Equipment Finance Sector Shows Activity Up 6% in October But Down 9% YOY

Cumulative new business volume year-to-date is down almost 6% compared to 2019 as pandemic continues to impact activity.

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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 $900 billion equipment finance sector, showed their overall new business volume for October was $9.2 billion, down 9% year-over-year from new business volume in October 2019. Volume was up 6% month-to-month from $8.7 billion in September. Year-to-date, cumulative new business volume was down almost 6% compared to 2019.

Receivables over 30 days were 2.20%, up from 2.00% the previous month and up from 2.00% the same period in 2019. Charge-offs were 0.60%, down from 0.82% the previous month and up from 0.46% in the year-earlier period.

Credit approvals totaled 72.3%, down from 72.9% in September. Total head count for equipment finance companies was down 4.9% year-over-year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in November is 56.1, up from the October index of 55.0.  

Some industries have proven more resilient than others. Howard Shiebler, president, Crossroads Equipment Lease & Finance LLC, noted, “We focus exclusively on transportation finance, and 2020 is shaping up to be an amazing year. Freight volume and trucking market spot rates are up and corresponding demand for new and used trucks is driving our new business to record levels. We expect this trend to continue into at least the first half of 2021 and for portfolio performance and used truck and trailer prices to stay strong.”

Ralph Petta, ELFA president and CEO, sees reason for optimism. “To the extent that member companies responding to the October MLFI-25 survey are an indicator, the equipment finance industry shows resilience in the face of a worsening health pandemic and uneven economic performance in the U.S.,” he stated. “The labor market continues to strengthen, except for workers and their employers in the restaurant, travel, leisure and hospitality sectors, who continue to struggle. Corporate earnings in many sectors are strong, the equity markets continue to defy gravity and business confidence seems to be on the rise.

“Hopefully, this struggle to get back to a sense of normalcy will not be overtaken by a double-dip recession caused by worsening COVID-19 outbreaks reported in some states around the nation,” he continued. “At the end of the day, equipment finance companies continue to do their part to help the nation get back to business by helping finance billions of dollars in equipment investment by businesses both large and small.”