With the City of Sydney recently announcing that it will be switching to 100% renewable energy by July 2020, you might be thinking about a switch to solar energy for your own small business.
Investing in a solar system for your business is not only great for the planet, it could also be a shrewd move to cut down the cost of your energy bills. Of course, understanding how much it will cost to install a solar system and whether it’s worth it isn’t always easy, especially if you’re looking at taking out a business loan to cover initial costs.
But according to Mozo energy expert Nathan Warne, “A business loan may seem like a big investment initially, but if your new solar system can cut your energy costs down then the return on your investment could be even bigger.”
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For example, say you installed a 20kW solar system for your business in Sydney. Your upfront costs could be approximately $26,584 according to solarcalculator.com.au (that’s with the Solar Rebate already taken out, and keep in mind, installation costs can vary.)
Let’s say, hypothetically, if your business was using about 110kWh on average a day, your quarterly energy bill might be about $3,165*. That puts your total energy costs for the year at approximately $12,660.
In this situation, with a 20kW solar system, you could potentially shave about $8,752 off your yearly energy costs. This means that over the course of 4 years your solar system would have paid for itself and you would begin to see an investment on your return.
After 5 years time you could have saved about $43,760. Taking into account the initial cost of the solar system that’s an approximate saving of $17,176 over 5 years.
How can a business loan help cover the costs?
If a lump sum of $26k is out of reach for you at the moment, then a business loan could be the perfect way to fund your new solar system.
If you were to take out a 2 year business loan of $27,000 from a bank, at the average interest rate of 6.03% p.a.,** over the course of 2 years, you would end up paying at least $28,730 in total, including interest.
With that interest cost added to the initial start-up costs on your solar system, your savings over 5 years would still be a hefty $15,030. So you tell us - worth the investment?
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Of course this is a completely hypothetical scenario, the cost of a 20kW solar system may vary depending on what installer you choose to go with.
On top of that the interest or fees accrued with your loan can vary, and not all business loan providers will charge based on an annual percentage rate. For example, an online lender may charge you a fortnightly interest rate as opposed to an annual one, or they may even charge you a regular set fee instead of an interest rate.
Just make sure you crunch the numbers for your own situation, based on what business loan you may be eligible for.
So, if you’ve weighed up the pros and cons and determined that taking out a loan to cover the cost of your green endeavours is worth it, why not check out the business loans on offer below.
Or head to Mozo’s business loans search engine, plug in exactly how much you want to borrow, what type of loan you’re after and where you live to see a full list of loans available to your business.
*Average electricity bill cost based on products available to NSW Small Business customers in the Mozo database, correct as of Thursday 31st October, 2019.
**Average percentage based on secured and unsecured business loans from banks in the Mozo database, correct as of Thursday 31st October, 2019.