Equipment Leasing and Finance Association

Equipment Finance Sector on Verge of Breakout Performance

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $725 billion equipment finance sector, showed their overall new business volume for May was $7.5 billion, up 21 percent compared to volume in May 2012. Month-over-month, new business volume was unchanged from April. Year to date, cumulative new business volume was up 11 percent compared to 2012.

Receivables over 30 days were at 1.6 percent in May, matching an historic low, and down from the previous three months at 2 percent. Delinquencies declined from 2.7 percent in the same period in 2012. Charge-offs were unchanged for the past three months at the all-time low of 0.3 percent.

Credit approvals totaled 78.8 percent in May, up from 77.2 percent in April. Sixty-three percent of participating organizations reported submitting more transactions for approval during May, down from 72 percent the previous month.

Finally, total headcount for equipment finance companies was up 1 percent from the previous month and up 1 percent year over year.

Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for June is 57.3, an increase from the May index of 56.7.

“May MLFI-25 data suggest an equipment finance sector on the verge of a breakout performance," said ELFA President and CEO William G. Sutton, CAE. "While recent key indicators show an overall improvement in lending to the small business sector, the May numbers provide concrete evidence of growing demand for productive assets by a cross section of the business community. At the same time, historic lows in delinquencies and charge-offs mean American businesses are better able to meet their financial obligations, creating a favorable environment for additional capital investment and job creation. We hope that these trends will continue into the summer.”

“The fact that all of the metrics are going in the right direction is really encouraging," said Robert Rinaldi, Senior Vice President, CSI Leasing, Inc. "Many lessors have seen these ups in new business volume (NBV) followed by subsequent down months, evidenced in the ‘saw-tooth’ pattern of the NBV chart. But, and this is a good news ‘but,’ if you run a six-month rolling average on the NBV data over the past six years to smooth out the ‘saw-tooth,’ a clearer picture of definitive growth appears.”

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