Equipment finance activity stalls

New business volumes in the equipment finance sector rose last month, compared to the start of the year, but are below last year’s activity, according to the latest data from the Equipment Leasing and Finance Association (ELFA).

ELFA’s monthly leasing and finance index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the industry, showed their overall new business volume for February was $6.1 billion, up 2% from new business volume in January.

The data shows volume was down 2% from $6.2 billion in February 2015. Year to date, cumulative new business volume decreased 7% compared to 2015.

Receivables over 30 days were 1.4%, up from 1.3% the previous month and up from 1.15% in the same period in 2015. Charge-offs were 0.37%, up from 0.26% the previous month. Credit approvals totaled 79.2% in February, up from 78% in January.

ELFA president and CEO Ralph Petta said: “While February origination volume is virtually flat when compared to January and the year-earlier period, credit quality shows signs of deterioration, with delinquencies and charge-offs inching upward over the same time intervals.”

He added: “Both metrics are worth keeping a close eye on as economic uncertainty continues to act as a drag on US businesses’ decisions to invest in capital equipment. However, this seems to run counter to the Foundation’s Monthly Confidence Index, which increased over the period from February to March.”

Market “thriving”

The Equipment Leasing & Finance Foundation has published a new study which reveals that the lender finance marketplace in the US is “thriving” eight years after the 2008 financial crisis began. The revival is being led by an “interesting mix” of traditional banks and newer, non-traditional lender, including financial technology (FinTech) venture capital companies, private equity firms, and insurers according to the findings.

The study was researched and written by The Alta Group and identifies key players, regulatory considerations, and implications for borrowers such as independent equipment lessors.

Valerie Gerard, managing director of The Alta Group, said: “Lender finance has been the lifeblood of independent lessors for decades. When traditional bank lenders pulled back in the aftermath of the financial crisis, they created an opportunity for other capital providers to support the equipment leasing industry. What that means for independent lessors is that more lenders are attracted to the industry than ever before. The study provides a blueprint for independents wanting to access this capital source.”

To purchase a copy of the study Lender Finance: How Does the Capital Stack? from the foundation, visit bit.ly/1nU498u