ELFA: New Business Volume in Equipment Finance Industry Rises 16% Y/Y in October

According to the Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $900 billion equipment finance sector, overall new business volume for October was $10.7 billion, up 16% year over year from new business volume in October 2020. In addition, volume was up 16% month to month from $9.2 billion in September and year-to-date cumulative new business volume was up 10% compared with 2020.

Receivables more than 30 days were 1.7%, up from 1.6% the previous month and down from 2.2% in the same period in 2020. Charge-offs were 0.16%, down from 0.35% the previous month and down from 0.6% last October.

Credit approvals totaled 78%, up from 76.3% in September. Total headcount for equipment finance companies was down 11% year over year, a decrease due to significant downsizing at an MLFI reporting company, according to the ELFA.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in November is 64.6, an increase from the October index of 61.1.

“The equipment finance industry heads into the final quarter of the year in fine shape judging from October MLFI data,” Ralph Petta, president and CEO of the ELFA, said. “New business volume shows double digit growth, a somewhat surprising development given anecdotal evidence by some ELFA members of supply chain disruptions negatively impacting the availability and cost of capital goods in certain market sectors. Fourth quarter economic growth is projected to be buoyant despite higher prices and labor imbalances in the economy. And with the recent signing of major infrastructure legislation coming out of Washington, the future for capital investment looks bright indeed.”

“Given the unprecedented times of supply chain disruption, excess liquidity and rising inflation, there is still much to be hopeful about within the equipment finance sector,” William C. Perry III, president of Regions Equipment Finance, said. “‘The Great Transition’ will allow us all as providers of capital to further educate and provide value to our clients as they look to surmount challenges never before faced. In doing such, this should challenge the equipment finance sector to rethink our approach and how we serve our mission-critical, $1 trillion sector. Trends reported in the October MLFI are largely encouraging and those that are not provide ‘opportunity’ to serve. Looking into 2022, we see significant potential for growth as pent-up demand begins to wane and our clients further assimilate to the current environment.”

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