult with solar providers to estimate the size of the solar system you need. This includes the number of solar panels and their capacity, which should match or exceed your average energy usage.

Consider Future Needs

Take into account any future energy needs. If you plan to expand your business or add new equipment, your energy requirements will increase. Ensure your solar system can accommodate these changes.

2. Determine If You Qualify for Your Preferred Small Business Loan Option

Not all loan options are available to everyone. Here’s how to check your eligibility for small business loans:

Clean your credit history

Solar loans often require a good credit history. Do you have any unpaid loans? Have you failed to pay back a bank or other financial institution in the past. Poor credit activities in the past can prohibit you from enjoying better credit options in the future. Check your credit score to ensure you are in good standing before you do all the work to apply.

Evaluate Income and Business Performance

Lenders will assess your ability to repay the loan based on your business’s income and financial health. Gather your recent financial statements, including bank statements, cash flow evidence, and even audited financials if you are a bigger corporation.

Consider Property Ownership

Owning your business property can make you a more attractive candidate for a solar loan. If you’re renting, you may need the property owner's consent to install solar panels.

3. Compare All of Your SME Financing Options

Once you know your needs and eligibility, it's time to compare financing options:

Research Different Lenders

Look into various lenders, including banks, credit unions, and specialized solar financing companies. Compare interest rates, loan terms, and repayment plans. Earthbond has done a thorough review of the best loan options available for business owners and remote workers looking to install solar. We can help you make the best choice given your preferences

Evaluate Loan Types

There are different types of SME loans for solar installations, such as secured and unsecured loans. Secured loans typically offer lower interest rates but require collateral. Unsecured loans don't require collateral but may have higher rates. In general loans will have different tenures, interest rates, and fees, but the financial specialists at Earthbond have created a simple recommendation guide to help businesses owners pick what is best for therm.

Consider Incentives and Rebates

Check for any government incentives, rebates, or grants available for solar installations. These can significantly reduce your overall cost and improve your loan terms. Earthbond taps into these as well as the carbon credit markets to fully lower the financial burden of installing solar for our customers by up to 20%.

4. Gather Your Required Documentation and Data

Prepare all necessary documentation before applying for small business loans:

Personal and Business Identification

Ensure you have valid ID documents, such as your passport or NIN Slip, BVN, and proof of address for every director of the company. Also prepare to share your CAC documents like your Certificate of Incorporation, MEMART, TIN, and any other CAC documents issued.

Financial Documentation

Gather your recent bank statements, tax returns, financial statements, and any other documents that prove your business's financial standing.

Get References

Request for two businesses (if applying as a business) or two individuals (if applying as a remote worker) to serve as a reference for your loan application.

Audit Report

Provide a detailed audit report and invoice from your installer that shows what you require and what appliances and equipment it should power. This should also include the itemized cost of the installation from batteries, to inverters, to panels which will serve as collateral for the loan itself.

By working with Earthbond we produce a top of line audit report as part of our services to help speed up this process.

5. Submit and Apply for a Solar Loan

With everything prepared, you’re ready to apply for your small business loan:

Fill Out the Application Form

Complete the loan application form provided by your chosen lender, or work with Earthbond to apply once and get loan options generated by all of the best lenders in the country. In some cases you may have to open a bank account to be eligible for a loan with a spec

Await Approval

After submission, the lender will review your application. This process may take a few days to a few weeks. Be prepared to answer any follow-up questions or provide any additional evidences that may be required to complete and gain approval for installation.

6. Review Your Loan Offer and Submit Your Deposit

Once approved, carefully review the loan offer for your solar installments:

Review the Loan Terms

Look over the interest rate, repayment schedule, and any fees associated with the loan. Ensure you understand all the terms and conditions.

Confirm the Loan Amount

Make sure the loan amount covers your solar installation costs, including solar panels and solar inverters. If it falls short, you may need to reassess your budget or find additional funding sources.

Submit Your Deposit

If satisfied with the offer, you may need to pay a deposit of up to 30% to secure the loan. If working with Earthbond, we will be sure to share the details on how to make the bank transfer to pay the deposit and initiate procurement.

Finalize the Agreement

Sign the loan agreement and any other required documents. Once finalized, the loan funds will be disbursed to the installer or Earthbond and we can proceed with your solar installation.

If you're looking to reduce your energy bills and adopt a more sustainable lifestyle, switching to solar solutions could be a great option. But it is a significant investment that requires careful planning and consideration. Nonetheless, numerous solar financing options for all solar solutions are available at Earthbond, which we can help you sort through. By following these steps, you can secure the financing you need to make your solar energy project a reality. Embrace the power of the sun and enjoy the benefits of renewable energy for your business!

Learn more about the financing options you can get at Earthbond by speaking with a team member today

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