Since March, Monitor Suite has published more than 100 articles across vendor finance, middle-market direct, credit, operations, technology and leadership. Each was written around a specific pain point and anchored in survey findings from Secured Research. Read one at a time, they describe discrete problems: a portal that asks too much of a dealer, a credit box built for the wrong customer, an annual review nobody wanted to attend. Read together, they describe one condition. Equipment finance companies are, for the most part, competitive on price and indifferent to everything that happens between the quote and the funding.
The vertical research reports Secured Research published alongside the articles, which surveyed the buyers of equipment rather than the firms that finance it, arrived at the same place from the other side of the desk. Among small and midsize business (SMB) manufacturers, 62% plan equipment acquisitions in the next 12 months, and fewer than one in five name interest rates as the primary factor holding them back. Among SMB trucking operators, 61% now prefer to finance rather than pay cash, up from 47% in 2024. Demand was not the constraint this year, and for most buyers neither was price.
That is not a comfortable conclusion for an industry that spends most of its management attention on rate, but the numbers do not leave much room for another reading. What follows is a roll-up of the findings that drew the most response, grouped by where they hit the business. Where the vertical reports speak to the same problem from the buyer’s side, their findings are folded in.
The Dealer Does Not Leave Over Rate
The most consistent finding of the year came from the dealer channel. Secured Research found that 64% of equipment dealers rank the speed and clarity of the funding process above rate when choosing where to send a deal. Among dealers who abandoned a financing submission, 46% named portal complexity as the primary reason. One article walked through a submission that took 11 clicks and found that dealers stopped at the fourth.
The friction is largely self-inflicted and largely cumulative. Some 49% of vendor programs added documentation requirements over the past five years without removing a single one, and the median package grew from nine documents to 14. Of approved deals that never funded, 28% died in stipulation clearing, and 35% of stipulations changed no credit decision over a 24-month window. Every requirement was reasonable when it was added. Together they cost the program deals it had already approved.
The manufacturing vendor research put a number on what that friction costs the seller. Point-of-sale financing attach rates averaged 44% across surveyed dealers and distributors, against 70% or better at best-in-class programs, and 45% of vendors raise financing only when the buyer asks. Financing presented with the first quote closed at 2.3 times the rate of financing introduced after price negotiation, and 31% of lost or stalled deals involved financing friction the seller could have controlled: slow approvals, soft costs left out of the deal or no way to hold a commitment across a nine-month equipment lead time. Above $500,000, the dealer-arranged share of transactions falls to 27%, and the buyer’s own bank takes 58%, usually because the financing conversation started too late.
The same pattern shows up at the start of the relationship. Among vendor programs signed in the prior 24 months, 44% had not produced a funded deal six months after signing, and programs that funded a first deal within 45 days originated 3.1 times the year-one volume of those that waited past 90. The dealer who goes quiet is rarely gone. Secured Research found that 43% of dealers classified as dormant had submitted to at least one competing funder in the same window, and more than half of enrolled dealers are dormant in a typical quarter. Among programs under $250 million in annual originations, 51% have no systematic process to bring a silent dealer back.
The Dealer Base is Changing Underneath the Program
A second thread concerned the structure of the channel itself. Private equity roll-ups are consolidating independent dealers into platforms, and 58% of vendor finance programs do not track the ultimate parent or ownership of their dealers. Of programs that experienced a roll-up, 47% learned about it only after it occurred, which is an odd way to find out that a single credit decision now carries the exposure of an entire platform.
Manufacturers are the other variable. More than half of midsize equipment manufacturers, 54%, operate with no captive or preferred-partner finance program, yet 48% of independent lessors have never formally approached one about filling the role. Another 47% of independent finance executives named an original equipment manufacturer partnership they wanted and never pursued. The articles on this theme argued the same point from two directions: The manufacturer who cannot afford a captive is an opportunity, and the manufacturer evaluating one is a threat that rarely announces itself to the incumbent.
Coverage models have not kept up either. Some 61% of programs allocate dealer coverage based on historical relationships rather than current or projected opportunity, and 43% have not redrawn territories in more than three years. Programs that pair floor plan with retail financing on the same dealer base captured 2.8 times the retail penetration of programs offering retail alone, a finding that reframed floor plan from a defensive product into the lever that locks in a manufacturer relationship.
Structures That Were Never Priced Correctly
A recurring theme was the gap between what dealers sell and what programs underwrite. Deferred payment structures ran four times the default rate of the rest of the portfolio in programs that measured it, yet 46% of programs offering deferrals cannot identify which dealer segments produce the highest first-payment defaults. Among programs running subvention, 39% cannot precisely calculate net margin on a 0% offer. Both are margin decisions that have been treated as marketing decisions.
Demand for newer structures is running ahead of supply. Of equipment dealers, 48% lost at least one sale in the prior 12 months for lack of a usage-based option, and 61% report rising demand for consumption-based terms, strongest among prime credits. At the other end of the contract, 43% of programs have no contractual mechanism to finance the replacement of equipment they originally funded, and 51% of dealers cite that missing refresh path as a top-three reason customers shop competitors at term-end. On trade-ins, 53% of programs have no documented protocol for valuing the equipment at the point of sale, even though 41% of dealer principals call trade-in negotiation the largest barrier to a replacement transaction.
The vertical reports show where the structure gap is widest. Across 418 acquisition decision makers surveyed for the “Technology Premium” special report, true fair market value (FMV) leases took 34% of financed technology-dense volume this year, up five points, while $1 buyout leases fell four points and loans fell six, despite permanent 100% bonus depreciation. Even in construction, the most ownership-minded vertical in the study, lease share on technology-dense acquisitions ran at 39%, double the 19% on conventional iron. Adoption, however, tracks who had the structure explained rather than who needed it. Among SMB manufacturers, FMV adoption runs 34% in the $50 million to $100 million revenue tier and 12% below $15 million. In trucking, Terminal Rental Adjustment Clause (TRAC) leases have climbed to 24% of SMB transactions, up five points, but adoption runs 34% among $50 million to $75 million fleets and 17% among $2 million to $10 million fleets. In both cases the smaller buyer carries the same obsolescence and residual exposure and simply has not had the structure walked through.
The buyer interviews describe how those decisions actually get made. The CFO of a Texas fabricator recounted a single automation deal: His bank wanted three weeks and would not finance roughly $70,000 of rigging and integration on a $400,000 cell, while an independent priced 90 basis points higher, funded the full project and deferred the first payment until the cell was producing parts. “That structure won, not the rate,” he says.
Residuals drew the sharpest numbers. Among vendor programs in medical and dental channels, 46% apply the same residual and advance-rate grid to reimbursement-dependent imaging as to consumable-driven CAD/CAM, and those programs reported imaging write-downs about 2.4 times higher than programs that graded the two separately. Among programs serving technology resellers, 44% applied industrial residual assumptions to computer hardware, and recoveries on three-year servers fell below 15 cents on the dollar.
In the Middle Market, The Relationship Is the Product
The middle-market coverage turned on a different point: The people who decide are not the people lenders talk to. Secured Research found that 49% of deals above $5 million closed without the originating relationship manager ever speaking directly with the CFO, and 38% of CFOs involved in an equipment financing decision could not recall any content or conversation from the provider they chose. Of those CFOs, 56% said the materials they did see were aimed at procurement or operations rather than finance. At the top of the ticket range, 58% of proposals of $10 million or more now require board or investment committee approval, and 53% reach the board without the provider in the room.
Incumbency is less secure than it looks. Among middle-market customers with four or more active equipment contracts, 44% evaluated or executed a portfolio refinancing in the prior 24 months, and 61% of those went to a non-incumbent. The customer is not shopping rate. The customer is consolidating nine schedules into one, and the lender that quoted the whole book first wins it. By contrast, 63% of customers on a master lease agreement kept their primary lending relationship for five years or more, against 29% of those on transactional structures. In the same vein, 48% of equipment finance companies lost a top-20 client within 12 months of the primary contact leaving. Only 23% of middle-market providers operate a structured customer advisory board, but those that do reported 12-month retention of 92% of top-20 relationships against 76% for those without one.
The annual review emerged as the most underused meeting in the business. A full 62% of middle-market borrowers described their lender’s annual review as a confirmation of what had already been filed in the data room, while customers in structured strategic reviews were 3.2 times more likely to expand the relationship within a year. Some 54% of borrowers carry owned equipment that meets sale-leaseback criteria, yet only 19% of incumbent providers have ever proposed one.
Sponsor-backed accounts and large capital programs showed the cost of arriving late. Some 59% of relationship managers covering sponsor-backed accounts have never spoken with the sponsor’s operating partner during a transaction, and 44% of senior credit officers have repriced or restructured a sponsor-owned account within 90 days of an exit announcement. In manufacturing modernization, 47% of investments above $20 million at larger companies went through bank term loans, even though equipment finance providers were approached on 58% of them. Of manufacturers with builds longer than 12 months, 52% funded progress payments from working capital or a revolver, and 41% said they would have preferred a dedicated structure that nobody offered.
The middle-market manufacturing report suggests why the equipment finance provider keeps arriving second. Among CFOs and CEOs at manufacturers with $100 million to $2 billion in revenue, 68% plan to increase equipment investment in 2026, with an average committed program of $7.9 million over 24 months, and at that scale the competition is the rest of the capital stack rather than another equipment lender. Equipment finance holds 38% of these companies’ planned equipment capital, up three points, against 27% for bank revolvers and term debt and 22% for internal cash, and it gains share when it is positioned as revolver preservation and asset-life matching rather than priced against a facility the CFO already has. Tax structure is the other unasked question. Full expensing rewards ownership only for a company with the domestic taxable income to use it, and 41% of surveyed CFOs reported constrained tax capacity and are evaluating leases that let a tax-capable lessor monetize the depreciation. Another 13% had never examined their position. Several said no incumbent lender had ever raised the subject.
Where Credit Lagged the Market
Credit coverage this year was less about any one asset class and more about review cycles that stopped. Some 44% of credit leaders have not materially revised concentration limits in more than 24 months, and 51% of independent chief credit officers have not reviewed portfolio composition against a late-expansion or recessionary scenario in the prior 18 months. Of those, 39% acknowledge that composition has drifted from policy.
In construction, 39% of lenders do not routinely request a work-in-progress schedule, and that group reported net charge-offs running nearly double those that do. Among programs with construction-equipment dealer exposure, 53% assess credit one dealer at a time with no measure of how correlated the book is to a single building cycle, and 31% have not stress-tested that exposure in two years.
The opposite failure also appeared: declining what should have been underwritten. Of equipment finance executives, 44% passed on a data center transaction over residual or obsolescence discomfort, and 36% of them watched a competitor fund it. The pattern repeated in energy transition, where 43% passed for lack of an internal residual framework, and in warehouse automation, where 44% of teams had no separate residual treatment for fixed automation versus mobile robotics. Meanwhile, fraud proved harder to see than assumed: 38% of confirmed origination fraud cases involved applicant profiles that had passed manual review at least twice.
Late-summer coverage reached a similar conclusion from other angles. Among middle-market credit officers, 43% require an updated personal financial statement only at origination, and median guaranty recovery ran below 12% of stated net worth. Of lenders active in commercial fleet, 45% apply the same TRAC residual methodology to battery-electric units as to diesel, and those that had taken an electric vehicle back at term realized roughly 30% below the diesel-equivalent book assumption. In machine tools, 41% of programs set residuals on a single age-and-cost table across all computer numerical control categories, which produced shortfalls on five-axis machining centers and surpluses on two-axis turning centers. And among small-ticket originators, 49% decline primarily for insufficient credit history rather than adverse history; those that added bank-transaction data raised approvals by a median 9 percentage points with no measurable rise in first-payment default.
The buyer surveys point to where the next credit questions sit. Among SMB manufacturers, revenue per employee has become a forward signal: The 36% of shops below $225,000 per employee are the most labor-exposed, the most margin-compressed and the most likely to defer, and they overlap disproportionately with the 13% carrying debt service coverage below 1.25 times. Tariff-driven input costs and customer-mandated inventory buffers are absorbing the cash that once funded down payments, pushing a segment that historically put 10% to 20% down toward 100% financing with soft costs included. In trucking, the average SMB power unit has reached 6.8 years, and 34% of surveyed tractors have passed 600,000 miles, which has moved the underwriting question from whether an operator can afford new equipment to whether it can afford to keep running the old.
The Org Chart Is Doing Some of the Damage
Executive-level coverage kept returning to structures inherited rather than designed. Some 61% of senior relationship managers carry more than 45 active relationships, and 35% of middle-market firms carry at least three relationships where fully loaded servicing cost exceeds margin contribution. In vendor finance, programs housed in a shared origination structure took more than twice as long to launch a new dealer program as those run through a dedicated unit, and 44% of integrated units lost a senior vendor hire in 18 months.
Technology and talent decisions showed similar drift. Of equipment finance firms, 54% run a core origination platform that is eight or more years old, and among firms that replaced one in the past three years, 58% exceeded budget at a median overrun of 40%. On the sales side, 59% of sales leaders say producers were hired or promoted for relationships and product knowledge rather than demonstrated ability to win competitive deals, and 57% of firms cite sales-credit friction as a top-three drag on cycle time, while 63% have no shared metric tying the two functions together. Among CEOs of firms below $1 billion in managed portfolio, 49% have not formally reviewed with their board whether the company is an acquirer, a target or an independent.
Small-ticket operations supplied the clearest economics. The median fully loaded cost to originate and fund a sub-$250,000 transaction was $1,180, and 39% of operators could not state their own cost per funded deal within 20%. Digital leads that cost $380 each funded at roughly 2%, producing a median cost per funded deal of $4,200.
AI is Being Bought Faster Than It Is Being Absorbed
A late-year series on artificial intelligence found the same gap between purchase and use. Among equipment finance companies that piloted an AI credit-decisioning tool in the past two years, 44% reported the model met or exceeded its accuracy target in testing, yet 51% of that group never reached production approval. The most common reason, cited by 62% of the stalled pilots, was that the credit committee could not map the model’s output to existing delegated-authority language. The model passed its tests. It had no standing in the approval process.
Spending patterns point the same direction. Of firms with an active AI origination initiative, 71% put the majority of spend into back-office functions, and only 24% have deployed AI at a customer-facing decision point; those that have saw application-to-decision abandonment at less than half the rate of back-office-only deployments. Of firms that shelved or scaled back an initiative within 18 months, 58% had skipped a formal readiness assessment. Among those that audited data before deployment, 39% found classification or exception-handling inconsistencies serious enough to require remediation first, and 46% of firms with a governance policy could not confirm that front-line staff had read it.
The Human Side of the Business
The Life of an Equipment Financier series produced some of the most widely shared pieces of the year, in part because the findings were recognizable. Of equipment finance professionals, 78% credit a specific individual as their most significant career influence, and 63% of those at the senior vice president level and above identified a single conversation with a more experienced colleague as the most consequential moment in their development. Of senior executives, 71% said they could not have accurately described their career path until five or more years after the moves were made.
The less flattering findings drew as much attention. Some 64% of equipment finance leaders work with a top-quartile producer whose behavior damages team cohesion, client relationships or standards. Moreover, 71% of professionals at the senior vice president level and above can name a transaction they wish they had challenged more forcefully, and 55% of senior credit officers approved a deal in the prior 24 months that they later identified as a clear judgment error. Furthermore, 46% acknowledged a client or dealer relationship that clouded their judgment, and 38% recognized it only after a loss or near miss. Quarter-end intensity is part of the picture: 59% of professionals work 55 or more hours a week in the final two weeks of a quarter, and 23% exceed 65.
What the Year Adds Up To
The common thread is that the losses were visible in advance. A dealer’s abandonment, a dormant program, a borrower’s consolidation, a CFO who never heard from the lender, a concentration limit set for a different portfolio: Each left a trail in the data well before it left a trail in the profit and loss statement. The firms that avoided them were not the ones with the lowest rates or the largest balance sheets. They were the ones that measured what happened between the quote and the funding, assigned someone to own it and acted on what they found.
The buyer research makes the point harder to dismiss. Buyers in every vertical surveyed had the demand and, for the most part, the credit. What they described choosing between was not two rates but two experiences: the lender that funded the soft costs, held the commitment through a long lead time or explained a structure nobody else had offered, and the lender that did not.
Monitor Suite will continue to publish at suitebymonitor.com, and the next phase of coverage turns from diagnosing these problems to the operating practices of the firms that have addressed them. The full vertical research reports, with the survey tables and buyer interviews behind the figures cited here, are available at suitebymonitor.com. •
Lisa H. Rafter is publisher of Monitor.
