ELFF: Equipment Finance Industry Confidence Eases in August



According to the Equipment Leasing & Finance Foundation’s August 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), overall confidence in the equipment finance market is 66.6, a decrease from the July index of 72.9.

“I have been optimistic on the near- and long-term future of the equipment leasing and finance industry,” Dave Fate, CEO of Stonebriar Commercial Finance, said. “As was proven out during 2020, secured loans and leases always outperform all other asset classes. In my opinion, that will never change. My only concerns are things outside of our control, such as the potential increase in tax rates and the political landscape that exists today both at the federal and state levels.”

When asked to assess their business conditions over the next four months, 35.7% of executives said they believe business conditions will improve over the next four months, which is down from 58.6% in July. Meanwhile, 64.3% of executives believe business conditions will remain the same over the next four months, which is up from 41.4% last month. None of the executives believe business conditions will worsen, which is unchanged from July.

“I think we are currently chopping wood and grinding through an abundance of liquidity, supply chain disruptions, ever narrowing margins and competitive recruiting environments,” David Normandin, CLFP, president and CEO of Wintrust Specialty Finance, said. “This will continue for the near future, and our industry will adapt and find ways to win.”

Nearly a third (32.1%) of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, which is down from 55.2% in July, while 67.9% believe demand will “remain the same” during the same four-month time period, marking an increase from 41.4% last month. None of the respondents believe demand will decline, which is down from 3.5% in July.

“We continue to see demand for equipment and facilities from our customer base. Customers are looking to take advantage of low-rate long-term funding,” Michael Romanowski, president of Farm Credit Leasing, said. “Business growth is solid but is somewhat hampered by supply chain challenges.”

In August, 28.6% of the respondents said they expect more access to capital to fund equipment acquisitions over the next four months, which is down from 37.9% in July. Most of the respondents (71.4%) indicated that they expect the “same” access to capital to fund business, which is an increase from 62.1% last month. None of the respondents expect “less” access to capital, which is unchanged from last month.

When asked, 35.7% of the executives reported that they expect to hire more employees over the next four months, which is down from 37.9% in July. Most of the respondents (64.3%) expect no change in headcount over the next four months, which is an increase from 62.1% last month. None of the respondents expect to hire fewer employees, which is unchanged from July.

Only 14.3% of the leadership evaluated the current U.S. economy as “excellent,” which is a decrease from 27.6% last month. The majority (85.7%) of the leadership evaluated the current U.S. economy as “fair,” which is up from 72.4% in July. None of the respondents evaluated the U.S. economy as “poor,” which is unchanged from last month.

Nearly a third (32.1%) of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, which is a decrease from 48.3% in July. Meanwhile, 64.3% indicated they believe the U.S. economy will “stay the same” over the next six months, which is an increase from 51.7% last month. Only 3.6% of respondents said they believe economic conditions in the U.S. will worsen over the next six months, which is up from none last month.

In August, 50% of respondents indicated they believe their company will increase spending on business development activities during the next six months, which is down from 51.7% last month. The other 50% believe there will be “no change” in business development spending, which is an increase from 48.3% in July. None of the respondents believe there will be a decrease in spending, which is unchanged from last month.


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