Welcome to the new Lien Solutions blog – insights and resources to help professionals reduce risk and shape the future of their business. You’ll find articles on thought leadership, practical tips, and an exchange of ideas that drive innovation and better outcomes.
As a business owner or manager, the only thing more important than your valued relationships with clients is your business itself. You don’t want to do anything to jeopardize either of them.
Solar panels aren’t cheap. Frequently purchases have to be financed or leases are made. Solar panel installers differ from most businesses in that the money they get to start their businesses and provide loans to customers comes not from traditional banks, but from federal, state and local governments and/or investors. For most small businesses, a bank might help show the new company the tricks of the trade when it comes to lending and leasing, But solar panel installers don’t always get that free and valuable education as they don’t often deal with banks. So they’re left to figure it out on their own. That can cause big problems down the road in the event of future borrower difficulties.
Leasing a piece of equipment is no different than loaning someone money. You expect to be paid a return on your asset during the lease period. However, if the lessee encounters financial trouble during the lease and files bankruptcy, or even goes out of business, what happens to your forklift, copier, oven, furniture or solar panel? Do you get them back? Or are they liquidated to pay off creditors? And what happens to your investment in that equipment or the remaining money owed on the lease? Where do you stand in line to be paid off? Are you even in the line at all?
Solar power is the green energy wave of the future, offering businesses and consumers clean, affordable energy while protecting our environment and reducing greenhouse gases. Thanks to advances in technology, solar panels can now be installed at an affordable price, one unthinkable just a decade or so ago.
But what you may not know could come back to darken your business’ bright future. That is: how to best protect your equipment – and your investment in it – if you are engaged in, or will enter into, a lease or power purchase agreement (PPA) with a customer.
The PMSI holds a favored position under UCC Article 9. If a transaction qualifies as a PMSI, the secured party can achieve a superior position even in relation to other secured parties that have perfected before it. A PMSI is generally a two-party transaction; the supplier or seller of goods retains a security interest for the purchase price.