The vast majority of businesses (79%) relied on financing for at least part of their equipment and software acquisitions last year amid a decline in the propensity to finance equipment investment, according to a new study, the 2019 Equipment Leasing & Finance Industry Horizon Report released by the Equipment Leasing & Finance Foundation.
The study, commissioned by the Foundation and prepared by Keybridge, reveals that of total 2018 equipment and software investment of $1.8 trillion, the overall share of equipment investment financed was 50%, resulting in an estimated industry size of approximately $900 billion. The figure, lower than that in last year’s Horizon Report, is attributed to additional cash on hand, coupled with higher interest rates, which drove down the propensity to finance among private businesses.
The report draws on the results of a new end-user survey the Foundation conducted in July 2019 that was more than double the size of last year’s survey. It provides the data to estimate the current size of the equipment finance industry, assess the propensity to finance private sector equipment investment for key equipment verticals, and forecast end-user plans to acquire and finance equipment over the next 12 months.
In addition to summarizing key industry performance data, this year’s Horizon Report includes a detailed analysis of recession risk. The new Foundation-Keybridge Equipment Finance Industry Recession Monitor is comprised of a mix of 11 consumer and business-oriented indicators designed to anticipate a recession even if the downturn has yet to fully materialize throughout the broader U.S. economy.
“The Horizon Report shows that while more businesses than ever are using financing, they aren’t financing as much of their acquisitions as they have in the past,” said Jeffry D. Elliott, foundation chairman and senior managing director of Huntington Equipment Finance. “With opportunities for growth in this competitive landscape, Foundation resources like the new Recession Monitor, are critical for equipment finance professionals in their portfolio and strategy decision-making.”
Other key findings from the report included:
Like this story? Begin each business day with news you need to know! Register now for FREE Daily E-News Broadcast and start YOUR day informed!