Your 2025 guide to solar loans from community banks

In collaboration with Climate First Bank

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Recently, I was speaking with a solar installer from Massachusetts who was frustrated with how difficult solar financing has become. The high interest rates and dealer fees that come with the standard loans make the ROI for solar unattractive to many consumers, while third-party financing options (TPOs) come with stricter documentation requirements and more recently less reliable milestone payments. When I asked if they knew about solar loans from community banks, all their ears perked up.

Community bank solar loans are one of the fastest-growing financing options in the industry. These banks are providing an alternative that allows solar businesses and homeowners to navigate the challenges of traditional financing with more flexible terms and fewer hidden fees.

In this article, we’ll break down everything you need to know about community banks, their solar loan options, and why they’re different from traditional fintech lenders. We’ll also show you how community banks offer additional services and perks that can set you up for long-term success. 

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What is a community bank (and how is it different from fintech lenders)?

A community bank is a traditional bank that serves local customers and businesses. Unlike fintech lenders, which raise money from Wall Street investors, community banks use local deposits to fund loans. This means when community banks tend to have a vested interest in the local economy, prioritizing sustainable investments that benefit both businesses and homeowners. This approach contrasts with fintech lenders which often prioritize investor returns over customer-friendly lending terms.

Fintech lenders often charge high dealer fees because their investors expect high returns. Community banks, on the other hand, keep money circulating within the local economy, helping both businesses and homeowners save.

RELATED: Cash, finance, or lease? A solar installer's guide to matching a homeowner with the best option

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No dealer fees, better terms

Did you know that community banks can save you and your customers thousands on solar loans? Unlike fintech lenders, which charge dealer fees between 20%-45%, community banks fund loans directly from customer deposits—eliminating those extra costs.

Fintechs often bundle dealer fees into the loan as "rate buy-downs," increasing the overall cost for homeowners. In contrast, community banks offer straightforward, transparent loans with flexible terms of up to 30 years, allowing customers to replace their electric bill with a lower monthly solar loan payment.

Additionally, many community banks offer refinancing options that enable homeowners to lower their rates even further as interest rates fluctuate, making solar investments even more accessible over time.

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Relationship banking: a personal touch

When you partner with a community bank, you and your customers receive personalized service. Loans aren’t just processed by algorithms—they're handled by real loan officers who understand the solar industry.  When you combine this with a customer experience platform to aid your team, you ensure a level of service that builds trust with your customers and ensures a seamless financing and installation experience.  

Community banks also tend to be more flexible in handling non-traditional credit profiles, meaning more homeowners can access financing without unnecessary roadblocks. Whether a customer has a strong credit history or is still building their financial foundation, community banks provide tailored solutions.

RELATED: A step-by-step guide to talking to your customers about solar financing options

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Leverage the "community" in community banking

Have you ever paid to be featured in a local business network or chamber of commerce? With a community bank, you can get that exposure for free.

Community banks actively promote their partners by featuring solar installers in marketing campaigns, local events, and customer outreach. Some community banks go further by connecting potential solar customers with vetted installers and showcasing their partners in banking apps, expanding visibility at both the local and national level.

In some cases, community banks also collaborate with local government initiatives and green energy programs to ensure their solar financing options align with regional sustainability goals. This makes them an even stronger ally in the push toward clean energy adoption.

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How community banks support long-term growth for solar installers

Community banks do more than just fund solar projects—they help your business grow. With access to business loans, lines of credit, equipment financing, and commercial real estate loans, you can expand your operations with a trusted financial partner that understands your industry. 

Unlike fintech lenders that only offer consumer financing, community banks provide full-scale banking solutions tailored to solar businesses. By maintaining a relationship with a community bank that specializes in energy finance, you gain a partner who understands the ups and downs of the solar industry.

Additionally, long-term relationships with community banks can open doors to new business opportunities, including partnerships with energy-efficient homebuilders, electricians, and other renewable energy professionals.

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Community banks vs. credit unions: what’s the difference?

While both community banks and credit unions focus on local financial services, they operate differently. Community banks are for-profit institutions that offer a broad range of loan products, whereas credit unions are member-owned nonprofits with more limited loan options.

For example, community banks can offer a 30-year residential solar loan, while most credit unions max out at 20 years. Additionally, community banks have the flexibility to create custom loan products for installers and homeowners, making them a better fit for long-term solar financing.

While credit unions can be a viable option for some borrowers, they typically lack the extensive industry partnerships and financial product variety offered by community banks. This can make a significant difference when structuring financing for a large-scale solar installation.

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What to look for in a good community bank

If you’re considering working with a community bank for solar loans, here are three key factors to evaluate:

1. Reputation & Track Record – Choose a bank with a solid history. Climate First Bank, for instance, has grown to over $850 million in assets in just three years, making it the fastest-growing community bank since 2009.
   
   
2. Community Involvement – Look for a bank that invests in local businesses and supports initiatives in your area.
   
   
3. Technology & Accessibility – A great community bank combines personal service with modern digital tools. For example, Climate First Bank, powered by OneEthos, ensures smooth online applications and quick loan approvals while maintaining a personal touch.
   
   

Community banks with a strong history in renewable energy financing are particularly valuable, as they can offer insights and recommendations tailored to the unique needs of the solar industry.

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Final thoughts

At the heart of solar financing is the homeowner experience. Community banks, in combination with customer experience software like Bodhi, help solar businesses provide exceptional customer service. By reducing communication gaps and streamlining the financing and installation process, solar companies can increase customer satisfaction and referrals, ensuring long-term growth.

Community banks are more than just an alternative to fintech lenders—they can be long-term partners that support your business and customers. With no dealer fees, better loan terms, personalized service, and business growth support, they provide a financing option that solar businesses should seriously consider.

Talk to Climate First Bank at climatefirstbank.com to learn more about community banks and their solar loans.