Equipment Financing Industry Outlook

Equipment Financing Industry Outlook Stays Strong

Paige Connelly Equipment Leasing, Financing Leave a Comment

It seems that confidence in the equipment financing industry is staying positive despite the current insecurity associated with the overall economy’s health. The Fed decreasing interest rates could play a role, and equipment-leasing executives could see this as a predictor of increased investment and a way to stimulate growth in the sector. 

Where the Numbers Come From

The numbers are researched by the Equipment Leasing and Financing Association (ELFA) and their Equipment Leasing and Financing Foundation (ELFF). ELFA is the trade association representing companies within the equipment financing sector – nearly a $1 trillion industry. They obtain the numbers from their member companies and compile them into data reports.

Equipment Financing Industry Confidence

The August 2019 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) Survey by the ELFF indicated continued growth for the equipment leasing industry, citing an overall confidence increase from 57.9 in July to 58.9 in August. 

Outlooks by company leaders remain positive, as 10% more executives said they believe business conditions will improve over the next four months – a total of 16.7% – while 76.7% said they expect it to stay the same. 6.7% said they expect it to worsen, and this number was unchanged from July.

This same trend continues when it comes to other factors as well, such as executives’ expectations for their access to capital. Other factors, however, mildly reflect the growing insecurity in the U.S. economy – 3.3% said they feel the current economy is “poor,” which is up from 0% in July. 

What’s to be interpreted from all these numbers? Firstly, it’s all good news for the equipment financing industry. Other than general insecurity with the U.S. economy based on current economic factors, like tariffs and lowered interest rates, equipment financing leaders seem to be confident that their businesses can grow in the next few months. That confidence says a lot about the outlook for the industry.

Equipment Financing Growth

There has been a steady reported growth in the industry over the past year. ELFA’s yearly Survey of Equipment Finance Activity said that in 2018, equipment financing companies saw a 4.4% increase in their New Business Volume (NBV). This was less than the 6.9% in 2017, but is still a decent increase. It’s possible the confidence increase in the industry is based on these numbers, and equipment financing companies feel they have reason to expect more growth in the coming months. On top of that, 63.5% of companies reported increases in their NBV, which marks the most since 2015. This means these companies saw the amount of business they brought in grow from the previous year. 

Overall, it’s safe to say the industry is on the rise. Equipment financing doesn’t yet show signs of slowing down despite the uncertainty of the national economy. Financing equipment offers customers a way to split the burden of large purchases, and offering it for you equipment could prove beneficial based on these national trends.

Interested in offering equipment financing? FaaStrak is a leader in providing vendors with the software and tools to offer financing to their customers. Book a demo with us today to see how we can increase your revenue and satisfy more customers.

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