 Service providers and end users often need financing to obtain stand alone systems however their needs are specific and often require tailor made financing products. Furthermore, the kind of financing products needed evolve with the different stages of industry growth. For growth of the industry, two target groups for financing can be identified:
 Finance for service providers to overcome high initial cost of the systems and fulfill substantial working capital requirements during business expansion phase
Finance for end users to overvcome high initial cost of systems
Finance for service providers At the first and infant stage of industry growth, financing is mainly needed to cover investment cost by the service providers. This is often resolved through the provision of: (i) credit provided by commercial or development banks, (ii) performance-based co-financing grants/subsidies offered by the government; and/or (iii) partial risk guarantee arrangement. At the second growth stage of industry development financing is required to allow for the rapid expansion of the industry. It is during this phase that cash flow constrains the growth rate. Debt financing provided by development and commercial banks, sometimes supported by an international credit line has so far been the most common solution. For ESCOs or concessionaires, financing is provided from a combination of private investors and debt providers, and Government grants or loans. For example see : Bangladesh, China and Sri Lanka. 
Finance for end users Because of the high upfront cost of stand-alone renewable energy systems, only a small percentage of rural households can purchase renewable energy systems on a cash basis. Credit sales make renewable energy systems affordable to a much larger portion of the rural customers. Consumer credit is provided through three primary mechanisms: dealer-extended credit such as in India, credit through a micro-finance organization such as in Bangladesh and Sri Lanka, and credit through a local development finance institution such as in Vietnam. In Sri Lanka, a partnership between consumers, micro-finance institutions, and dealers is adopted, where dealers are responsible for sales, installation and after sales while the micro-finance institution is responsible to client appraisal, loan approval and collection. In the case if a client is dissolvent, the dealer, after request from the micro-finance institution, is responsible for dismantling of the system. In Bangladesh, the micro-finance institution, Grameen Shakti, act as both dealer and consumer credit provider. An IFC loan under the small and medium Scale Enterprise Program enabled Grameen Shakti to extend the consumer credit for solar home systems from 1 year term to 3 years. In Vietnam, sales by a private dealer are assisted by a complex credit delivery scheme involving the Vietnam Women’s Union, an NGO, and the Vietnam Bank for Agriculture and Rural Development, a development finance institution. Lessons learned from early experience demonstrated that provision of consumer credits requires special expertise and a wide network in rural areas, and involves high transaction costs and risks. Micro-finance institutions, the traditionallenders in rural areas, are better positioned to provide consumer credit for solar home systems than commercial banks or dealers. Longer credit terms stimulate demand by poorer households but increase risks. Some customers with seasonal income may require credit repayment schedules tied to income. For additional information please see Access to Finance and also see India and SELCO for more case studies.
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