Equipment finance sector turns positive

Latest data from the Equipment Leasing and Finance Foundation (ELFF) suggests the equipment finance industry had a positive start to the year, with its monthly survey showing a marked rise in confidence for March.

The Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), which reports a qualitative assessment of both the prevailing business conditions and expectations for the future, currently stands at 51.6, an increase from the February index of 48.3.

Detailed breakdown of the March survey results shows that most senior executives (77.4%) believe business conditions will remain the same over the next four months, an increase from 71 in February. The proportion who think believe business conditions will worsen has dropped to 19.4% a decrease from 25.8% the previous month.

However, the market remains challenging, according to one small ticket independent lessor. David Schaefer, CEO, Mintaka Financial, noted: “Application volume and approvals remain strong but closing them has been difficult. We attribute this to competitive factors from within our industry and from the alternative finance industry. There still seems to be a level of uncertainty in the small business market as well.”

Demand stable

In line with these findings, most respondents (74.2%) believe demand for leases and loans to fund capital expenditures will “remain the same” during the same four-month time period, up from 61.3% the previous month. The proportion who thinks demand will decline has halved, and now stands at 16.1%, a decrease from 35.5% who believed so in February.

“There are pockets of opportunity in both types of equipment and specific industries. That said, there are an increasing number of industries that are hitting a reset button with regard to growth and capital spending,” pointed out Harry Kaplun, president, specialty finance, Frost Bank.