Equipment Finance Sector Suffers Summer Bump, but Expects Smooth Year-End

Overall new business volume for 25 companies representing a cross section of the $725 billion equipment finance sector was $7.7 billion in September, down 6 percent compared to volume in September 2012. Month-over-month, new business volume was up 20 percent from August. Year to date, cumulative new business volume increased 6 percent compared to 2012.

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25) furthermore reports that receivables over 30 days were at 1.5 percent in September, down slightly from 1.6 percent in August. Delinquencies declined from 1.8 percent in the same period in 2012. Charge-offs were unchanged from August at 0.4 percent, and only slightly higher than the previous five months’ all-time low of 0.3 percent.

Credit approvals totaled 77.3 percent in September, down from 79.1 percent the previous month.  Fifty-six percent of participating organizations reported submitting more transactions for approval during September, unchanged from the previous month.

Finally, total headcount for equipment finance companieswas up 1.2 percent year over year.

“September’s year-over-year drop in new business volume seems to reflect a pull-back in corporate confidence in the U.S. economy spawned by the fiscal crisis in Washington,” said ELFA President and CEO William G. Sutton, CAE. “Uncertainty created by the inability of policy makers to come together to agree on sustained tax and spending policy is holding back the U.S. economy, and in particular, capital investment. The equipment finance industry and our members look forward to getting past this crisis and on with the business of supporting sound growth policies that stimulate capital formation, stabilize the capital markets, and, ultimately, strengthen our economy.”

Daniel Krajewski, vice president, business development, Direct Capital Corporation, said, “After an expected decline in the summer months there was a healthy rebound in activity in September, which exceeded the early Q2 spike. We remain cautiously optimistic about the continued growth in the sector and are encouraged to see that average delinquency metrics remain low. We believe that we will close out the year strong, but are consistently monitoring the economic and governmental issues that may impact demand.”