Should you take out a solar loan from Slipstream Energy Finance Solutions?

The idea of making a large, upfront cash payment on a solar installation is daunting for many homeowners. Luckily, there are plenty of financing options available that can make paying for home solar a little easier on your wallet.

Solar loans are a popular way for homeowners interested in long-term financing solutions, and unlike leases and PPAS, allow you to reap all the benefits of going solar. In fact, besides buying in cash, using a solar loan to finance a solar system is the best way to pay for solar.

So, of all of the solar loan companies out there, is Slipstream Energy Finance Solutions one worth checking out?

Overview of Slipstream Energy Finance Solutions 

Slipstream Energy Finance Solutions (EFS) is the financial services division of the Wisconsin Energy Conservation Corporation (WECC). WECC merged with Seventhwave to form Slipstream in 2019, bringing EFS under Slipstream. 

Slipstream EFS offers financial solutions and loan origination services for energy efficiency projects. Loan origination refers to the financial loan process, which includes starting the loan application, assessing credit risks, approving or rejecting the loan application, and allocating borrowed funds to eligible customers. 

EFS loans can be used for the following energy efficiency improvements and projects*:

• Solar panels

• Roofing

• Heating, ventilation, and air conditioning (HVAC) systems

• Water heaters

• Lighting and fans

• ENERGY STAR® qualified appliances

• Heat pumps

• Installation of new energy technologies or systems

*Eligible projects may vary depending on the selected loan program - more on this below

EFS has more than 20 years of experience providing affordable financing for home projects and energy solutions. In fact, since 2018, the business has closed 50,000+ loans totaling $490 million, with the average loan amount for these transactions being $9,000. 

Types of Slipstream EFS solar loans 

EFS offers mostly unsecured loans, which can be proactive or reactive, for both homeowners and businesses. For the purposes of this article, we will be focusing on loans for residential solar installations only. 

A proactive loan is for planned home improvement projects that help lower energy costs, such as a rooftop solar system or HVAC unit. A reactive loan is for emergency or unexpected system replacement, such as a broken water pump or heater. 

Unsecured loans versus secured loans 

Unsecured loans are not backed by assets and have higher interest rates, unlike secured loans, which typically use property as collateral and have low interest rates. The higher interest rates associated with unsecured loans are great for the company (more profits), but bad for the customer, as it makes the monthly loan payments higher. 

You absolutely want to have a low interest rate for loans for lower monthly payments. One way to do that is to opt for secured loans. Unfortunately, EFS loans are mostly unsecured with only one program offering secured loans. Therefore, you would be stuck with higher interest rates for most of these unsecured loans. 

On the positive side, unsecured loans are easier to qualify for than secured loans. However, if your credit score and history do not meet the requirements of the unsecured loan, your application could get rejected or you could end up with a higher interest rate. Lenders view low credit scores and limited credit histories as risks, which justifies the higher interest rate for approved loans. 

In addition to credit scores and credit histories, lenders will look at income stability, bill or mortgage payments, and debt (if any) in their assessment. You shouldn’t have a difficult time getting approved for an EFS loan if you have consistent credit, income, and bill payment records.

Does Slipstream EFS offer loans in every state? 

EFS offers home improvement loan programs in New Jersey, New York, Illinois, and Michigan; however, loans for solar installations are only eligible for homeowners in New York and Michigan.

Slipstream EFS loans for homeowners in New York 

Slipstream EFS solar loan programs in New York are available through the New York State Energy Research and Development Authority (NYSERDA) and PSEG Long Island Financing for Energy Efficiency Projects. 

NYSERDA solar loans 

New York residents looking to fund a solar installation can qualify for loans under NYSERDA. 

EFS loans come from various state renewable energy organizations, like NYSERDA, a public benefit corporation specializing in statewide energy efficiency projects. Loans under NYSERDA include on-bill recovery loans and smart energy loans, and EFS originates these energy efficiency loans on behalf of NYSERDA.

On-bill recovery loans 

On-bill recovery loans are paid through monthly payments via the customer’s utility bill. Your monthly loan payments are added to your utility bill every month until the loan is fully paid off. In the event you close your utility account before the loan is fully paid off, you will receive monthly statements for your loan. The interest rate for on-bill recovery loans is 3.49% or 6.99%.

Smart energy loans 

A smart energy loan is a traditional loan, wherein you receive a loan statement every month and make payments toward the loan. The interest rate for smart energy loans is 3.99% or 7.49%. Your loan payments and utility bill account are separate in a smart energy loan. This offers some flexibility for people who don't want the two associated together. However, the interest rates are higher compared to on-bill recovery loans.

How the loans work 

NYSERDA on-bill recovery and smart energy solar loans are available for up to $25,000. The term for these loans is five, 10, or 15 years for qualified applicants.

The contractor for your solar installation must be a participating member of the NY-Sun Incentive program in order to be eligible for the loan.

In New York, the average cost for a 6 kilowatt (kW) solar installation is $17,160 before any credits or incentives. After the 30% federal tax credit is taken into account, that cost drops to about $12,000. You would be able to finance a typical home solar installation with EFS at this price.

To qualify for a NYSERDA solar loan, you will need a credit score in the 540-780+ range. Your debt-to-income (DTI) ratio is another major factor that will determine your eligibility, as it shows lenders your ability to make monthly payments on the loan. It is calculated by adding up all of your monthly debt payments and dividing that amount by your monthly income. The lower your DTI, the better.

For homeowners with credit scores between 540-599, the DTI ratio for NYSERDA loans is 70%, which is uncommonly high for financial loans. The DTI ratio for credit scores between 600-779  is up to 75%. There is no limit for those with credit scores above 780. These very high DTI ratio requirements would make the loans accessible for people who may not qualify for traditional bank loans with strict DTI ratio requirements. 

To compare, lenders generally want to see a healthy DTI ratio between 28% and 36% for traditional bank loans, and a DTI ratio higher than 43% would make qualifying for bank loans very difficult.

PSEG Long Island Financing for Energy Efficiency Projects 

If you’re a customer of Public Service Enterprise Group (PSEG) Long Island you could qualify for two types of solar installation loans under the Green Jobs-Green New York (GJGNY) program. 

Slipstream originates these loans, which are the same on-bill recovery loans and smart energy loans offered by NYSERDA in the above section. You must meet the same loan approval criteria above to qualify for these loans. 

Slipstream EFS solar loan programs in Michigan 

Slipstream EFS solar loan programs in Michigan are available through Holland Energy Fund, Inc. and the Traverse City Light and Power On-Bill Financing Program. 

Holland Energy Fund, Inc. 

Holland, Michigan homeowners looking to go solar can fund their installation via the Holland Energy Fund (HEF). HEF Inc. launched this program to help single-family homes ease rising energy costs through home improvement upgrades, including solar panels. The HEF offers on-bill unsecured loans for eligible Holland residents; Slipstream originates these loans on behalf of HEF Inc. 

You must be a customer of Holland Board of Public Works (BPW), a local power provider in Holland, with a consistent on-time payment history of 12 months to qualify for this loan. Qualifying for a loan under HEF is much easier than a NYSERDA loan, as there are no credit score and DTI ratio requirements. The program requires customers to have current utility bills and tax payments, as well as no bankruptcies in the past three years and unfulfilled or outstanding money-related judgments. 

How the loan works

Eligible customers can apply for loans between $5,000 and $30,000. Available loan terms are five to 15 years or the expected system lifespan if it is less than the maximum term. Solar panels are designed to last 25+ years, so the maximum loan term you can qualify for is 15 years under HEF. A five to 10-year loan has a 4.99% interest rate, while a loan longer than 10 years (maximum 15 years) has a 5.99% interest rate.

In our view, these loan amounts, terms, and interest rates are reasonable. The fact that qualification does not require a high credit score or low DTI ratio makes the loan even more attractive. The only downside here is that the loan is only available for customers of Holland BPW with an on-time payment history of 12 months, which limits eligibility for HEF loans.

Traverse City Light and Power On-Bill Financing Program 

Michigan residents who don’t qualify or meet the loan criteria for HEF loans can consider on-bill loans under the Traverse City and Power (TCLP) program. Like HEF loans, there are no credit score and income requirements in the qualification process. TCLP is the only program that offers secured loans for solar installations under EFS.

How the loan works

This loan is for customers of TCLP only; if you’re not a TCLP customer, you cannot qualify for this loan. Loan amounts range between $5,000 and $30,000, with a 3% fixed interest rate. The maximum loan term is 10 years. 

How to apply for a loan with Energy Finance Solutions 

Pre-approvals for EFS loan programs are facilitated on the company website.

The first step in applying for a loan with EFS is to complete a credit application. You will typically receive a loan status notification within 24 hours, and if approved, your contractor can get the Credit Agreement from the EFS website. Your interest rate is considered fixed upon approval.

Your contractor can begin the solar installation after signing the Credit Agreement, and they have 60 days to complete the project from the signing. Upon finishing the work, the installer must complete a Certificate of Completion, along with a final invoice. 

Any change order that increases your loan amount requires approval for the new amount, as well as a new loan agreement with the higher amount. 

After completing all of these steps, you will get a welcome letter from Volt Viewtech, the company that handles the servicing for your loan. You have the option to receive a billing statement every month or set up automatic monthly payments to your lender.

Energy Finance Solutions solar loans versus other lending companies 

Major qualification requirements for EFS solar loans include residing in Michigan or New York and being a customer of a specific electric or power service provider. If you don’t meet these requirements, you would have to go with a different lender. So how does EFS compare to other loan companies in the U.S.?

Large lending companies, such as Mosaic, LightStream Financial, Sunlight Financial, GoodLeap, and Home Loan Investment Bank serve customers in all 50 states and Washington D.C. Loans under these lenders do not require you to be a customer of a local power provider, making these options a lot more flexible. Most of these companies work directly with solar installers or contractors and offer tailored programs that suit their solar system products.

Loan terms, interest rates, and amounts vary, depending on the requirements of the loan provider. For example, Mosaic offers loans between $10,000 and $100,000 with 10-year and 20-year loan terms, with interest rates as low as 2.49%. On the other hand, Sunlight Financial offers loans between $10,000 and $70,000, and you could qualify for interest rates as low as 0.00% for a 12-year loan, 0.49% for a 20-year loan, or 1.49% for a 15-year loan. 

Check out our list of top solar financing companies to learn more about your options.

Loans from large finance companies typically require a 600+ credit score, a consistent credit history, and a healthy DTI ratio. These criteria are standard for most loan types, such as mortgage, personal, and in this case, home energy efficiency.

You should consider these alternatives to EFS loans if you are looking for different loan terms, higher loan amounts, or lower interest rates. Qualifying for these loans is generally more difficult than EFS loans, because they heavily factor in your credit score, credit history, and DTI ratio.

Is Slipstream Energy Finance Solutions the best loan provider for your home solar installation? 

In our opinion, EFS loans are an acceptable choice for financing home solar panels. Some of these loan programs have very lax qualification standards and do not require you to have a good credit score or DTI ratio. This could be right for you if you have a low credit score and are working on building your credit history.    

Unfortunately, availability for loans under EFS is limited; you must reside in Michigan or New York to qualify for EFS solar programs. Make sure your home solar project is eligible under your preferred loan program and contractor, as not all programs cater to solar installations.

If you don’t live in an area where EFS loans are offered or if your home efficiency project is not eligible under your preferred loan program, you would have to look for a different loan provider, such as local banks or third-party lenders. 

If you do decide to finance your solar installation with a loan, don’t forget to combine it with federal tax credits and other incentives. This would help reduce the cost of your installation and speed up your solar payback period, or in other words, your return on investment.