Solar financing giant Mosaic pauses operations amid economic headwinds\n\nTax credit uncertainty and high interest rates threaten the solar lender’s future.\n\nMosaic, one of the nation's largest providers of residential solar loans, has announced significant operational delays effective May 27. In a message sent to installer partners, Mosaic cited \"capital markets uncertainty resulting from the solar tax credit 25D and 48E guidance\" as the reason. Earlier this month, the House of Representatives passed President Trump's \"Big, Beautiful\" budget reconciliation package, which includes provisions to terminate the solar tax credit for home systems. \n\nThe Oakland-based company, which has funded over <a>$13 billion in loans and helped more than 360,000 households</a> go solar since 2010, informed its partners that \"there will be delays in all (M1, M2, M3) milestone processing until further notice\" for its <a>CHOICE and PLUS loans</a>. These milestones represent critical payment stages in solar financing: M1 (contract execution), M2 (installation completion), and M3 (permission to operate from the utility). \n\nThe company also paused loan approvals and welcome calls on all opportunities starting May 28.\n\nThe payment delays represent a significant blow to both solar installers and homeowners with projects in Mosaic's financing pipeline. Under typical arrangements, M1 payments are triggered upon contract signing, M2 payments occur upon installation completion, and M3 releases the final payment (often around 10%) when utilities grant permission to operate.\n\nFor installers, the timing of these payments is crucial for maintaining operations. Installers typically have to pay project costs like equipment upfront, but must wait weeks or months to receive their final payment from the financing company until the utility grants permission for the system to operate. When financing companies delay or halt these payments, installers can face immediate cash flow crises that can force them to slow down work.\n\nThis creates a cascading effect for homeowners who have signed contracts for solar installations, as M1 funds may be tied up in stalled projects. With Mosaic pausing new loan applications and processing, homeowners in various stages of the solar buying process—from initial quotes to signed contracts—may need to restart their financing process, potentially facing different loan terms with alternative lenders.\n\nFortunately, other financing companies continue to support residential solar—which is particularly important as homeowners scramble to go solar before the tax credit is potentially cut at the end of this year. \"We remain committed to supporting the market, funding loans, and helping installers and homeowners move forward in a cost-effective way,\" Sunlight Financial CEO Timothy Parsons told EnergySage. \n\nMosaic's troubles reflect broader challenges facing the residential solar industry, which has experienced unprecedented turbulence. According to <a>Wood Mackenzie's latest analysis</a>, America's residential solar market experienced a 31% decline in installed capacity during 2024, marking the sector's first contraction since 2017.\n\nThe decline comes amid \"interest rate cuts failing to lower financing costs and market turbulence causing some providers to file for bankruptcy,\" said Wood Mackenzie analyst Zoë Gaston. As a result, the financing landscape has undergone significant changes.\n\nThe loan segment, which traditionally dominated home solar financing, has been hit particularly hard. According to Gaston, \"the loan segment's share of the residential solar market steadily declined throughout 2024, averaging 43% overall (its lowest annual share since 2017).

Mosaic Halts Solar Loan Approvals as Tax Credit Faces Elimination

Solar financing company Mosaic has paused operations and loan approvals due to uncertainty over the solar tax credit and high interest rates, impacting solar installers and homeowners. The company cited guidance from the House of Representatives' budget package, which threatens to eliminate the tax credit for home systems. This decision follows a 31% decline in residential solar capacity in 2024, as the industry faces challenges from market turbulence and financing cost increases.