Why Finance Solar Panels Rather Than Pay Cash?
Farm solar installations are capital-intensive but generate long-term, predictable income through reduced electricity bills, Smart Export Guarantee (SEG) payments and potential Power Purchase Agreements (PPAs). Financing the installation preserves working capital and allows you to match repayments against the income stream the asset generates.
Typical payback periods for farm solar have fallen significantly as panel prices have dropped and electricity prices have risen. However, tying up £150,000–£500,000 of cash in a solar installation when finance is available at 6–7% APR is rarely optimal from a farm business perspective.
Types of Solar Finance for Farms
HP - Own the Panels
Pay a deposit (typically 10–20%), then fixed monthly payments over 3–10 years. You own the panels outright at the end. Eligible for capital allowances and full expensing.
Finance Lease - Off Balance Sheet
Monthly payments for an agreed term. The lender owns the panels. Payments are a revenue expense. No ownership at the end without a secondary rental arrangement.
Operating Lease - Flexibility
Lower monthly payments; lender takes residual value risk. Can be useful for technology that may become obsolete (e.g. first-generation panels being replaced with higher-efficiency units).
Business Green Loan
Some lenders (e.g. Funding Circle, NatWest) offer unsecured green loans for solar. Often faster to arrange but rates are typically higher than specialist asset finance.
What Will the Lender Want to Know?
Agricultural lenders assessing a farm solar application will typically want:
- Details of the installation: size (kWp), panels, inverter, mounting system, installer
- Planning permission status (required for arrays above a certain size)
- Grid connection offer or confirmation
- Projected energy yield and revenue (SEG/PPA if applicable)
- Two to three years of farm business accounts
- Details of any existing agricultural finance or borrowing
- Whether any grant funding (e.g. REAP) has been secured
Lenders We Work With for Farm Solar Finance
| Lender | Rate From | Max LTV | Max Term | Seasonal HP |
|---|---|---|---|---|
| Close Brothers | 6.2% APR | 85% | 10 years | Yes |
| Aldermore | 6.4% APR | 80% | 7 years | On request |
| Shawbrook | 6.5% APR | 80% | 7 years | Limited |
| Lombard | 6.7% APR | 75% | 7 years | No |
| Funding Circle | 7.2% APR | Unsecured | 6 years | No |
Rates correct as of October 2026. Subject to credit assessment. We compare across a wider panel - enquire for a full market search.