Trends

 

09 16 2015

09 16 2015

Equipment Leasing Industry Showing Signs Of Solid Growth

The equipment leasing industry is showing solid signs of growth and confidence recently, which means it’s a great time for small business owners to take advantage of this surging sector of the economy.

The Equipment Leasing and Finance Association’s Monthly Leasing Finance Index and the Equipment Leasing and Finance Foundation’s Monthly Confidence Index both revealed strong numbers for the most recent months are available.

According to the ELFA’s June 2015 MLFI, overall new business volume for the 25 companies that form a cross section of the industry showed an increase of $9.5 billion. This represents a 4 percent year-over-year increase for June. Total month-to-month volume experienced a 34 percent increase to May’s $7.1 billion number, while cumulative new business volume grew by 9 percent year over year.

“The level of new business volume at the halfway point in the year is higher than in any similar period since at least the Great Recession,” said ELFA President and CEO William G. Sutton. “In most sectors, ELFA members report robust performance, in terms of both originations and portfolio quality.”

Confidence levels

Meanwhile, the ELFF’s June MCI-EFI reported the confidence level in the equipment finance market at 62.6 on its July index. Although the June index reported a 63.0, the 0.4 point drop is statistically unremarkable. According to the index, 17.2 percent of executives believed business conditions for the next four months will improve, while 75.9 percent believed conditions would remain the same. These represent a decline of 0.7 percent and 6.2 percent, respectively, from June’s numbers.

According to the confidence index, 20.7 percent of respondents anticipate growth over the next four months for leases and loans to fund capital expenditures, representing a 0.7 percent decline from June. While no executives believed demand for equipment leasing and loans would decline in June, July experienced a slight uptick to 6.9 percent of respondents who believed it would decline slightly. For respondents who thought the industry would remain the same, 72.4 percent indicated they believed this to be true, which represents a slight decline from June’s 78.6 percent reading.

Respondents who anticipate greater access to working capital to fund equipment acquisitions dipped from 25 percent in June to 20.7 percent in July. However, those respondents who believe it will remain the same ticked up from 75 percent in June to 79.3 percent in July, while none expected less access to capital, which remained the same from June.

When asked about whether U.S. economic conditions will get better over the next six months, 24.1 percent of respondents said they believed it will, which marks a 4.5 percent decrease from June. However, 69 percent of respondents said they believed it would stay the same, a 1.1 percent increase from June.

Equipment financing is a great way for small-business owners to take advantage of utilizing top-of-the-line machinery for their companies, while saving money on overhead expenses and helping the business prosper during challenging economic times.

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