Structuring Loans for Solar-Equipped CRE: What To Ask Up Front

When a member asked how to strengthen the “second way out” on a solar-related CRE loan in ProSight’s online member forum, longtime real estate expert Brian Ginter weighed in. With more than 40 years of experience and a specialty in complex properties, Ginter offered such practical and insightful guidance that we reached out to learn more—resulting in a full article that became the debut feature in The RMA Journal’s new “Forum Focus” department. 

In our follow-up conversation, Ginter shared a deceptively simple framework for surfacing key risks and aligning stakeholders around solar-related deal details early in the process. 

Start with three questions.  To frame the deal, Ginter recommends asking: 

• Who are you lending to? 

• What are you lending on? 

• How is the collateral being structured? 

Deals run into trouble when even one of those answers isn’t clearly understood up front, Ginter said. 

Ownership and attachment affect collateral. Don’t assume the panels are part of the real estate. “Make sure you know who owns the panels,” Ginter warned. If the borrower doesn’t, they can’t pledge them as collateral—and another lender might hold repossession rights. Even if borrower-owned, panels may be removable or separately financed. 

Used panels have limited value. Resale prospects are often poor. “You can take a chattel lien,” Ginter said, “but ask yourself: What’s a used solar panel worth after removal?” Between depreciation, de-installation, and uncertain demand, lenders should be cautious when assigning standalone value. 

Protect the cash flow, not just the asset. The real benefit of solar panels is in reduced operating costs or increased income from selling power back to the grid. Ginter suggests protecting that value—where applicable—through assignments of income or rents. But because solar-related savings decline over time, he recommends underwriting them separately from typical property cash flow. 

Bring in reviewers early. Solar can introduce structural, legal, and permitting risks. Ginter encourages banks to loop in appraisers and environmental reviewers early to avoid surprises and scope the request appropriately. 

Bottom line. The key is clarity and communication. “Start with the three questions,” Ginter said. “Then communicate. The rest will follow.” 

Read more in The RMA Journal.