In October, U.S. companies borrowed 8% less than they did a year ago to finance their equipment investments, according to the Equipment Leasing and Finance Association (ELFA). This decrease was attributed to high interest rates that some businesses felt the impact of. Despite a strong U.S. economy, ELFA reports on the economic activity of the nearly $1-trillion equipment finance sector and surveys banks like Bank of America and financing affiliates of equipment makers.
Year-to-date, cumulative new business volume was up 0.7% compared to 2023, ELFA announced. However, despite these positive metrics, ELFA CEO Ralph Petta noted that there have been slight increases in both losses and delinquencies among participants in the industry. He explained that this softness in credit quality is due to challenges faced by businesses operating in a higher interest rate environment and being constrained by reports of a pull-back in bank lending.
Dennis Bolton, Head of North America Equipment Finance at Gordon Brothers, echoed Petta’s sentiment about the trends being consistent with the economic environment and market turmoil resulting from quantitative tightening, inflation, employment, and supply chain disruption. According to ELFA, U.S. companies signed up for $10.4 billion worth of new loans, leases and lines of credit in October, an increase from $9.7 billion in September. Credit approvals also improved month-on-month, reaching 76% in October from 73.6% in September.
The Equipment Leasing & Finance Foundation (ELFF) reported that its confidence index stood at 42