ELFA Index Shows 12% Drop in April NBV Y/Y

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25) showed overall new business volume for April was $7.3 billion, down 12% from April 2015. Volume was down 10% from $8.1 billion in March. Year-to-date, cumulative new business volume decreased 10% compared to 2015.

Receivables over 30 days were 1.2%, unchanged from the previous month and up from 0.89% in the same period in 2015. Charge-offs were 0.30%, down from 0.5%the previous month.

Credit approvals totaled 78.2% in April, up from 77.7% in March. Total headcount for equipment finance companies was up 0.6% year-over-year.

“With April data showing declining originations, mixed portfolio quality, and a lower level of confidence by equipment finance executives, it appears that political uncertainty joins economic uncertainty as one of the reasons businesses are holding off investing in capital equipment at this time,” said Ralph Petta, ELFA president and CEO. “Sluggish activity to begin the second quarter seems to have continued the relatively soft Q1, both in terms of overall equipment finance industry performance and economic activity.”

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for May is 55.1, a decrease from the April index of 59.1. Despite some deterioration of the indices, optimism remains.

“We continue to see good demand for capital equipment across all of our in-footprint regions, which include the Midwest and Southeast, as well as across the country through our national sales force,” said Thomas Partridge, president of Fifth Third Equipment Finance. “The picture remains favorable for those looking to finance capital equipment, as interest rates remain low and credit markets remain very competitive. The recent weakening of the dollar should help those companies focused on exporting goods and services. Given the low price of oil, as well as some of the recent bankruptcy filings, those with ties to the oil industry have a significant opportunity to restructure existing facilities.”

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