Strong growth in US equipment leasing market

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic performance for a cross-section of 25 companies, also revealed new business volume for May was up 13% year-over-year compared to the same period last year.

Receivables over 30 days were 1.4%, up from 1.3% for the same period last year. Credit approvals were 77% in May, up from 75.9% in April.

ELFA president and CEO Ralph Petta (pictured above) said: “Origination volume for the month of May continues strong second quarter performance for the equipment finance industry.

“Although certain verticals and industry sectors are performing better than others, overall demand for capital equipment continues the positive momentum begun in the first few months of the year.

“At the same time, credit quality remains in acceptable ranges. While the data provide a rear-view mirror glimpse of industry health, more telling will be the impact of rising interest rates, warmer summertime weather and whether policy makers in Washington succeed in making progress on important legislative matters that benefit the business community.”

The 25 companies in the survey represent a cross-section of the $1 trillion equipment finance sector in the US.

Adam D. Warner, president of Key Equipment Finance, said: “The current business environment is perplexing. While the US economy is experiencing the third longest expansion in history, there have not been any sustained pockets of robust growth.

“Confidence levels are still very encouraging, as businesses continue to invest and finance equipment and related services at stronger levels than in 2016.”

However, he said that it is critically important to watch all economic indicators for signs of change.

Warner added: “With rising interest rates forecast for the remainder of the year, we expect some margin compression relief with minimal impact on new financing activity.”

The ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with research and benchmarking information to support strategic business decision-making.

The latest MLFI-25, including methodology and participants, is available here.

The ELFA has 580 members, including independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers.