One Iowa community bank is among the latest to compete with national lenders to finance solar installations. Advocates hope the trend creates more options, trust and comfort for borrowers.
Smaller, regional banks and credit unions are increasingly looking to help homeowners finance solar installations in a sign of growing recognition of the opportunities in clean energy finance.
In the Midwest, Iowa-based Decorah Bank & Trust is among the latest to begin marketing loans for solar and other clean energy projects. The community bank recently relaunched a digital subsidiary called Greenpenny to serve residential and commercial customers in Iowa, Illinois, Missouri, Minnesota and Wisconsin.
It joins longtime Twin Cities clean energy lender the Center for Energy and Environment and a handful of credit unions and other community banks offering products in a space traditionally dominated by larger, national firms.
Clean energy advocates are hopeful the availability of local lenders will increase options for borrowers and provide a greater comfort level for those who might be less inclined to trust online lenders or large national banks.
Jeremy Kalin, a partner with Avisen Legal who helped the Minnesota Credit Union Network create its CU Green solar loan program, said typical residential borrowers are sensitive to “long-term value and trust” when looking for lenders. A personal connection to a bank or credit “makes a difference.”
The process often starts with referrals from solar installers. St. Paul-based All Energy Solar offers Greenpenny and Center for Energy and Environment loans to customers, as well as national lenders. “Historically, we find the national players pushing the envelope here very consistently with innovations and competing with each other to offer a diverse array of financing options that will help each customer to get the most value out of their project,” said Ryan Buege, All Energy Solar’s vice president of sales and marketing. Still, he said, if more banks developed clean energy loans, more consumers would likely become more comfortable installing systems.
Jessica Reis, vice president of communications and marketing for Greenpenny, said the bank creates a transparent loan process with no hidden fees or upfront charges, a contrast with some national lenders who use such fees to lower interest rates. The bank calls every customer who applies and communication continues via phone or email.
Drawing on local knowledge
Greenpenny relaunched last year after struggling with an earlier rollout during the pandemic. Now the Iowa credit union has been adding staff to manage a growing portfolio. Decorah Bank & Trust CEO and President Ben Grimstad said his father, Larry, had started lending to organizations doing renewable energy projects decades ago because of his environmental interest.
Decorah, home to Luther College, has a strong ecological ethos that allowed the bank to gain experience financing more than 100 local projects, most of them solar. Grimstad wanted to expand the bank beyond Decorah and decided to create a digital offering to leverage the bank’s experience with clean energy.
“We are about a year and a half into it and it’s gone pretty well,” he said.
Greenpenny provides solar loans and a green mortgage product for efficiency, geothermal, battery storage and other carbon-reducing projects. The digital bank serves residential customers as well as small- to medium-sized commercial and industrial projects, but not utility-scale wind or solar farms.
The loans are secured by the value of the equipment, from panels to storage devices. Greenpenny President Jason MacDuff said the bank tries to set …….