Commercial Solar Financing Options for San Diego Businesses

Option 1: Cash Purchase

Paying for your solar system outright with business capital delivers the highest total return over 25 years. There are no interest costs, and you receive the full ITC and MACRS depreciation benefits in year one (or shortly after).

Many San Diego businesses with capital reserves prefer to finance solar even when they could pay cash, in order to preserve working capital, especially when loan terms allow the system to generate positive cash flow from day one.

Option 2: Commercial Solar Loan

Commercial solar loans are the most common financing structure for San Diego business owners who want to own their system without deploying full cash. Dedicated solar lenders (Mosaic, Dividend, Sunstone, and others) and traditional commercial banks both offer solar-specific lending products.

The most important advantage of a solar loan over a PPA is that the borrower remains the system owner and captures the ITC. The ITC alone (30%) can be structured to pay down the principal balance significantly in year one, effectively creating an immediate equity position in the system.

Option 3: C-PACE (Commercial Property Assessed Clean Energy)

C-PACE is a California-enabled financing program that allows commercial property owners to finance solar, battery storage, and energy efficiency improvements through a property tax assessment. The financing is repaid via a long-term addition to your property tax bill — not a traditional loan.

Option 4: SBA Loans (7(a) and 504)

Solar energy systems qualify as capital improvements under both the SBA 7(a) and SBA 504 loan programs, making them eligible for SBA-backed financing with competitive rates and government-guaranteed terms.

SBA 504 loans are particularly attractive for commercial solar because they allow businesses to lock in a fixed interest rate for 10–25 years, providing long-term certainty aligned with the useful life of a solar system.

Option 5: Equipment Financing / Capital Leases

Equipment finance companies offer solar-specific leasing and equipment financing structures. Under a capital lease (finance lease), your business is treated as the owner for tax purposes and claims the ITC and depreciation, while the leasing company holds the legal title until the end of the lease term.

Capital leases are distinct from operating leases (which are more similar to PPAs); it is essential to confirm the tax treatment with your CPA before signing.

Option 6: Power Purchase Agreements (PPAs)

As discussed in our PPA vs. Ownership guide, a PPA places system ownership, and therefore the ITC, with a third-party developer. Your business purchases electricity at a contract rate. There is no upfront capital requirement and no ownership.

PPAs are appropriate for businesses with no federal tax liability or no access to capital. For all other San Diego commercial solar buyers, an ownership-based financing structure typically delivers significantly higher long-term financial returns.