The Best of Both Worlds
Asset finance lets you own your solar system without paying for it all upfront. You finance the full cost through a lending partner and repay over 5-10 years — while enjoying immediate electricity savings and the full Section 12B tax deduction in year one.
Why it works so well for solar:
- Your monthly electricity savings typically exceed your monthly loan repayment
- You claim 100% Section 12B tax deduction in year one (because you own the asset)
- The tax saving alone can cover 10-15 months of repayments
- After the loan is paid off, your electricity savings are pure profit for 15-20 more years
- You own the asset, building long-term value on your balance sheet
In simple terms: The system pays for itself while you pay for the system.
The Asset Finance Process
Step 1: Assessment & Proposal We assess your facility and provide a detailed proposal with system design, savings projections, and financing scenarios at different terms.
Step 2: Finance Application We connect you with our finance partners. You provide standard financial documentation (financials, tax returns, director details). Approval typically takes 5-10 business days.
Step 3: Approval & Agreement Once approved, you sign the finance agreement. Terms range from 5 to 10 years depending on your preference and qualification.
Step 4: Installation We proceed with system design and installation — typically 2-4 weeks from approval to activation.
Step 5: Savings Start Immediately From the day your system is switched on, your electricity bill drops. Your monthly repayment is covered by savings from day one.
Step 6: Claim Section 12B At year-end, claim the full 100% tax deduction on the system cost. This refund further accelerates your effective payback.
Asset Finance — A Worked Example
Scenario: 100kWp commercial solar system
| Item | Amount |
|---|---|
| System cost | R1,500,000 |
| Finance term | 7 years |
| Estimated monthly repayment | ~R25,000 - R30,000 |
| Estimated monthly electricity saving | ~R30,000 - R42,000 |
| Net monthly cash flow | +R0 to +R17,000 (positive) |
Year One Tax Benefit:
| Item | Amount |
|---|---|
| Section 12B deduction | R1,500,000 |
| At 27% corporate tax rate | R405,000 tax saving |
| Equivalent to | ~13-16 months of loan repayments |
After Loan is Paid Off (Years 8-25+):
| Item | Amount |
|---|---|
| Monthly repayment | R0 |
| Monthly electricity saving | R30,000 - R42,000+ (growing with Eskom increases) |
| Pure annual profit | R360,000 - R504,000+ |
Figures are estimates based on industry benchmarks. Actual amounts depend on your consumption profile, system size, finance rate, and tariff structure.
Asset Finance vs Purchase vs PPA
| Factor | Asset Finance | Outright Purchase | PPA |
|---|---|---|---|
| Upfront cost | Deposit (if any) | Full system cost | R0 |
| Monthly payment | Loan repayment | None | PPA electricity rate |
| Section 12B (100%) | Yes — year one | Yes — year one | No |
| Cash-flow from day one | Positive (savings > repayment) | Maximum savings immediately | Savings (20-30% below Eskom) |
| Total savings (25 years) | Very high (own the asset) | Maximum | Good (but pay PPA rate throughout) |
| Maintenance | Your responsibility | Your responsibility | Provider's responsibility |
| Balance sheet | Asset + liability | Asset | Off-balance sheet |
| Risk | Low (savings cover payments) | Investment risk | Zero |
| Best for | Businesses wanting ownership without full upfront cost | Businesses with available capital | Capital-constrained businesses |
The key advantage of asset finance: You get the ownership benefits of purchasing (including Section 12B) with the cash flow management of a PPA.
Asset Finance Makes the Most Sense If You...
- Want to own the system but don't want to deploy full capital upfront
- Want Section 12B tax benefits — you need to own the asset to claim the deduction
- Have a profitable business with taxable income to offset (maximises the 12B benefit)
- Want long-term maximum savings — after the loan, it's pure savings for 15-20+ years
- Prefer predictable costs — fixed monthly repayments vs escalating Eskom bills
- Want to build asset value — the system sits on your balance sheet
Asset finance may NOT be ideal if:
- Your business has limited credit history → Consider a PPA instead
- You have no taxable income (can't utilise Section 12B) → PPA may suit better
- You want zero maintenance responsibility → PPA includes maintenance
- You have the capital available → Outright purchase maximises returns
How Section 12B Works with Asset Finance
A common misconception: many business owners think you need to pay cash to claim Section 12B. That's not the case. As long as you own the asset (which you do with asset finance — the finance company provides the loan, you own the system), you can claim the full 100% deduction in year one.
How it plays out:
- Finance approved and system installed (Year 1)
- System brought into use → triggers Section 12B eligibility
- Claim R1,500,000 deduction on your IT14 return
- Receive R405,000 tax saving (at 27% rate)
- Apply that R405,000 to loan repayments — or reinvest in your business
- Continue making monthly repayments from electricity savings
- Loan paid off in 5-10 years → pure savings thereafter
The Section 12B tax saving effectively reduces your net system cost from R1,500,000 to R1,095,000 — making the already-favourable payback even faster.
Common Questions About Solar Asset Finance
What finance terms are available? Typically 5 to 10 years, depending on the finance provider and your business profile. Shorter terms mean higher monthly payments but lower total interest cost. We help you find the term that balances cash flow with total cost.
What interest rates can I expect? Rates vary based on your business financials, credit profile, and the term selected. We work with multiple finance partners to find the most competitive rate for your situation.
What documentation do I need? Standard commercial finance requirements: 2-3 years of financial statements, management accounts, tax clearance, director details, and a completed application form. We guide you through the process.
Can I finance the full system including batteries? Yes. Panels, batteries, inverters, mounting structures, and installation costs can all be included in the finance agreement. All components qualify for Section 12B.
What if my business situation changes? Finance agreements typically include provisions for early settlement (often with a small penalty). If you come into capital, you can pay off the balance early and enjoy full savings sooner.
Is my business eligible for solar finance? Most established businesses with 2+ years of trading history and sound financials qualify. We'll assess your eligibility as part of the proposal process — before you commit to anything.