Video: OneEthos pitches ‘ethical’ solar financing (with no dealer fee)

OneEthos is the fintech affiliate of Climate First Bank, which bills itself as the world’s first FDIC-insured digital community bank founded to combat the climate crisis. The certified B Corp is now offering residential solar loans with a 30-year fixed rate, no dealer fees, and 100% financing in 27 states today — soon to be 50 by the end of the year. Chris Cucci, EVP at Climate First Bank and OneEthos, joined The Pitch to explain their loan terms, LMI customer focus, and eco-friendly business model.

• 0:41 – How does Climate First Bank operate?
•  1:58 – Solar loan outlook
•  2:47 – Advantages of OneEthos solar financing for homeowners
•  3:43 – Advantages for installers (no dealer fees, steady demand)
• 4:58 – What will they finance? What won’t they finance?
•  5:35 – Solar installer approval process explained
•  5:58 – Products on AVL?
•  7:20 – How they can lower payments for low-income customers
•  9:50 – Climate First emissions reduction & B Corp goals

Watch the full episode above, or skip to a timestamp. Below are some key moments from the transcript.

What is Climate First Bank?

Cucci: “Climate First Bank was formed with environmental impact as one of the cornerstones of our business plan, and that’s why we put it in our name. We spun out OneEthos, which is also a certified B Corp., as our standalone fintech business line to support solar installers about a year later.

“We did this because we knew solar installers deserve the opportunity to work with a lender who had environmental finance in its DNA. This isn’t a product line that we just decided to dabble in, it was one of the reasons we started this bank. We’re not one of these solar lending platforms that just got acquired by a bank and then tried to reinvent ourselves within that context. We were birthed from the bank, and totally focused on financing solar across the country.”

How does OneEthos differentiate its loan offering?

For homeowners | Cucci: “We can’t control the markets or what happens with interest rates, but what we can control is our product, and the loan terms that we offer. A little less than a year ago we shifted to a 30-year term on our consumer loan, and that was done to combat the effects of the higher interest rates that we were seeing. When you can spread the payment over those extra five or 10 years — a lot of competitors are offering a max of 20 or 25 years — that makes a huge difference. It’s giving the homeowner a payment that’s going to be equal or lesser than their utility expense in most cases.

For solar installers | Cucci: “Our competitive advantage OneEthos is a lending platform that is powered by a bank. What I mean by that is Climate First Bank is not a vendor; it’s not a relationship that we’re at risk of losing. OneEthos and Climate First Bank are both under the same holding company; we’re affiliates of one another; and we were built with the intention of feeding off of each other.  

“What that means to an installer is our demand isn’t going to slow. We have a bank that is one of the fastest growing banks in the country since 2009, they’re continuing to build their loan portfolio, and one of the ways they’re doing it is through offering these consumer solar loans that OneEthos facilitates.

“Along with the fact that we have that 30-year product, it’s a competitive interest rate, and no dealer fees, we feel like that really gives the installer an advantage. Doesn’t lead to any of those awkward conversations where they have to explain around a 35% dealer fee.

“We know that the product isn’t enough, and the process is really important. It has to be fast and efficient for the installers, And we do offer that. It takes about three minutes to fill out the app, a 30 second credit decision, and that can be done online, 24 hours a day, 7 days a week.

How Climate First Bank helps low and moderate income (LMI) households go solar

Cucci: “We’ve bumped our debt-to-income ratio requirement up a little bit to make it more accommodating for homeowners of a wider income range. We have a 50% debt to income threshold now, which is somewhat higher than other players in the market, especially the ones that are backed by banks.

“To your point that a lot of low to moderate income homeowners can’t monetize the tax credit because they don’t have the tax liability … we have a big wave of opportunity happening — it’s starting now, and it’s going to be for the next five to six years — which is the Greenhouse Gas Reduction Fund. Three big grant programs totaling $27 billion that’s been awarded all across the country to different community lenders and state green bank authorities. That is something that we see as a huge opportunity.

“We have entered into a really cool program in the Metro DC area. We partnered with a nonprofit green bank called Montgomery County Green Bank in that market, and they’re subsidizing the interest rates on our loans. If we do a loan in a low or moderate income Census tract in their market — what’s called an Equity Emphasis Zone in their market –they’re going to buy that rate down from our 7.99% APR down to a 0% APR for the first 10 years.

“That’s one example, and there are countless Green Bank Partners across the country. We’re currently working with people all over the Midwest, a few on the West Coast, some in the Mountain region, on programs just like that. And when we do that, our installers who are already on-boarded with us, they get priorities.

“That’s why I always tell people: we’re in 27 states today, we’re going to be in all 50 by the end of this year with our consumer platform, so go ahead and get signed up now. Start onboarding with us because then you get first dibs at some of these programs that are going to make solar a no-brainer for low to moderate income.”

What other environmental selling points does Climate First Bank have?

Cucci: “One of our branches is LEED Platinum certified, the other one is being renovated to a LEED Platinum certification. our Winter Park, Florida, office is just awesome and has a solar wall on the outside.

“We focus on measuring and reporting on our Scope 1 and 2 carbon emissions; we also publish an annual impact report for the company, and we do that to really show that we’re being authentic to our mission.

“… But then we have over 80 employees all over the country working remotely, consuming carbon at home. The bank does a few things. One, they incentivize us to go solar with 0% loans for solar for employees, 0% loans for electric vehicles for employees, and they’ll help with the cost of installing electric vehicle charging. Then we have a carbon impact survey that we have to fill out every year to show what our carbon impact is at home, and we buy offsets for that.

“We have this Mission Specialist program where our employees earn points if it helps them towards their annual goals, based on their activities at home. Doing things like composting, recycling, and what we’re finding is that it has this really cool side effect, that they’re actually reducing their carbon output organically. … As our employee count has grown in the last couple of years, we’ve actually seen our carbon output as a company decrease.”

Tags: Climate First Bank, The Pitch