Merchant West Asset Finance (“MWAF”) a division of Merchant West Holdings are pleased to announce the issuance of a ZAR 300 million Note under its JSE listed lease backed receivables securitisation programme – MW Asset Rentals (RF) Limited. The Note was issued on 4 September 2020 and is rated AAA(za) by GCR Ratings. The Note and Subordinated loan proceeds will be used to purchase circa ZAR 361 million of qualifying assets.
MWAF provides finance and ancillary services to South African corporates, SME’s and SMMEs and this funding is a further positive step in assisting MWAF in its mission to provide this essential service and help grow and maintain South African companies. MWAF is able to service this segment of the market through its advanced credit scoring methodology, financial structuring competency and nationwide footprint.
With load-shedding rearing its ugly head once again and the chronic unreliability of South Africa’s power supply, buying a generator is a serious consideration for many South African businesses. Many will, without question, opt for the lowest discount rate option usually offered on an Instalment Sale through commercial banks. However, the advantage of an asset rental or rent-to-own option over your standard instalment sale agreement lies in the ability to accelerate the asset write down and subsequent tax deductions on your balance sheet.
Simply put, if you buy an asset using cash or through an instalment sale, that asset will stay on your balance sheet for the entirety of its write-off period as set out by The Schedule of Wear and Tear/ Depreciation Allowances issued by SARS.
As a 22 year old independent financial services company, adapting to the Covid-19 pandemic is an unprecedented challenge. We would typically rely on historical events to inform a response to major economic changes as it is inevitable that at some stage in history, businesses and people have gone through some extreme economic circumstances. There are generally always case studies and information available that can be used to understand success stories and those efforts that failed when faced with these challenges.
This is the most opportune time for you to partner with a Financier; whether you’re a supplier of equipment that traditionally sells on a cash basis, or a commercial business needing to invest in new equipment during these unforeseen times of having lost over a month’s turnover – we all need a “ Finance Wingman”
Supplier Advantages to offering a finance solution:
A frequently advertised benefit of equipment rentals is that it is “100% tax deductible.” In actual fact, this is not really a benefit as all CAPEX /equipment spend is 100% deductible.
The real benefit of renting your equipment lies in the ability to accelerate this write down and the subsequent tax deductions.
According to The Schedule of Wear and Tear/ Depreciation Allowances issued by SARS, the full acquisition cost of Medical Theatre Equipment typically qualifies for a 6-year write-off term. This means that If you buy Cash or do an Instalment Sale through your Bank, that asset will stay on your balance sheet until written-off in 6 years’ time.
However, if one opts for a rental or Operating Lease over 3, 4 or 5 years instead, your tax deductions will be automatically accelerated (100% of the monthly Operating Lease spend is tax deductible). Thus, having a significant effect on the actual after-tax Cost of Equipment.
With the rise in smart technology systems, businesses across the globe are implementing this technology within their offices to increase productivity and optimise operations, among other benefits. Now that these systems can be realised through asset finance solutions, more and more businesses in South Africa can join the smart revolution. This empowers South Africans with the opportunity to successfully compete with local and international players in their industry. Read on to find out which smart office systems are currently trending, as well as what benefits they offer to businesses across multiple industries.
There still exist many misconceptions around the term “finance”. At Merchant West we strive to demystify asset finance and promote it as a bespoke solution for businesses to acquire the equipment and systems they need to grow. Finance should not be limited as the misconstrued term it often is referred to, used to simply describe people who cannot afford to buy. The reality of finance is that it is designed for profitable companies that want to become industry leaders, with best-practice financial risk management consciousness. Our asset finance solutions are designed for the ambitious, here’s why:
Keeping up with technology often means that businesses are budgeting for new purchases each year to continuously refresh their security infrastructure and taking a financial knock on the depreciating asset value of the outdated equipment. At least that has been the case up
New approaches to security asset financing, such as an operating lease enables the business to implement their security refresh projects, but without purchasing the equipment. This model keeps depreciating assets off the client’s balance sheets, while the supplier can offer their clients fully financed end-to-end solutions they can bank on.
Global Credit Ratings (“GCR”) has accorded the following final, public long-term credit rating to the following Secured Class A Notes (“Class A Notes”) issued by MW Asset Rentals (RF) Ltd (the “Issuer”) (the “Transaction”) on 18 November 2016:
● Class A Notes, stock code MWAR01; R450,000,000; AAA(ZA)(sf) Stable Outlook.
GCR concurrently accorded the following final, public long-term credit rating to the following Notes issued by the Issuer on 29 March 2018 (“New Issuance”):
● Class A Notes, stock code MWAR02; R300,000,000; AAA(ZA)(sf) Stable Outlook.
The Issuer has increased the Subordinated Loan to R64,645,000 from R44,645,000 that is unrated and held by Merchant West (Pty) Ltd.