It is possible to obtain a loan for your solar rooftop project.

For residential installations loans are easy to come by as the overall amount is not too high. Towards the end of 2014 the Ministry of New and Renewable Energy(MNRE) sent a letter to all public sector banks advising them to encourage installation of solar rooftop projects through home loan/home improvement loans.

Soon thereafter, the MNRE also launched the Indian Renewable Energy Development Agency(IREDA)'s loan scheme for rooftop solar projects which provided loans at interest rates ranging from 9.9% to 10.7% for a period of 9 years.

For commercial installations, the financing needs to be a combination of equity and debt. The ratio tends to be 70% debt and 30% equity, though in some cases it can be altered to 80%:20% as well.

Currently, several domestic and international banks provide financing options. Some of the commercial banks and financial institutions involved in renewable energy financing are:

• ADB, DEG, DBS, ICICI Bank, IDFC, IFC, IL&FS, PFC, Proparco, Rabobank, SBI, SBI Caps, YES Bank

Under the Priority Sector Lending(PSL), Indian banks can sanction a loan amount of upto Rs. 10 lacs for a residential solar installation and upto Rs. 15 crore for industrial/commercial purposes.

For residential projects, the loan interest rate can depend on a variety of factors such as amount of loan, gender of borrower and scheme under which loan is being availed. The interest rate tends to be the same as your home loan interest rate and can be as low as 8.35%.

For non-residential projects, the interest rates depend on debt to equity ratio, tenure, lender, loan amount, corporate credit rating and collateral security. It variaes from around 9.9%(IREDA) to 13%.

A loan tenure can vary from 7 to 15 years, depending upon a variety of factors.

For non-residential installations, the collateral required ranges from 30% to 100%. The lower end of 30% is offered only by the IREDA.

It is unlikely that a loss making company will be provided with a solar loan by a bank. However, the IREDA has mentioned that loss making applicants can be considered for a loan if they provide security of Bank Guarantee/Pledge of Fixed Deposit Receipt issued by a scheduled commercial bank

A C credit rating means you are at the highest possible risk and a D credit rating means you are at default In both of these scenarios, the probability of getting a loan for solar would be close to zero. Companies with a credit rating greater than C should be able to avail of a loan for solar, but of course at varying rates.