Pick up in equipment finance new business volumes

New business volume in the equipment finance sector is picking up significantly according to the latest figures from the Equipment Leasing and Finance Association (ELFA), but remains below last year’s levels of activity.

ELFA’s monthly leasing and finance index (MLFI-25), which reports economic activity from 25 companies representing a cross section of sector, showed their overall new business volume for June was $10 billion, up 3% year-over-year from new business volume in June 2015.

Volume was up 47% month-to-month from $6.8 billion in May. However, year to date, cumulative new business volume decreased 7% compared to 2015.

Receivables over 30 days were 1.4%, an increase from the previous month and up from 1.02% in the same period in 2015. Charge-offs were 0.65%, up from 0.33% the previous month. Credit approvals totaled 78.1% in June, up from 76.5% in May.

Ralph Petta, ELFA president and CEO, said: “New business volume experienced a healthy increase in June, eclipsing a similarly strong year-ago month. In fact, June’s originations were the largest since end-of-year 2015, when business activity in the equipment finance sector typically spikes upward.”

He went to explain: “However, volume for the year thus far is still down when compared to last year at this time. This uneven performance appears to reflect the trend toward continued slow economic growth and volatile equity markets in the US, as well as troubling international events that are causing business owners to approach capital investment decisions with a wary eye. A decline in portfolio quality contributes to a narrative of an equipment finance market trying to gain its footing in the face of a volatile economy amidst a recent period of uncertain political and social unrest.”