According to a study from the Equipment Leasing & Finance Foundation, 78% of businesses used at least one form of financing when acquiring equipment. The reading is up from 72% of respondents from the previous foundation market study released in 2012 and represents an increase in the overall propensity to finance.
The study also shows that 68% of the total value of equipment and software acquired in 2015 was financed, a significant increase from the previous estimate of 55% forecasted in the 2012 foundation market study.
The new study, conducted by IHS Markit, forecasts the U.S. equipment finance market will grow by 1.31% to $1.03 trillion in 2016.
Total public and private investment in equipment and software grew 4.0% in 2015, to $1.5 trillion, according to the study. In 2016, equipment and software investment is expected to be relatively flat, increasing by only 0.5%. However, due to excess liquidity and strong competition, which have driven down the cost of borrowing, finance volume is expected to outpace total investment in equipment and software. The study cites excess global capacity, low commodity prices, a strong dollar, sluggish export markets and the collapse in drilling for oil and natural gas as main factors holding back capital investment
“This invaluable research provides a comprehensive picture of the size and scope of the equipment finance sector,” said Ralph Petta, president of the foundation and president and CEO of the ELFA. “In so doing, the analysis reaffirms the industry as an integral component of the U.S. economy, enabling firms—both large and small—to acquire capital assets to operate and grow their businesses.”
Highlights from the study include:
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