By: Anna Majavu
The major banks are on a new drive to sell loans for solar power systems to small, medium and micro-enterprises. Some banks are also offering specific bank loans for commercial and industrial-grade generators for SMMEs. Repayable over 10 years, the major selling point of Nedbank’s “Sustainability Funding Offerings” is that small businesses would “save over the long run and benefit from ‘free’ electricity after repayment”, Nedbank’s Group marketing communication specialist Khanyane Molefi told Vutivi News.
Nedbank also encourages SMMEs that take out loans for new solar energy systems to think ahead to a time when they will be able to generate an income by selling power back to the grid. No deposit is required, making the move to green energy attractive to SMMEs, but an obstacle is that small businesses must still meet the regular credit criteria to qualify for solar power loans. Another hurdle for SMMEs was that they might need to already be banking with the bank which funded their solar power loan because “stand-alone finance is not encouraged”, Molefi added.
However, SMMEs who owned property could finance new solar systems by extending their bonds, he said. Standard Bank’s “Power Pulse” digital platform connects customers who take out loans for green energy with accredited solar power providers. It also helps businesses calculate the cheapest way to balance their needs for energy supply security against high electricity costs.
Depending on how much money a company can afford to spend on a solar system, the best advice the bank can sometimes give is for customers not to go completely off-grid, but to adopt a hybrid system of part electricity and part green energy. This reduced electricity consumption and electricity payments while providing a reliable source of energy to keep the business going, a Standard Bank spokesperson said. The scheme was currently tailored towards larger businesses only, but Standard Bank was currently developing an SMME version of the product, the spokesperson added.
When approached for comment, an ABSA spokesperson was short on details of their SMME solar power loan schemes, which also appeared not to cater at all to micro-enterprises. “The current energy crisis wears heavy on SMEs across both the formal and informal sectors. We have solutions available to assist customers to fund the purchase of alternate energy solutions such as inverters and solar. Pricing is typically informed by a number of factors including the sector in which the business operates, and the level of funding required by an SME.”
The spokesperson said that ABSA mainly financed solar installations through asset finance. Many small businesses have shut down, while others are close to buckling due to rolling blackouts. During his State of the Nation Address earlier this month, President Cyril Ramaphosa announced that small businesses would be granted funding to buy solar panels. This would be done through the government-guaranteed bank loan scheme set up during the Covid-19 pandemic to support companies that had suffered losses.
However, this will not be enough to help the country’s small businesses, which account for a large proportion of the GDP. The government has appealed to the private sector and finance institutions to assist with ensuring that SMMEs receive the support needed to keep their doors open during the country’s power crisis.