An increase in new business volume in the equipment leasing and finance industry reflects a belief that the overall economy is improving but still at a slow, steady pace.
Photo credit: Equipment Leasing and Finance Association
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 the overall new business volume for June was $8.6 billion, up 8 percent compared to volume in June 2012. Month-over-month, new business volume was up 15 percent from May. Year to date, cumulative new business volume increased 10 percent compared to 2012.
Receivables over 30 days were at 1.4 percent in June, reaching a new historic low, down from 1.6 percent in May. Delinquencies declined from 2.4 percent in the same period in 2012. Charge-offs were unchanged for the past four months at the all-time low of 0.3 percent.
Credit approvals totaled 78.5 percent in June, relatively unchanged from May. Fifty-four percent of participating organizations reported submitting more transactions for approval during June, down from 63 percent the previous month.
Finally, total headcount for equipment finance companies was relatively unchanged from the previous month, and up 1 percent year over year.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for July is 59.4, an increase from the June index of 57.3, reflecting industry participants’ increasing optimism despite continued moderate demand for equipment.
“Businesses continue to increase spending on capital equipment as evidenced by U.S. government statistics showing three consecutive months’ increase in durable goods orders by American firms," said ELFA President and CEO William G. Sutton, CAE. "Our June MLFI-25 data confirms this trend: the amount of leasing and financing of business equipment and software continues to grow, while the credit quality of these transactions remains at historic highs. Member companies are optimistic that this trend will continue into the summer months and beyond.”
“I believe the trend of increasing new business volume as shown in the recent ELFA industry statistics is a solid reflection of an improving business economy," said William Besgen, President and Chief Operating Officer, Hitachi Capital America Corp. "We at Hitachi Capital America Corp. are definitely seeing increased activity versus last year in credit applications and new business volume from the over 2,000 independent truck dealers throughout the U.S. that we serve, both for new and used vehicles. I feel the small to medium-size businesses that are acquiring this equipment are reinforcing their belief that the overall economy is improving, albeit at a slow, somewhat steady pace.”