ELFA: New Business Volume in Equipment Finance Falls 4% Y/Y in February

According to the Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index (MLFI-25), overall new business volume for February was $7.1 billion, down 4% year over year from new business volume in February 2021. In addition, volume was down 14% month to month from $8.3 billion in January. Year-to-date cumulative new business volume through the end of February was down nearly 1% compared with the same period in 2021.

Receivables more than 30 days were 1.7%, down from 1.8% in January and down from 2.1% in February 2021. Charge-offs were 0.09%, down from 0.17% in January and down from 0.55% in February 2021.

Credit approvals totaled 78.2%, down from 78.4% in January. Total headcount for equipment finance companies was down 12.2% on a year-over-year basis, a decrease due to significant downsizing at an MLFI-25 reporting company, according to the ELFA.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in March is 58.2, a decrease from 61.8 in February.

“New business volume at MLFI-25 companies has grown modestly in 2022 as it typically does in the early months,” Ralph Petta, president and CEO of the ELFA, said. “What is eye-catching, however, is the extremely high credit quality reported by respondents. Geopolitical unrest, increasing interest rates, inflation and continuing supply disruptions all pose headwinds that bear monitoring. But equipment finance companies always find ways to stay relevant, resilient and reliable in helping American businesses acquire the assets they need to thrive.”

With a quarter of the year nearly complete, we remain cautiously optimistic with steady deal flow and a strong pipeline,” Kris Foster, president of equipment finance at Pinnacle Financial Partners, said. “Supply chain constraints continue to be a major issue as we see equipment delivery delays for the foreseeable future. Positively, we see these delivery delays coupled with strong demand across most asset classes being a tailwind for future financing opportunities. Competition continues to be very strong with continued pressure on loan yield spreads. Credit quality and credit metrics are at historically strong levels; however, we are closely monitoring current geopolitical events, future Fed rate hikes, growing inflationary pressures on the broader economy, yield curve inversion and record high costs for many asset classes.”

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