ZM Financial Systems (ZMFS) is helping clients take the “guess work” out of the equations on repayment/re-amortization for solar panel loans by developing a new instrument that models these loans reflective of the tax credit structure. The structure has extra variables, such as the tax credit repayment date and the expected tax credit amount, that can pose a challenge when forecasting cash flows.

The tax credit for solar panel loans is typically received 18 months from the issue of the loan, though in ZMFS’ solution, ZMdesk, this can be any amount of time to assist with forecasting. The tax credit is typically between 18-30% of the original loan balance, depending on the current government program.

“There are numerous moving parts when modeling these solar panel loans,” says Ben Thomasson, Director, ZMdesk Support. “While solar panel loan agreements expect the borrower to apply the full tax credit to the loan upon receipt, this is not a requirement. On the expected repayment date, the loan re-amortizes to the stated maturity date. If the tax credit is applied, the P&I is reduced. If the tax credit does not get applied, then the P&I could increase.”

“Analysts need an instrument they can easily configure to handle this unique structure,” comments Butch Miner, Co-founder, ZMFS. “During this unprecedented pandemic, we are still continuing to enhance our product to meet the ever-changing demands of this industry. Now more than ever financial professionals need a more sophisticated tool that can help them forecast, run more assumptions and detailed scenarios.”

For more information on ZMFS’ solutions, please contact sales@zmfs.com.