Are you a farmer or do you work in agriculture? Do you own your land and buildings? Are you looking to generate additional income?
If you answered yes to any of these 3 questions, then not only could you be the perfect candidate for a solar generator, but you’re likely an ideal candidate to receive loans and funding to build it!
There’s multiple reasons farms make great candidates for solar generators:
And while the economics look pretty great these days with the drastic fall in costs of solar, you can bet they get even better if you can secure funding and loans to support the construction of your generator.
Farmers are always looking for alternative means to generate income and make the best use of their available space. And as we’re seeing some Canadian farmers falling on hard times, solar offers an environmentally clean alternative source of income that can help farmers offset their energy usage for generations to come
Jump to the “How Do I Get Started?” section of the article.
Loan sizes and debt rates vary significantly across different farming operations. They will entertain financing to anyone as long as the project and applicant are deemed eligible.
You will need to reach out to FCC directly to find out if you qualify.
FCC would like a presentation regarding the project details. This presentation should outline the project cost, savings, pay-back, assumptions etc. In addition, you’ll need the following items:
In order to qualify for the loan, your solar project must be located on a farm or agribusiness property and more than 50% of your income must be generated from farming or agribusiness activities. FCC provides both construction loans and collateral mortgages for these projects, pending approval..
From what we’ve seen, it seems that for borrowers to qualify they require a cash flow that is reflected by 130% of payments received by FCC. For example, if the loan payment from FCC is $100, you would need an income of $130.
The interest rates offered by FCC are determined based on the strength of the applicant and application, so you would need to submit your application to receive an exact number. FCC’s posted variable mortgage rate is 4.7% (Update March 2021: this number is currently lower due to interest rates being down, talk to FCC directly for an accurate rate) and they’re competitive with rates offered by other Financial Institutions.
FCC’s primary goal for farm and agriculture clients is to offer either a premium or discount depending on the risk rating of the application.
FCC offers an assortment of interest terms that again depend on the applicant, the project they’re submitting for, and the application itself. We’ve seen examples of variable mortgages to 10+ years fixed.
Amortization typically matches the life of the asset. Solar installations on farms are typically 10 years max if FCC is just using the solar panel as security. If the full commercial or farm property is being used for collateral as well, the FCC offers amortization periods of 15 or 20 years in some cases.
FCC offers a variety of loan products, and will take all factors into consideration when considering your loan application. You can view the whole list of available FCC loan products here, but here are some options that may apply to you:
There are many more options, including both loans and collateral-mortgages, so make sure you’re aware of all options available when applying. And remember, it could help to get a second opinion from a consulting company to ensure you don’t miss any opportunities.
Investing in a new piece of equipment can be a big decision for any farmer in the business. That’s why it helps if you have all the numbers crunched for your specific location and circumstances going into this decision.
You can download our guide: "Should I Install Solar Panels On My Farm?"
Before you begin your loan application, you should have a clear idea of how big of a generator you can build given your available space and location, as well as how much power you can plan to generate, and the initial costs of building your system.
All these questions can be answered in a Feasibility Analysis, which will give you a clear idea of the optimal generator design for your needs, the amount of capital necessary to build, and how long you can expect payoff periods to last. The Feasibility Analysis will also be an essential tool in the loan application process.
Then, in order to start the loan application process, the applicant needs to provide a Business Plan including detailed 3 yr projected cash flows.
Compass Energy Consulting can help with this part of the process.
In 1959, the Farm Credit Act established FCC, which has been disbursing funds to the agriculture sector ever since. The powers of this Crown corporation have been expanded over the years allowing it to provide capital to young farmers, individuals and agri-businesses, and now farmers looking to add renewable energy sources such as solar to their farm.
Compass makes renewable and clean energy a reality by providing expert and nuanced advice to decision makers. We provide detailed feasibility analyses so you have a clear understanding on the economic benefits of going solar today. We’ll be your guide for all projects including Net Metering, Battery Storage and much more.
Compass has supported the development of over 1,000 MW of clean and renewable energy over the last five years. We're devoted to providing objective and nuanced advice on risks and rewards associated with renewable and clean energy installations. There's a reason that over 70% of our clients over the last three years have engaged with us on multiple assignments.