Mark Bonanno,
President and CRO,
North Mill Equipment Finance

Kiran Kapur,
CEO,
36th Street Capital

Allen Snelling,
EVP, Business Development,
Financial Pacific

As interest rates fluctuate, regulatory policies shift and credit markets evolve, how are equipment finance leaders adapting? In this exclusive roundtable, executives from Financial Pacific, 36th Street Capital and North Mill Equipment Finance share their perspectives on funding trends, credit appetite, macroeconomic challenges and strategies for brokers and independent lenders.

How would you describe the current funding climate? Are there any notable shifts in credit appetite, risk tolerance, or underwriting standards?

MARK BONANNO: Rapidly rising interest rates and poor liquidity management led to a banking crisis in 2023 that saw the failure of several major U.S. regional banks. The resulting impact was a pull back by U.S. regional banks on equipment lending as part of a broader tightening of credit. Many equipment finance lenders who relied on a strategy of syndicating bank quality paper to regional banks were left with more limited avenues to syndicate business. In 2024, well capitalized independents and private credit funds stepped in to fill that void. This led to stricter credit appetite and a recalibration of risk and return. Many independents and private credit funds saw record equipment volumes in 2024. While liquidity remains robust, lenders are becoming more selective in their credit appetite, favoring well-capitalized borrowers with strong cash flow visibility. Financial institutions are prioritizing resilience — focusing on industries with stable fundamentals and businesses that demonstrate operational discipline.

KIRAN KAPUR: I’d describe the current funding climate as highly liquid. There is a lot of fresh capital coming into the market. The money supply side of the market appears to be outpacing the demand generated by originators, which is driving a reduction in spreads with respect to borrowing and syndications. Overall, the most notable shifts with respect to credit appetite and risk tolerance on the part of some seems to be taking on higher single obligor exposure amounts to deploy more capital. With respect to our own firm, we continue to remain focused on building a portfolio with good diversification across all categories, with no material chance in our underwriting standards.

ALLEN SNELLING: Like most lenders that have had any significant concentration in transportation, we’ve seen the impact of the transportation recession the last few years. Most of that stress came from the 2022 vintage which is now about 80% aged. While there is still a tail on that 2022 vintage, the 2023 and 2024 vintages are performing significantly better. The spot rates for transportation really haven’t improved yet, but we anticipate seeing an improvement later in 2025, which will be a welcome event.

What key trends are you seeing in deal flow, asset types and borrower credit profiles? Have these trends changed significantly over the past year?

BONANNO: We’re seeing a flight to quality across the board. Deal flow remains active, but lenders are placing a premium on assets with strong residual values and borrowers with demonstrated financial strength. In the past year, there has been a marked shift toward essential-use equipment financing, particularly in logistics, healthcare and infrastructure. Credit profiles are bifurcating — larger, well-established firms continue to attract capital at favorable terms, while smaller or highly leveraged entities are facing increased scrutiny.

KAPUR: We have seen an uptick in deal flow from companies operating in sectors which are experiencing a downturn. This is not unusual; rather, it varies with respect to what sectors generate more opportunity at any point of time, based on overall macro and sector-specific dynamics. Over the last two years we have seen more obligors with cash flow issues driven by higher debt service costs due to benchmark rate movement.

SNELLING: At FinPac we heavily monitor the deal flow looking for trends with our business. Over the last year it’s been consistent in terms of credit quality measuring it with different data points. Asset types have remained consistent, partly driven by our management of asset concentration levels. Diversity by equipment types has always been an important part of our portfolio management strategy.

How are macroeconomic factors — such as interest rates, inflation and economic uncertainty — impacting the funding environment and borrower demand for equipment financing?

BONANNO: Interest rate fluctuations and persistent inflation are significantly reshaping the cost of capital, compelling businesses to reassess their financing strategies. As borrowing costs rise, many companies are shifting toward more deliberate and strategic capital expenditures, prioritizing investments with clear, long-term value. Despite these pressures, demand for equipment financing remains resilient, particularly in asset-intensive industries where operational continuity is paramount. The prevailing economic uncertainty is also driving a shift toward leasing structures over outright purchases, enabling businesses to preserve liquidity, manage risk and maintain flexibility in an environment where financial agility is increasingly critical to sustained growth.

KAPUR: There is a tremendous amount of volatility at the moment. Tariffs, potential uptick in inflation, trade wars and overall talk of a pending recession require extra due diligence and stress testing when it comes to extending credit. There are still good deals to be done, but navigating the uncertainty requires more rigor.

SNELLING: That’s a good question as there are surely a lot of those macroeconomic factors facing us that could impact borrower demand. While it’s still early in the year, I think its playing out like a typical annual cycle so far. That cycle has demand low to start the year in January then application activity starts to pick up mid-February and demand is usually strong through the spring. We’ve seen that February increase so far, and time will tell if the increased activity will be sustained and grow in March and through the spring. We’re optimistic that it will!

Under the Trump administration, what are your expectations for regulatory changes, tax policy, or other factors that could impact the equipment finance sector?

BONANNO: Regulatory shifts under the Trump administration are expected to focus on deregulation and tax incentives to spur economic growth. From a deregulation perspective, we have already seen the U.S. Court of Appeals for the Fifth Circuit stay enforcement of the Consumer Financial Protection Bureau’s (CFPB) Small Business Lending Rule — also known as Section 1071 of the Dodd-Frank. More recently we have seen the Trump administration shutter the majority of CFPB staff.

With respect to tax policy, we anticipate new legislation to be introduced that will extend key components of the Tax Cuts and Jobs Act (TCJA) of 2017 that are set to expire at the end of this year.

KAPUR: We would expect that the regulatory environment to be more relaxed than in prior administrations, potentially creating both more opportunity and increased competition. Tax policies appear to be unclear, but one would expect that a “Made in USA” administration agenda would spur on U.S. manufacturing investment. How much and how quickly that actually translates to demand for equipment financing remains to be seen.

SNELLING: The most noticeable change in the early part of the Trump term is the pause with Dodd Frank 1071. We, like a lot of lenders, were gearing up for a mid-2025 implementation which would have been burdensome for us, our partners and customers. The pause and potential adjustments or repeal has been a welcome event.

What advice would you give to brokers and smaller independent finance companies looking to secure funding in the current environment?

BONANNO: In today’s environment, brokers and independent finance companies must differentiate themselves through disciplined underwriting and strategic lender partnerships. To secure funding, they should:

• Expand Relationship Networks: Diversification of capital sources is key. Establishing ties with non-bank lenders and institutional investors can provide alternative funding channels.

• Demonstrate Strong Credit Fundamentals: Lenders are prioritizing deals with well structured risk mitigation. A clear narrative around borrower creditworthiness is essential.

• Optimize Credit Liquidity: Maintain disciplined leverage management by establishing diverse credit facilities. Strengthening liquidity buffers enhances financial resilience and better positions you to capitalize on strategic growth opportunities while mitigating funding risks.

• Leverage Data and Technology: Utilizing advanced credit analytics and portfolio management tools can enhance decision-making and improve lender confidence.

• Maintain Transparency and Compliance: Given the heightened regulatory focus, ensuring robust compliance frameworks will foster trust and long-term lending relationships.

Ultimately, capital flows to those who demonstrate financial prudence, operational excellence and strategic foresight. The firms that embrace these principles will be best positioned to navigate today’s evolving funding landscape.

KAPUR: Brokers and independents should benefit by the incremental liquidity coming into the space but should be focused on customer satisfaction and partnering with lenders who are able to deliver on their commitments and do so in a manner that aligns with the originators business objectives. Establishing an ongoing funding relationship is a “win-win” for both parties.

SNELLING: I don’t think the advice has changed much over the years. Our best partners are those that have their own controls in place to effectively screen opportunities, know their customer, have a good idea if the opportunity is a fit with their lender, can close the majority of their approvals and provides complete funding packages. Funders like Financial Pacific are okay taking the credit risk as long as they have efficient partners that enhance the economics of funding through third parties. In addition, it’s important for us to understand how you source business and any areas of concentration we should expect either from a vertical or equipment segmentation. •