Spruce’s solar portfolio is collateral for $105.4 million in debt financing

Spruce Finance, which finances residential solar systems and home-efficiency improvements, has closed a new round of debt financing, following on its $120-million financing round in May.

The new syndicated loan is $105.4 million, financed with Investec and Silicon Valley Bank (SVB), will be used to put in more systems across the United States. Investec also led the May fundraising efforts.

In a sign that lenders are becoming infinitely more comfortable with funding residential solar arrays, the deal allows Spruce to use its existing solar portfolio as collateral for the loan. Banks often weren’t sure how to value solar systems, which often made it difficult for homeowners to get appropriate financing.

Over the past five years, the solar industry has worked hard to educate bankers on the inherent value of the assets. This latest round of Spruce financing indicates the effort has been, at some level, successful.

What makes Spruce stand out from other big financiers in the residential market like SolarCity and Sunrun is that its lease and loan financing options are not tied to using a specific installer. This provides a level of flexibility for homeowners that is often not available in other financing situations.

Michael Pantelogianis and Ralph Cho, co-heads of Investec’s North America power & infrastructure finance group, said quality sponsors like Spruce are starting to use syndicated loans more often.

“This deal demonstrates strong interest from the capital markets in both Spruce’s business and the industry in general, said Darren Thompson, chief financial officer at Spruce. we look forward to continued growth in 2017 and beyond.”