Whether you are a start-up, micro business, small or even medium enterprise, capital is always important. This is especially true if you want to scale your business. Whether you aim to buy more equipment, a new company vehicle, an emergency power supply or even office devices, rent-to-own solutions for businesses might just be your answer when you’re strapped for cash.
Businesses don’t only need to turn to loans when they aim to buy vital assets. After all, assets are oftentimes the tools that enable businesses to operate. Rent-to-own solutions provide an affordable solution that is flexible and tax deductible! Without any further ado, here’s what you need to know about rent-to-own solutions for businesses.
What is Rent-to-Own?
Rent-to-own is the act of a business renting an asset, such as a printer, from a company for a monthly fee. During this time, the business can continue to use the asset while paying off its total cost. At the end of the rental period, the asset is paid for in full, and the business retains ownership of it.
It is a cost-effective option for businesses that can’t afford a large amount of capital expenditure all at once.
Benefits of Rent-to-Own
When you purchase an asset through this method, requires no upfront deposit. You simply start renting. The monthly payment structure is flexible depending on what is being purchased from who, but it is equal monthly instalments, not a balloon payment.
Furthermore, in South Africa, these payments are completely tax deductible, unlike traditional loans. Value Added Tax (VAT) is also spread over the rental period, reducing the punch to your pocket.
Because equipment that is obtained through the rent-to-buy model is an asset, they are not indicated as a liability on your balance sheet.
Finally, these types of agreements are not damaging to your business’s credit score for the same reason: It isn’t a loan and thus not a liability.
Asset Finance
Although a few companies in South Africa offer businesses rent-to-own solutions, you might find it difficult to identify one that offers you rent-to-buy options for the specific equipment you like to purchase. In this case, you can turn to asset financiers. These companies specialise in providing working capital loans that are used specifically for purchasing your assets.
It’s important to note that you might not have all the benefits of renting equipment if you need to obtain asset finance for it.
Two platforms that you can turn to for asset finance are the Intello Group and the Rental Company, however, other financiers also exist. Speak to a representative to find out if they only work with certain companies for buy-to-own agreements.
Rent-to-Own Solutions in South Africa
Many South African companies offer rent-to-own options based on the industry they operate in and for selected products. Here are some of the businesses that you can turn to.
Alternative Energy Solutions
To prevent your store from going dark when power outages occur, you can invest in alternative energy solutions. This can include solar power, inverters or even generators.
Mzansi Power offers clients smart renting solutions for generators.
IT Solutions
From computers and printers to servers and software, any business has information technology needs. ASG provides an extensive list of solutions to entrepreneurs. In addition to the previously mentioned solutions, they also provide CCTV systems, UPSs, and cyber security solutions,
Transport
In the transport industry, there is a need for leasing trucks and trailers to ultimately own them. Businesses can turn to Q capital for that.
Tools and Equipment
Whether you are working as a handyman service, construction business or garden care service, equipment and tools are key to making your business a success. Wanawake can offer rent-to-own tools.
Manufacturing
The manufacturing industry uses many specialised equipment that is very expensive. Factory Smart specifically offers a rent-to-own option for the Max Photonics fibre-laser welder.
Now that you know there are other options for obtaining imperative assets that your business cannot go without, you can continue working towards making your business a success. Try rent-to-own options for your enterprise today.
