Solar lending giant Mosaic files for bankruptcy

Mosaic, one of the nation's largest providers of residential solar loans, filed for bankruptcy on Friday, citing macroeconomic challenges facing the residential solar industry.

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.

The political uncertainty surrounding the fate of solar tax credits has put significant pressure on the industry, squeezing companies already contending with high interest rates and unfavorable policy changes. 

Mosaic said it “expects to remain fully operational without disruption” and plans to maintain its loan servicing operations. The Oakland-based company, has funded over $13 billion in loans and helped more than 360,000 households go solar since 2010.

The solar lender filed for Chapter 11 in the Southern District of Texas, noting between $1 billion and $10 billion in both assets and liabilities, according to the court filing.

Prior to filing for Chapter 11, Mosaic informed its partners that “there will be delays in all (M1, M2, M3) milestone processing until further notice” for its CHOICE and PLUS loans. The payment delays represented 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.

For 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.

This 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.

Fortunately, 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. 

Similarly, Mike Gilroy, CEO of Sungage Financial—another residential solar financing company—told EnergySage, “Although the current legislation has caused some uncertainty and volatility in the solar market, Sungage is fortunate to be in a position of stability… We are confident we have the financial strength and adaptability to weather these challenging times.”

Mosaic's troubles reflect broader challenges facing the residential solar industry, which has experienced unprecedented turbulence. According to Wood Mackenzie's latest analysis, America's residential solar market experienced a 31% decline in installed capacity during 2024, marking the sector's first contraction since 2017.

The 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.

The 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)." Even more dramatically, Gaston said, "customer ownership (loan and cash) volumes dropped by over half in 2024." 

As loan volumes declined, Gaston observed that "the market became more fragmented," with "major lenders experiencing volume declines, while smaller players like credit unions [occupied] a growing market share." This likely put Mosaic in a difficult financial position heading into 2025. 

Unlike competitors who sell their loans quickly and frequently, Mosaic used a more complex funding approach that involved accumulating hundreds of millions of dollars worth of loans for months before selling them all at once in large investor sales. This business model typically requires more consistent access to credit and investor appetite compared to models that sell loans more frequently—which can become unstable amid market uncertainty.

On EnergySage, Mosaic was the most quoted loan product in Q1 2025 with 17% marketplace share. However, that share has dropped to 13% in Q2 to date, behind Credit Human (15%) and Climate First Bank (14%). 

Adding to financing pressures, the residential solar industry faces an existential threat from proposed federal legislation that would eliminate the 30% residential solar tax credit (Section 25D of the U.S. Tax Code) by the end of 2025—nearly a decade ahead of its original 2035 expiration date. The Solar Energy Industries Association (SEIA) estimates that this decision would cost nearly 75,000 residential solar jobs. 

Solar companies have responded to financing challenges by diversifying their product offerings. Many are seeking new financing options, such as more affordable solar loans with lower dealer fees. 

Some companies have introduced third-party ownership (TPO) offerings. These models, which include solar leases and power purchase agreements (PPAs), have gained momentum because they can access additional tax credit benefits that customer-owned projects cannot. Under these arrangements, homeowners don't own the solar panel system but pay for the electricity it produces. 

An increasing number of homeowners have been seeking alternatives to traditional solar loans. In 2024, third-party-owned projects made up more than half of the market—that’s the first time it’s been that high since 2016, according to Wood Mackenzie. 

"Lenders are navigating the slowdown differently, focusing more on home improvement offerings, launching their own TPO product, or re-thinking traditional loans to better compete with TPO," said Gaston. 

However, proposed legislative changes would also impact traditional loan alternatives. The House bill includes provisions preventing solar leasing companies from claiming commercial tax credits for TPO residential systems, potentially eliminating a key financing mechanism for lower- and middle-income households. This would make it even more difficult for solar financing companies to adapt their business models. 

Some financing companies, like Sungage Financial, are looking to expand their loan offerings beyond solar. Providing loans for other home improvement products could help them continue to support solar while keeping revenue strong amid the industry’s volatility.

For companies like Mosaic, the outlook remains challenging.

In April 2025, Gaston projected that this pattern would continue before "a modest recovery for the loan segment in 2026 as lenders introduce more innovative financing options." However, that came before the “Big, Beautiful Bill” text was released, threatening to cut the residential solar tax credit at the end of this year. 

The fate of the tax credit now rests with the Senate, where a final vote is expected before the August recess. Industry advocates are actively lobbying to preserve the incentive, arguing that its elimination would devastate a sector that has created hundreds of thousands of jobs nationwide.

The shaky environment poses significant risks to the solar sector. "The current uncertainty is plaguing the industry, ranging from homeowner hesitancy to less tax equity funding," said Gaston before the House bill’s passage. With the tax credit on the line, EnergySage is encouraging homeowners considering solar to act as quickly as possible—or risk missing out on an average of $9,000 in savings. 

Sungage Financial CEO, Mike Gilroy, says that while the industry will face some short-term disruption if the tax credit is cut at the end of this year, he believes it will rebound. “We expect rising utility rates, increased demand for electricity, the need for energy resilience in extreme weather events, a desire for control over energy costs and support of clean energy will continue driving solar growth over time.”

Mosaic was founded in 2010 as a pioneer in solar crowdfunding commercial projects before pivoting to traditional lending for residential solar in 2014. Over the past decade, the company has weathered previous market challenges and regulatory changes. 

Despite being a direct competitor, Sunlight Financial is rooting for Mosaic's recovery. “[We] hope they’re able to navigate the situation and continue supporting their customers and installer partners… we believe residential solar is an important part of America’s energy future,” said CEO Timothy Parsons.

Whether Mosaic can endure the current state of high financing costs, policy uncertainty, and market contraction will be a critical test for the established industry leader. 

EnergySage reached out to Mosaic for comment, but did not immediately hear back.