SBA Loans for Solar Installers: Financing an Existing Company Purchase
Buyers of established solar installation companies frequently look at SBA-backed financing because it may allow longer repayment terms and a smaller equity contribution than some conventional options. SBA loans for solar installers may be used to help finance the purchase of an existing, operating installation or service company, depending on the business, the buyer, the use of proceeds, program rules and lender review.
This article is general information. It does not address financing solar systems or projects, starting a new company or financing equipment on its own. SBA programs and lender requirements change, and eligibility is determined case by case. Every loan is subject to lender approval. Nothing here is a commitment to lend.
How SBA Loans May Fit an Acquisition
The SBA does not lend directly in these programs. It guarantees a portion of loans made by participating lenders, which may make lenders more willing to finance an acquisition. The SBA 7(a) program can be used for business acquisitions, and in some cases may include working capital or real estate as part of the transaction. See our page on SBA 7(a) business and real estate loans.
Eligibility Questions
Whether a particular transaction qualifies depends on factors such as:
- The business’s size, structure and ownership
- How the loan proceeds will be used
- Whether the business is an operating company rather than a passive investment
- The buyer’s character, credit and relevant experience
- Program rules regarding the seller’s continuing involvement or ownership
- Any existing government debt or legal issues
A lender will review these questions against current program rules.
What Lenders Evaluate
Lenders frequently focus on documented cash flow, the quality of earnings, the buyer’s experience in contracting, electrical work or managing crews, the licensing plan, warranty exposure and the company’s sensitivity to policy changes. Our article on solar installer loan requirements covers these topics in more detail.
Valuation and the Loan
Lenders want the purchase price to be supported by the business’s earnings, and they may require a business valuation. See our guide to solar installation company valuation.
Equity and Seller Financing
Buyers are generally expected to contribute equity. In some transactions, a seller note may form part of the structure, subject to program rules on how such notes are treated. See our article on solar installer seller financing.
Working Capital and Transition Planning
An installer needs cash to buy materials and pay crews before customers or third-party funding providers pay. Lenders may look at whether the proposed structure leaves enough working capital to complete the backlog and handle warranty work after closing. A realistic transition plan, including how licenses, supplier accounts and key staff will be handled, can strengthen a request.
Documents to Prepare
- Business tax returns and financial statements for several years
- Interim financial statements and a debt schedule
- Backlog report, revenue by segment and warranty history
- Licensing information and the plan for qualifiers after closing
- Buyer’s personal financial statement, tax returns and resume
- A letter of intent or purchase agreement
- A business plan and projections that address policy and market risks
Estimating Payments
Our SBA loan calculator can help estimate payments under different assumptions. Actual rates, terms and fees depend on the lender and the transaction.
US Professional Funding helps buyers finance the acquisition of existing, operating solar installation companies, including transactions that may use SBA-backed loans. Learn more about our solar business acquisition financing.
