More businesses are experiencing the benefits of equipment leasing, according to the latest Monthly Leasing and Finance Index from the Equipment Leasing and Finance Association (ELFA).
The index, which reports economic activity from 25 companies engaged in the equipment financing sector, showed that overall new business volume for August 2014 was $7.2 billion – a 13 percent increase from the same time last year. This comes on the heels of an 8 percent year-over-year increase during July.
“Continued strength in new business volume reflects the uptick in overall economic activity most economists forecast for the second half of 2014,” said ELFA President and CEO William G. Sutton. “Solid fundamentals – modest GDP growth; an improving labor market; increased consumer spending, as evidenced by strong auto sales; and low interest rates – all bode well for continued business investment in general, and the equipment finance sector, in particular. Credit quality appears manageable as well, although the index shows a slight uptick in delinquencies.”
Receivables over 30 days rose 1.3 percent during August on a month-over-month basis, as well as 1 percent from August 2013. Meanwhile, charge-offs remained unchanged for the fifth consecutive month at an all-time low of 0.2 percent.
The index also showed credit approvals reached 79.5 percent in August, a slight decline from 80.3 percent in July. However, total headcount for equipment finance companies increased 1 percent on a year-over-year basis.
These figures have led to an increase in confidence for the equipment leasing industry, as the Equipment Leasing & Finance Foundation’s Monthly Confidence Index for September reached 60.2, up from 58.9 during the previous month.
With businesses continuing to seek out ways to retain cash reserves in a recovering economy, it appears many are making use of commercial equipment financing to ensure they have the tools and machinery they need.